From RanSquawk [20]
European finance ministers instruct Spain to make new cuts to their budget to reduce the deficit by a further 0.5%.
Greece must cut government spending by 5.5%/GDP over 2013/14 to meet bailout fiscal targets, according to a Commission report
Markets await the FOMC rate decision with analysts expecting no change to the current rate.
Market Re-Cap
European equity markets are trading higher across the board ahead of the US open, with the financials sector outstripping others and Health Care lagging behind, although still in positive territory. The main news from yesterday’s finance minister’s meeting was instruction to reduce their deficit by a further 0.5% of GDP; this is having an effect on the Spanish spread against the German bund today, underperforming against other European spreads.
The main data of the European session so far comes from Germany, with the ZEW survey for Economic sentiment beating expectations for March, as well as the UK trade balance figures showing a record high in the UK’s non-EU exports.
As the session progresses, participants will be looking towards the US retail sales data and the latest FOMC rate decision.
Global Headlines
Brazilian Finance Minister Conzendy said progress on the Europe sovereign debt crisis had raised the chances of non-European countries coming up with around USD 300bln in IMF funding, more but the total amount of funds that will be contributed to the IMF had not yet been defined. (Sources)
US Headlines
The Fed will release results of its 2012 capital tests and stress tests for 19 banks on March 15th, at 2030GMT. The stress tests do not represent a forecast for the economy, and will show the impact of a 21% decline in home prices, as well as a 13% jobless rate and 50% fall in stocks. Banks will be notified should the Fed object to capital distribution plans. (RTRS)
According to the ManpowerGroup’s employment survey, US employers are as reluctant to hire workers in the next three months as they were at the bottom of the economic downturn. (FT) The survey finds that 72% of employers are neither cutting nor adding jobs. ManpowerGroup’s CEO commented that pre-2008; the survey never recorded such a high figure, with the number typically being in the mid-60% area.
Managers at major banks ignored widespread errors when overseeing foreclosures prior to the 2008 housing crisis. (NYT) In some cases, banks instructed employees to adopt make-believe titles and speed documents through the system despite internal objections, according to a review by federal investigators.
Asian Headlines
The BoJ have held their target rate range unchanged at 0.0-0.1% and have left the volume of their asset purchase program unchanged at JPY 65trl, however some members did vote for an increase in these funds. The BoJ are to expand the ceiling for growth loans from JPY 3trl to JPY 3.5trl and will extend their loan program for banks in earthquake-affected areas by one year until April 2013. (Sources)
According to a Standard & Poor’s report, Japan is likely to achieve 2% real GDP growth in 2012, with exports set to rebound throughout the year. (Sources)
US President Obama is seeking to pressure China over the exports of materials for high-tech products, with the US, Japan and the EU making the case against China to the WTO, according to an admin official. (Sources)
EU and UK Headlines
Eurozone finance ministers have called on Spain to make new cuts in its 2012 budget to reduce its deficit by another 0.5% of economic output. (FT) Despite the cuts, Madrid will still be allowed to breach a previously-agreed deficit limit of 4.4% of GDP this year by nearly 1%. The country’s new target will now be 5.3%, according to a Eurozone official. The Dutch finance minister has said these targets are entirely feasible. (Sources)
Greek finance minister Venizelos has said that Greece is to receive the first instalment of EUR 25bln for bank recapitalization, while a total EUR 48bln has been earmarked to restore the capital needs of the country’s financial sector. Venizelos has also commented on the escrow account, noting that it will be designed according to Greece’s proposals. (Sources)
EU’s Juncker has said the Eurogroup have ‘politically adopted’ the second Greek bailout. Juncker has also noted that the Eurogroup are to discuss lifting the EUR 500bln bailout cap in their meeting at the end of March. Juncker and Rehn have further commented on the Eurozone periphery countries saying that the Portuguese program is on track and they welcome Belgium’s very substantial efforts to meet deficit targets. However, they remain concerned on the Spanish unemployment rate. (Sources)
ECB’s Weidmann has said it is not the task of central banks to keep weak banks artificially alive, adding that decisions on redistribution of larger solvency risks of banks and states can only be taken by elected governments and parliaments. Weidmann further commented that emergency aid via monetary policy must be limited and temporary and cannot be an excuse to delay reform. (Frankfurter Allgemeine Zeitung)
Greece must cut government spending by 5.5%/GDP over 2013/14 to meet bailout fiscal targets, according to Commission report. (Sources)
- Greek government to identify needed savings by June, implement them in 2013, 2014 budgets
- New Greek savings to focus on welfare benefits, defence, public sectors redundancies, central and local government
Major data released in the European session so far is the ZEW survey for Germany.
