Daily US Opening News And Market Re-Cap: September 21

From RanSquawk

• Today sees the S&P 500's largest quarter-end rebalancing since 2005, with two-way trade volumes estimated to reach USD 33bln, along with the quadruple witching of expiries for the US equity markets.
• The ESM is set to launch on October the 8th without leverage vehicle options, as Finland oppose additional exposure to bailouts, alongside expectations.
• Pick-up in volumes sees EUR/USD breach the 1.30 handle to the upside, however the pair retreats to trade close to flat as the US comes to market, in one of the few catalysts for price action in the European session today.

Market Re-Cap

As we enter the North American cross over, equity indices in Europe are seen higher, supported by telecom and health care sectors. There was little in terms of fresh news flow and instead the price action was largely driven by expiration of various futures and option contracts. On that note, it is not only the quadruple witching day, but also quarterly S&P rebalancing. As such, brief spells of volatility will be observed as market participants close out remaining positions. Looking elsewhere, range bound price action was observed in the fixed income market, where the benchmark German Bund is currently trading in close proximity to 140.00 level. Talk of demand from Middle Eastern accounts in EUR/USD earlier in the session saw the pair trip buy stops above 1.3000 and then above 1.3025. GBP/USD was a direct beneficiary of USD weakness, which in turn pushed the pair above 1.6300 level (touted option barrier). Going forward, the second half of the session will see the release of the latest CPI from Canada.

Asian Headlines

The regional bourses across Tokyo, Shanghai and Hong Kong have retraced some of their losses seen yesterday to close in the green in the overnight Asian session, as investors took the opportunity to pick up cheaper equities after the severe sell-offs seen over the past few days.

US Headlines

N/A

EU & UK Headlines

The Eurozone's permanent bailout mechanism, the ESM, is set to launch on October 8th without leverage vehicle options according to sources. (Newswires)
- Finnish objectives scuttled a deal to transfer the leverage vehicles to the ESM
- Leverage vehicles were said to allow Eurozone to mobilize over EUR 1trl.
- These comments come in-line with expectations, with the launch date already indicated for October 8th and with the Finnish opposition to further exposure to Europe known.

UK Public Finances (GBP) (PSNCR) (Aug) M/M -9.6bln vs. Exp. -5.5bln (Pre. -22.9bln, Rev. -25.0)
- UK PSNB ex. Interventions (GBP) (Aug) M/M 14.4bln vs. Exp. 15.0bln (Prev. 0.6bln, Rev. 0.1bln)
- UK Public Sector Net Borrowing (GBP) (Aug) M/M 12.4bln vs. Exp. 13.2bln (Prev. -1.8bln, Rev. -1.9bln), highest level of public sector net borrowing for August since records began.

Following reports overnight that Greece's official creditors are considering granting the country another haircut on its sovereign debt, a German finance minister spokesman has declined to comment on the talk, with the German government spokesman Kotthaus adding that there is no reason to speculate upon this. (Newswires/RANsquawk)

Equities

Following in the footsteps of the Asian bourses, European equities opened higher but suffered from selling pressure in the early hours of the session to close the gap. Stock futures saw some support on the break of the 1.30 handle to the upside in EUR/USD, being propped up by the telecoms and financials sectors. Volatility has been provided by the high number of futures and options expiries in both the European and US stock markets, with focus turning to the US' quadruple witching and the S&P 500's rebalancing due later today.

In individual equities news, today sees the official release of Apple's iPhone 5 across the globe, with the company's new release being carefully watched to see if it is yet another record breaker. The release has weighed upon ever-troubled Nokia's share price, trading lower by over 2.5% as we head into the North American crossover.

FX

ME names supported EUR/USD earlier in the session, which in turn saw the pair trip few buy stops before topping out in the mid-1.3000 region. Since then the pair pared the entire move higher and stabilised around the 1.3000 level. Elsewhere, bids from a UK clearer, as well as general USD weakness lifted GBP/USD above 1.6300 level (touted option barrier).

Commodities

WTI and Brent crude futures trade higher heading into the North American crossover after making gains in the Asian session alongside equities, retracing some of the losses made over the past few days but still remaining markedly lower on the week after the significant falls in pricing observed only a few days ago. Spot gold and silver prices are moving with the same sentiment, seen marginally higher into the NYMEX pit open.

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