Forex Blog - European market Update: G20 prepares for its summit this week; Talk globally, act nationally overtaking central bank policies; Risk aversion theme creeps back into market sentiment.
European market Update: G20 prepares for its summit this week;
Talk globally, act nationally overtaking central bank policies; Risk aversion
theme creeps back into market sentiment.
ECONOMIC DATA ***
- (SP) Spain Jan Total Housing permits M/M: -39.6% v 8.2% prior; Y/Y: -62.8% v
- (SP) Spain March Prelim CPI (EU Harmonized) Y/Y: -0.1% v 0.3%e
- (HU) Hungarian Feb Unemployment Rate: 9.1% v 8.7%e
- (HU) Hungarian Feb Producer Prices M/M: 3.2% v 3.0% prior; Y/Y: 8.0% v 6.5%e
- (NO) Norway Retail Sales M/M: -0.6% v 0.1%e; Y/Y: -5.8% v -0.4%e
- (UK) Feb Net Consumer Credit: -Â£0.2 v Â£0.4Be; Net Lending on Sec Dwellings:
Â£1.5B v Â£0.9Be
- (UK) Feb Mortgage Approvals: 38K v 34Ke
- (UK) Feb Final M4 Money Supply M/M: 1.4% v 1.4% prior, Y/Y: 18.7% v 18.8%
- (EU) Euro-Zone March Business Climate Indicator: -3.58 v -3.48e; Consumer
Confidence: -34 v -34e; Economic Confidence: 64.6 v 65.4e; Industrial
Confidence: -38 v -36e; Services Confidence: -25 v -24e
- (BE) Belgian March CPI M/M: -0.6% v 0.3% prior; Y/Y: 0.6% v 1.93% prior
- Equities: Barclays [BARC.UK], the bank confirmed that the UK FSA is applying
the stress test to company in efforts to determine resilience; capital position
expected to meet requirements. Barclays itself has confirmed that its capital
position and resources, after exposure to the stress, are expected to continue
to meet the FSA capital requirements. Reportedly, if/when the FSA formerly
confirms that pass, the bank will to not seek action regarding UK APS. || Tui
Travel [TT.UK] announced cooperation agreement with Air Berlin. Under the terms of the Transaction, TUIfly will
continue to operate 38 aircraft and will enter into long-term wet lease
contracts with Air Berlin and TUI Germany. 17 aircraft will be operated for Air Berlin. This represents the transfer of the 'city-pairs'
flying operation to Air Berlin,
along with full commercial responsibility and risk. The aircraft will be operated
under the Air Berlin brand. 21 aircraft will be operated for TUI Germany, which will provide dedicated capacity for our
charter business in Germany. This business will retain the TUIfly brand. TUI
Travel will acquire a 19.9% equity stake in Air Berlin for cash consideration of â‚¬64.8M, via a capital
increase in Air Berlin. Air Berlin will acquire a 19.9% equity stake in TUIfly for
â‚¬36.3M, also in cash. Upon completio, TUI Travel will receive the right to
nominate one non-executive director to the Board of Air Berlin. || Dana Petroleum [DNX.UK] reported its FY08 Net
at Â£96.2M, lower than the Â£106.9M expected and its pre-tax at Â£191.4M v Â£228.3M
expected. Dana put its proven/reliable resources at 194.1M BOE at the end of
FY08 and planned its FY09 CAPEX at Â£235M. Further, Dana plans a total of 17
exploration/new wells in FY09. At the end of FY08, the groups cash reserves
stand at Â£158.9M. || British Airways [BAY.UK], reportedly talks between BA and Iberia have made little progress toward finalization
-Times. Article cites insiders who note that stumbling blocks on over 12 issues
still remain to be settled. Merger talks have been ongoing between two carriers
since August 2007. Previously, both BA and Iberia have stated that they had sought a final decision