German ZEW (Mar) (Economic Sentiment) M/M 22.3 vs Exp. 10.0 (Prev. 5.4)
German ZEW (Mar) (Current Situation) M/M 37.6 vs Exp. 41.5 (Prev. 40.3)
ZEW have commented that economic expectations in Germany are at their highest since June 2010. (Sources)
UK trade balance data has also been released for January, recording the highest level of exports to non-EU countries on record:
UK Visible Trade Balance (GBP) (Jan) M/M -7532mln vs. Exp. -7900mln (Prev. -7111mln, Rev. -7184mln)
UK Trade Balance Non-EU (GBP) (Jan) M/M -3678mln vs. Exp. -4300mln (Prev. -3748mln, Rev. -3601mln)
UK Total Trade Balance (GBP) (Jan) M/M -1762mln vs. Exp. -1900mln (Prev. -1109mln, Rev. -1217mln) (Sources)
EQUITIES
European equities are trading higher across the continent today with some renewed risk appetite displayed in the outperforming Financials sector.
In individual stocks news, Commerzbank are one of the strongest gainers in Europe so far today following news that the company has come to an agreement with the European Commission and will keep hold of it’s Greek unit Eurohypo. Commerzbank shares currently trade up 2.5%. (Sources)
Antofagasta are performing particularly poorly today following the publication of their corporate earnings, and the news that they have dropped their total dividend 62% to USD 0.44. Company shares are currently down 3.15%. (RTRS)
Top performing sectors in the BE500: Financials (+1.73%), Basic Materials (+1.24%), Industrials (+1.11%)
Worst performing sectors in the BE500: Telecommunications (+0.40%), Consumer Goods (+0.44%), Health Care (+0.48%)
FX
JPY has displayed weakness across the board today, although the BoJ made no significant change to its monetary policy overnight, there are a number of factors that could be behind the moves including the widening of interest rate differentials at the short end in favour of the USD, weakening the JPY. (Sources)
GBP/USD is trading higher ahead of the US open, with market talk of a UK clearer on the bid with stops touted above 1.5670, however this remains unconfirmed. The pair may see further fluctuations later in the session at the release of US retail sales and the FOMC rate decision. (Sources)
COMMODITIES
WTI and Brent crude futures are higher ahead of the US open, moving in tandem with the European equity indices with general market sentiment displaying some modest risk appetite. The market looks ahead to US Retail Sales, the FOMC rate decision as well as the weekly API inventory data due later today.
Oil & Gas News:
• US exports of gasoline, diesel and other fuels will more than double in the next three years as refiners take advantage of a growing supply of domestic crudes and ship more fuel to emerging markets, according to research firm Wood Mackenzie.
• A minister for Oman has said that oil prices at USD 100/BBL are fair.
• Japan’s 10 regional power utilities’ crude imports more than tripled in February as thermal generation dependence increased after the country shut its nuclear plants following the Fukushima disaster, according to data released by the Federation of Electric Power Companies.
• Iranian Supreme Leader Khamenei has called on officials to pursue the policy of using oil as a source of further economic progress for the country. Khamanei has said that oil must stop being used as a source of income and funding for the country’s budget and must become a source of progression.
• The UK’s largest oilfield, Buzzard field, faced fresh output problems and was running at below the normal rate yesterday. The field typically produces 200,000BPD.
• North Sea oil output is set to increase in April due to higher loadings from Oseberg and Ekofisk streams. April supply will average 2.26MBPD, supply in March stands at 2.18MBPD.
Geopolitical News:
• North Korea are to accept monitors from the IAEA.
• Sudanese State oil minister Gamaa has insisted that Sudan is under no pressure to come to a deal with its Southern neighbour because the national economy could still survive without oil income. South Sudan’s economy on the other hand relies on oil for 98% of its income.