Daily US Opening News And Market Re-Cap: October 19

From RanSquawk

  • EU Summit provides little in the way of material progression on the Eurozone crisis, with the Spanish PM Rajoy restating that
    there has been no decision made on a Spanish bailout.
  • General Electric (GE) Q3 Operating EPS USD 0.36 vs. Exp. USD 0.36, reaffirms forecast.
  • Price action looks to remain muted, with a light data calendar in the US session ahead.

Market Re-Cap

Yet again Germany was forced to compromise and agree on what can only be viewed as a partial agreement on EU banking supervision. Under the agreed timetable, a legal framework for the new ECB-based supervisor would be finalised by the end of this year and then it would take six to 12 months to get the supervisor up and running. Still, German Chancellor Merkel insisted that direct recapitalisation of banks by the ESM will only be available once fully fledged supervision is in place and ruled out retroactive bank recapitalisation. This, together with the fact that Spain is yet to ask for monetary assistance prompted market participants to book profits. In particular, selling pressure was most evident across the financial sector, where Italian and Spanish banks underperforming for much of the session. As a result, EUR/USD traded lower, with large option expiries today and on Monday between 1.3000 and 1.3050 preventing the pair from posting large losses. Going forward, the second half of the session sees the release of the latest Existing Home Sales from the US and Canadian CPI.

Asian Headlines

Asian equities have ended the week with firm gains over the five-day period, although the Shanghai Composite closed lower by 0.16% on the day. The Nikkei 225 managed to close above the key psychological 9,000 level for the first time since September amid a quiet overnight session.

EU & UK Headlines

The Spanish PM Rajoy commented that he feels no pressure to ask for a bailout, prompting some risk-off themed trade ahead of the Wall Street open, as some disappointment filters in markets. (Newswires)

UK Public Finances (GBP) (PSNCR) (Sep) M/M -0.6bln vs. Exp. 4.7bln (Pre. -9.6bln)
- UK PSNB ex. Interventions (GBP) (Sep) M/M 12.8bln vs. Exp. 13.5bln (Prev. 14.4bln, Rev. 12.8bln)
- UK Public Sector Net Borrowing (GBP) (Sep) M/M 10.7bln vs. Exp. 11.7bln (Prev.12.4bln, Rev. 10.8bln)
- UK Treasury says that borrowing numbers are lower than Sep 2011 and that data shows that UK borrowing better than market forecasts.

Equities

European equities head into the North American crossover trading lower, with peripheral bourses underperforming their core peers. The modest risk-off sentiment is evident in the lower financials sector and the firmer healthcare stocks, a pattern observed from the open today, despite slight progress being made on an EU banking supervisor. US stock futures are currently trading alongside their European counterparts, indicating a lower open on Wall Street today.

In individual equities news, German automaker BMW have reaffirmed their guidance for 2012, and still sees a higher 2012 pre-tax group profit. The news boosted BMW and other related stocks in the DAX, with the Volkswagen also among the strongest European stocks today.

FX

EUR heads through the midway point of the European session softer, as no positive news emerges from the conclusion of the EU summit. However, the losses have been somewhat stemmed from large vanilla expiries at 1.3050 for today's 10am (1500BST) NY cut, however a touted EUR 2bln option expiry around that mark for Monday is said to be more influential.

GBP weakness has been present from the Eurex open, after some relatively dovish comments from BoE's Miles, who hinted towards extended weakness in the UK economy and low risk of inflation, laying the groundwork for additional easing, helping take GBP/USD to intraday lows, printed at 1.6030.

Commodities

The energy complex trades little changed ahead of the NYMEX pit open, with WTI crude futures looking to make a gain on the week after TransCanada announced yesterday that they are to shut their Keystone pipeline for repairs. Spot gold and silver prices are seen lower, with
a stronger USD-index weighing on pricing.