by end of March 2009. ||Rio Tinto [RIO.UK ], BHP has received shareholder
approval to pursue acquisitions; BHP may revist a deal with Rio Tinto - London
Telegraph. BHP has told Goldman Sachs to examine its strategic options after it
raised more than $6B selling bonds. Under agreement from prior acquisition
attempt, BHP has to wait until November of 2009 to re-approach Rio. ||Sistema [SSA.UK], it has acquired a controlling stake in Bashkir
Oil and Energy Group for $2.5B. The Co has signed an agreement with Agidel-Invest
LLC, Ural-Invest LLC, Inzer-Invest LLC and Yuryuzan-Invest LLC to acquire their
stakes in Bashkir Oil and Energy Group companies, including ANK Bashneft JSC,
Ufaneftechim JSC, Novoil JSC, Ufaorgsintez JSC, Ufimskiy NPZ JSC and
Bashkirnefteprodukt JSC. The deal is expected to be concluded for a total cash
consideration of $ 2.5B. The payment is being made in two tranches with $2.0B
paid upon the completion and $500N being paid on a deferred basis after 14
months. The completion of the deal is contingent upon the fulfillment of a
number of conditions. || Peugot [UG.FR] CEO Christian Streiff to resign. The
board voted to remove the executive from his post immediately. ||EADS [EAD.FR],
China President: Has had no order cancellations from
Chinese airliners so far. Stated that some delays in aircraft delivery to
Chinese airlines and some Chinese airlines have changed aircraft models, sees
delivery delays as "normal" under current conditions. Expects orders
for 3,000 aircraft from China in the next 20 yrs. On additionally topic: Update:
CEO notes that A400 will not be continued at any cost -Spiegel. Seeks to make
aircraft a success, will reproach German and French governments. Will not build
the plane if the cost to EAD's is unacceptable or not profitable. || Air Berlin [AB1.GE] reported its FY08 Net Loss at â‚¬75M, this
was lower than the expected loss â‚¬23.3Me, EBIT â‚¬14.2M v â‚¬18.6Me, and Rev â‚¬3.40B
v â‚¬3.37Be. The carrier sees some signs of demand growth following bookings rate
growth in first few months of 2009. Air Berlin expects 2009 bookings currently down slightly from
y/y figures. ||
Hypo Realestate [HRX.GE] confirms German government to acquire a stake in the
share capital of co. As a first step to recapitalize Hypo Real Estate Group,
SoFFin has committed itself to acquiring 20 million Hypo Real Estate shares to
be issued under authorized capital, at the minimum price prescribed by law of
â‚¬3.00 per share, to the exclusion of shareholders' pre-emptive rights. The
entire issue amount of â‚¬60M thus payable by SoFFin will be made available to
Hypo Real Estate Holding AG, not to the existing shareholders. SoFFin will thus
acquire a stake of approx. 8.7 per cent in Hypo Real Estate Holding AG. ||
Siemens [SIE.GE] has been awarded an â‚¬350M contract to build power and water
facility in Emirates, the order is for Abu Dhabi in combined cylce power plant. || [GM], German
Opel Labor Leader: Sees new CEO Henderson as more inclined towards greater OPEL
independence. Reminder: On March 29 -WSJ states CEO Rick Wagoner will resign
and to be replaced on an interim basis by COO Fritz Henderson. || Banco
Popolare Scarl [BP.IT] Banca Italease unit report a FY08 net loss of â‚¬1.1B v
â‚¬525.6M y/y. The unit's write-downs in 2008 totaled more than â‚¬850M. ||
Seadrill [SDRL.NO] Announces stake purchase in Petromena for approx NOK1.1B.
