From RanSquawk [19]
- Markets remain calm before the Merkel-Sarkozy meeting being held in Berlin at 1230GMT
- US Earnings season begins with the publication of Alcoa’s earnings reports
Market Re-Cap
Markets are quiet halfway through the European session as most are awaiting the outcome of the meeting between German Chancellor Merkel and French President Sarkozy in Berlin at 1230GMT. The meeting is likely to centre around Greece, as well as the PSI update that, according to the FT may see the holders of Greek bonds accept higher losses as the contentious negotiation over writing down Greece’s debt burden are due to be concluded soon. German Industrial Production figures for November came in roughly in line with expectations, with the German Economic Minister commenting that this measure is likely to remain subdued over the winter months. Data released from Switzerland today shows Retail sales performing much stronger than expected, showing strong consumer demand in Switzerland across November.
Asian Headlines
There is a Japanese Market Holiday today in observance of Coming of Age day.
The Chinese government is expected to set its economic growth target at the 7% level for 2012, below the 8% outlook in place for the last seven years. China will also continue to implement a stable monetary policy and will increase the flexibility of the Yuan’s exchange rate, according to the country’s central bank.
• Chinese New Yuan Loans (Dec) 640.5bln vs. Exp. 575.0bln (Prev. 562.2bln)
• Chinese Money Supply-M0 Y/Y (Dec) 13.8% (Prev. 12.0%)
• Chinese Money Supply-M1 Y/Y (Dec) 7.9% vs. Exp. 7.9% (Prev. 7.8%)
• Chinese Money Supply-M2 Y/Y (Dec) 13.6% vs. Exp. 12.9% (Prev. 12.7%)
US Headlines
Fed’s Bullard said the Fed probably won’t begin a new round of bond purchases following ‘encouraging’ US labour data.
Fed's Dudley said that US taxpayers and mortgage bond investors should fund loan principal reduction for distressed homeowners. Dudley added that although taxpayers would spend about USD 15bln a year the cost would largely be recouped through repayments and the savings achieved by staving off mass foreclosures.
EU and UK Headlines
Data released today falls mostly in line with expectations, however Swiss Retail Sales for November performed higher than expected by 1.6%.
• German Industrial Production SA M/M (Nov) -0.6% vs. Exp. -0.5% (Prev. 0.8%)
• German Trade Balance EUR 16.2bln vs. Exp. 12bln
• French Trade Balance EUR -4412mln vs. Exp. -6000mln
• EU Sentix Investor Confidence -21.1 (Prev. -24.0)
• Swiss Retail Sales 1.8% vs. Exp. 0.2% (Prev. -0.2%, Rev. 0.1%)
• Swiss Unemployment Rate M/M (Dec) 3.3% vs. Exp. 3.2% (Prev. 3.1%)
EQUITIES
US Earnings season begins today with the publication of Alcoa’s earnings after the close today.
Financials are once again under pressure with UniCredit underperforming its peers, with utilities being the highest performing sector so far in the European session.
FX
FX markets have shown little movement today as the market is awaiting the outcomes of the meeting between Merkel and Sarkozy. Euro has gained over the last few hours in preparation for the Merkel-Sarkozy talks.
COMMODITIES
WTI and Brent crude futures have encountered some erratic price action through the European session and are both trading in negative territory, as market participants remained cautious ahead of Merkel and Sarkozy meeting.
Citigroup lowers 2012 gold forecast 12% to USD 1709 an ounce.
Oil & Gas News:
• According to Morgan Stanley, WTI crude futures, and in particular March-delivery contracts, will be most affected by a re-balancing of commodity indices (S&P GSCI and the Dow-Jones-UBS Commodity Index) that begin today.
• Goldman cuts 2012 Nymex Natural Gas forecast to USD 3.10 vs. Exp. USD 3.70.
• UAE oil minister said that the Strait of Hormuz threat has always existed. He added that, the IPIC pipeline bypassing the Strait of Hormuz has been delayed until at least April due to construction difficulties according to sources. The capacity of the pipeline is 1.5-1.8mln BPD, adding that USD 85 – USD 95 oil is good for UAE oil investments.
Geopolitical News:
• Iran’s next round of Persian Gulf naval drills on Jan. 27 will practice the armed forces’ ability to close the Strait of Hormuz according to a lawmaker on the parliament’s national security committee.
• Nigeria national strike not impacting oil output, exports for now.