Daily US Opening News And Market Re-Cap: September 29

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From Ransquawk:

  • The German lower house passed the EFSF amendment bill with a leading conservative lawmaker noting that the coalition did not need to rely on opposition votes.
  • Fed’s Bernanke said the central bank might need to ease monetary policy further if inflation or inflation expectations fall significantly.
  • German BDB confirms that the 90% target rate for private sector involvement in the second Greek bailout has been met adding that the ECB is well prepared to assist EU banks.
  • Greek PM will travel to Paris on Friday to discuss debt crisis with French president Sarkozy according to a source.
  • Banks and other private sector bondholders are resisting the idea of taking larger haircuts on Greek debt by lobbying countries such as Germany and the Netherlands.

 

Market Re-Cap

Markets have traded in a fairly quiet and light session since the European open as market participants keenly awaited the results of the German EFSF expansion vote in the German lower house. Initial buoyancy in stocks was attributed to comments last night from Fed's Bernanke who said the central bank might need to ease monetary policy further if inflation or inflation expectations fall significantly. Stocks have since pulled off their session highs as the German vote passed with a large majority of 523 to 85 and only 3 abstainers. The USD-Index showed significant weakening, down over 0.50%, as investors now see the possibility of further easing in the US becoming a closer and closer reality. This flow out of the dollar gave many currency pairs a boost as both EUR/USD and Cable traded up around 100 pips, and further moves in safe haven currencies were seen as the JPY weakened following an earthquake in Japan's Fukushima region, registering 5.6 on the Richter scale.

Looking forward at the rest of the session, focus will now turn to the US weekly Initial Jobless Claims number which will be closely watched after Bernanke last night said the US is facing a crisis with a jobless rate which resists decline. Attention will also fall on the final US GDP reading, alongside Fed speakers Plosser and Lockhart later in the session.

Asian Headlines

  • Japanese Retail Trade SA (Aug) M/M -1.7% vs. Exp. 0.2% (Prev. -0.3%)
  • Japanese Retail Trade (Aug) Y/Y -2.6% vs. Exp. -0.8% (Prev. 0.7%, Rev. 0.6%) (RTRS)
  • Market talk of weaker than expected China PMI due out this Saturday – Unconfirmed (RANsquawk)
  • **NYSE LIFFE US MINI MSCI EAFE AND EMERGING MARKETS INDEX FUTURES ARE HAVING A RECORD MONTH THIS SEPTEMBER UP 36% (155K) AND 47% (215K) RESPECTIVELY FROM ITS PREVIOUS RECORD SET BACK IN JUNE 2011. **

 

EU and UK Headlines:

  • The German lower house passed the EFSF amendment bill with 523 German MP’s voting for, 85 against & 3 abstentions. A leading conservative lawmaker noting that the coalition did not need to rely on opposition votes. (RTRS)
  • Banks and other private sector bondholders are resisting the idea of taking larger haircuts on Greek debt by lobbying countries such as Germany and the Netherlands. (FT-More)
  • Greek PM will travel to Paris on Friday to discuss debt crisis with French president Sarkozy according to a source.(RTRS)
  • German Unemployment Change (000's) (Sep) M/M -26K vs. Exp. -8K (Prev. -8K, Rev. -9K)
  • German Unemployment Rate (Sep) M/M 6.9% vs. Exp. 7.0% (Prev. 7.0%) (RTRS)
  • German BDB confirm that the 90% target rate for private sector involvement in the second Greek bailout has been met adding that the ECB is well prepared to assist EU banks.
  • Italian BTP auctions had slightly stronger bid/cover ratios but markedly higher yields on all 3 lines. (RTRS)

EQUITIES

European markets trended higher coming off early lows in anticipation of the passing of the EFSF amendment bill in the German Bundestag.  The FTSE 100 has again lagged its European peers with mining stocks being particularly weak following the downbeat commentary regarding China.  Late yesterday the renowned Bank of America China strategist predicted much weaker growth of 7% and a “hard landing” in China, with market talk overnight of weak economic data from China in the next couple of weeks.  Elsewhere, financials were supported by the successful vote in Germany and are the best performing stocks heading into the North American open with peripheral Europe outpacing the core.  One big story of note in the European session was Nokia announcing 3,500 further job cuts and Nokia shares moved back to flat after falling 2%.   US equity futures have been in the green throughout the session following the dovish comments from Fed’s Bernanke after the Wall Street close yesterday.

FX

The major forex pairs have been driven by the weakness in the USD-index following the dovish comments from Fed’s Bernanke last night.  EUR/USD and GBP/USD have traded consistently in positive territory, with added support for the EUR coming from the German unemployment data and the anticipated passing of the EFSF vote in Germany.  Elsewhere, JPY weakness was observed following reports of another earthquake in the Fukushima prefecture in Japan, however the move was short-lived as no tsunami warning was issued and no damage to the power plant reported.

COMMMODITIES

WTI and Brent crude traded higher during the European session with weakening in the USD-Index after Fed’s Bernanke said the central bank might need to ease monetary policy further if inflation or inflation expectations fall significantly.