Purchase made through 80% stake in NOK2B bond offer being held through
Petromena. || UBS [UBSN.SZ] may cut 8,000 additional jobs and "writedown
billions" - Sonntag. Writedowns may include CHF2.0B in credit redemptions
because risk premiums have increased and around CHF1.0B in CLO portfolio. Job cuts
will be announced soon and
- Speakers: ECB's Bini Smaghi commented that focusing on short term steps to
revive economic growth would prove to be a mistake. He did add that it would be
difficult to make prediction for the year and that risk aversion would be high
for some period of time || World Bank report saw the Russian economy
contracting by 4.5% in 2009 with inflation inn a range of 11% to 13%. || Spain Econ
Min Solbes commented that Spain's banking system remained healthy || Irish PM
Cowen noted in a radio address the budget adjustment would take years. These
comments followed a Times article which reported that the emergency budget on
Apr 7th would be 'difficult' and that the PM Cowen signaled that government
revenue might drop to around â‚¬32B in 2009 around â‚¬2B lower than previously
predicted || Japanese LDP panel: Might issue construction and deficit covering
bonds for new stimulus package || Brazilian Pres Lula commented that the
economic and financial crisis was now threatening emerging markets. Restoring
credit and free trade among the key issues. || IMF's Belka commented that the
sharp downturn in the global trade flows should be temporary but cautioned that
some international trade flows might disappear forever if US savings rate increased
- In Currencies: Risk aversion back in play. Both the JPY and USD strengthened
to 2-week highs against their related pairs following an Obama administration
official who commented that bankruptcy might be the best option for GM and
- March 31st marks to end of the Japanese fiscal year. Overall dealers thinking
that USD/JPY is a 'long term' buy as economic conditions worsen and demand for
JPY should ebb in near future. The EUR/USD level of 1.3130 was the area the
pair was trading ahead of the Fed's quantitative easing some two-weeks ago and
being eyed as pivotal support. .
- Fixed income: Broad based risk aversion has prompted strength in Government bonds
in Europe this morning., Long bond futures are leading the
way up, higher by almost a full point ahead of Fed purchases later in the New York afternoon. Euro-zone peripheral bonds are weaker
against the bund this morning . Italy sold just under â‚¬10B in conventional
BTP's and floating rate notes with weak results pushing the yield on the
Italian 10y as high as 140bps over Bunds. Greece announced it would tap its 5.5% 2014 bonds later
today, with pricing indicated around 230bps over mid-swap and the anticipated
supply pushed the yield on the Greek 10y to 270bps over Bunds, its widest level
in a month. In other supply news, Germany sold just over â‚¬2.8B in a 12 month Bubill, and Slovakia sold â‚¬195M in 2y zero coupon bonds.
- In Energy: SeniorGulf OPEC Delegate commented that Gulf sees oil prices at $50/barrel are
good enough for now. He added that it was too early to tell if OPEC needed to
cut output during May meeting. Oil market fundamentals should improve in H2 of
2009 || South
ESKOM might reduce its tariff increase request. Business day reported that
National Energy Regulator for electricity tariffs to be raised by 34% for the
year ahead compared to the 88% it was considering "a few weeks ago,"
|| Sinopec [SNP] Chairman: Reviewing overseas acquisition targets; and was not
expecting oil prices to remain at 'very low levels' for a long time. The
company was seeking approval form stake holders to directly approve overseas
deals and reviewing acquisition targets in Africa, South America
- Credit Crisis: Spain mounted its first major bank rescue in 16 years as the
state took over Caja Castilla-La Mancha after efforts to arrange its purchase
by a rival failed.
*** NOTES ***
- Talk globally, act nationally. Monetary Authority of Singapore reportedly
seeks to weaken its currency by around 4% to aid exporters. - G20 prepare to
meet in London later this week. The City of London prepares for a long week of hooliganism leading up
to the event. Protectionism will be a major theme.
- Several change leadership at the top of auto makers. as GM and Peugeot make
- US Govt task force rejects viability plans for GM and Chrysler. Bankruptcy
remains an option.
- Global equities lower on the renewed bout of risk aversion. USD and JPY
firmer as a result..
- 10:30 (EU) ECB's Trichet and Wellink speak in European Parliament
- 11:00 (GE) ECB's Weber speaks in Frankfurt
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