Daily US Opening News And Market Re-Cap: August 9

From RanSquawk

  • ECB's Survey of Professional Forecasters cut their 2012 Eurozone growth forecast to -0.3% from -0.2%.
  • Overnight Chinese data disappoints as industrial production and retail sales slow.

Market Re-Cap

The initial boost given to European equities following weaker than expected overnight data from China, which renewed speculation of more stimulus measures, has faded throughout the morning. The major European bourses are now trading in negative territory at the North American crossover. The DAX is underperforming, weighed down by the likes of Commerzbank and Deutsche Telekom who both failed to impress markets with their earnings reports pre-market.

However, thin summer volumes and another light economic calendar have once again been the theme for the morning, with only the UK Trade Balance for June gaining some market attention. Despite the larger than expected deficit, the ONS said that the figure is likely distorted by the extra public holidays.

USD strength has weighed on other major currencies, pushing EUR/USD to lows of 1.2305. Weakness seen in EUR also comes following the latest ECB survey of professional forecasters, who tweaked their inflation expectations slightly for 2013 and downwardly revised both the 2012 and 2013 GDP expectations for the Eurozone area to -0.3% from -0.2% and 0.6% from 1.0% respectively.

Asian Headlines

  • Chinese CPI (Jul) Y/Y 1.8% vs. Exp. 1.7% (Prev. 2.2%)
  • Chinese PPI (Jul) Y/Y -2.9% vs. Exp. -2.5% (Prev. -2.1%)
  • Chinese Industrial Production YTD (Jul) Y/Y 10.3% vs. Exp. 10.4% (Prev. 10.5%)
  • Chinese Industrial Production (Jul) Y/Y 9.2% vs. Exp. 9.7% (Prev. 9.5%)
  • Chinese Retail Sales YTD (Jul) Y/Y 14.2% vs. Exp. 14.3% (Prev. 14.4%)
  • Chinese Retail Sales (Jul) Y/Y 13.1% vs. Exp. 13.5% (Prev. 13.7%). (Newswires)

The weaker-than-expected data from the world's second-largest economy was met with the usual response of chatter that the figures may give the People's Bank of China additional scope and justification for stimulus measures. However, as the session progressed and nothing materialised from China, the speculation soon faded.

US Headlines

US home foreclosure dropped in July for the 22nd consecutive month as banks repossessed fewer properties, but foreclosure starts rose for the third straight month, according to RealtyTrac. (Newswires)

EU & UK Headlines

The ECB says survey of professional forecasters have revised their 2012 GDP forecast to -0.3% from their previous estimate of -0.2%, making similar adjustments in 2013 and 2014. These forecasts are alongside expectations, as ECB's Draghi says growth risks were  skewed to the downside in his press conference.

- 2012 Inflation forecast at 2.3% vs. prev. 2.3%
- 2013 Inflation forecast at 1.7% vs. prev. 1.8%
- 2014 Inflation forecast at 1.9%
- No reaction observed across the asset classes after the ECB make a minor tweak to their inflation forecasts and revise lower their growth estimates, as ECB have previously clarified that growth risks are skewed to the downside for the Eurozone.

The trend observed in the Spanish short-end over the past two days has not kept up its pace, as the yield curve still flattens, but at a much slower rate today, with the same trend being observed in the Italian counterpart. This comes despite comments from ECB's Noyer, reiterating that bond purchases are to be focused on the short-end of the yield curve. Meanwhile, the Italian and Spanish 10yr  government bond yields have drifted higher throughout the European morning to trade 5.84% and 6.87% respectively. With little newsflow, price action remains muted among very thin volumes, with just over 200K Bund contracts going through at the 1200BST/0600CDT point. (RANsquawk)

UK Visible Trade Balance (GBP) (Jun) M/M -10.119bln vs. Exp. -8.725bln (Prev. -8.363bln, Rev. -8.364bln) (Newswires)
- UK Trade Balance Non-EU (GBP) (Jun) M/M -5.176bln vs. Exp. -4100bln (Prev. -3865bln, Rev. -3.879)
- UK Total Trade Balance (GBP) (Jun) M/M -4.308bln vs. Exp. -3100bln (Prev. -2717bln, Rev. -2.719bln)
- Despite the number being a larger deficit than expected, the ONS said that the figure is likely distorted by the extra public holidays.


European equities trade lower heading into the North American open with underperformance noted in the DAX alongside the peripheral Spanish and Italian markets. Telecommunications lead the way lower Deutsche Telekom weigh on the sector following their disappointing earnings report in pre-market. On the other side of the Atlantic, US stock futures are moving alongside their European counterparts, indicating a lower open on Wall Street today.

In individual equity news, SMI-listed consumer goods giant Nestle are one of the strongest performers in Europe today, following a beat on revenue expectations of CHF 44.1bln vs. Exp. CHF 43.9bln and H1 organic growth of 6.6% vs. Exp. 6.3%. The company's shares have made steady progress this morning, printing multi-year highs at CHF 61.80 today. On today's session, the company trades higher by    around 3.5%.

To the downside, Commerzbank are suffering following their disappointing earnings release, wherein they forecast their H2 net income to come in below H1's results as loan-loss provisions increase in the second half of the year. Commerzbank added that their operating  profits remain under pressure and the bank is to subject their cost base to a critical review. The bank's shares trade lower by around 5%, weighing on the DAX index today.


EUR/USD traded sideways in the early hours of the European morning, with little newsflow or key data releases to prompt price action. As the pair drifted lower following the ECB's survey of professional forecasters downgrading their growth estimates some volatility was observed on the move below 1.2330, as stops were tripped and session lows printed at 1.2298 after the initial volatility. The pair was also weighed upon by the crosses, as JPY strength pressed USD/JPY and EUR/JPY as investors seek safe havens. Looking ahead in the session, the weekly US jobs data as well as US trade balance figures are the next flashpoint for activity. Going into the 10am (1500BST) NY cut, a touted option expiry at the 1.2310 level could prove influential.

GBP/USD is seen mirroring the moves in the EUR as the USD-index gains upward momentum, but EUR/GBP intra-week lows at 0.7863 helped provide some support for the pair. UK trade balance came and went with little price action, as ONS comments justify the greater-than-expected deficit. Looking ahead in the session, the USD index will become influential upon the jobs data release, and a touted option expiry at 1.5650 could take focus heading into the NY cut.


After opening higher in the European session, WTI crude futures extended their gains as disappointing Chinese data prompted chatter that the government has more room for stimulus. Some price action was observed alongside a pick-up in volumes as highs were printed at USD 93.91, but the choppy trade sold off the gains to settle just below USD 93.50 ahead of the NYMEX pit open. Gold and silver spot prices are lower, with gold sitting just above session lows at USD 1,610/oz at the North American crossover.