European Market Update: Risk appetite finds comfort following ECB 3-month LTRO operation (Trade the News)
Wednesday, June 30, 2010
European Market Update: Risk appetite finds comfort following ECB 3-month LTRO operation
***Economic Data*** - (RU) Russian Central Bank (CBR) Leaves Refi rate unchanged at 7.75%; In line with expectations - (FI) Finland Apr Final Trade Balance: â‚¬270M v â‚¬355M prior - (UK) Jun Nationwide House Prices M/M: 0.1% v 0.3%e; Y/Y: 8.7% v 9.0%e - (HU) Hungary Current Account: â‚¬344M v â‚¬212Me - (HU) Hungary Producer Prices M/M: 3.8% v 1.6% prior; Y/Y: 5.5% v 3.0%e - (TU) Turkey May Trade Balance (TRY): -4.8VB v -5.7Be - (TU) Turkey Q1 GDP Q/Q: 0.1% v 2.3% prior; Y/Y: 11.7% v 11.5%e; GDP WDA Y/Y: % v 4.0% prior - (SW) Sweden Apr Non-Manuel Wages Y/Y: 1.8% v 2.4% prior - (DE) Denmark Q1 Final GDP Q/Q: 0.5% v 0.6%e; Y/Y: -0.4% v -0.4%e - (IT) Italy Jun Business Confidence: 96.1 v 96.1e - (TH) Thailand May Current Account: $1.0B v $1.4Be; Overall Trade Balance: -$1.0 v $3.7B prior; Total Trade Balance: $2.3B v -$190M prior - (TH) Thailand May Manufacturing Production Y/Y: 17.2% v 23.9%e; Total Capacity Utilization: 67.3% v 62.9% prior - (TH) Thailand May Business Sentiment: 49.9 v 46.0 prior - (GE) Germany Jun Unemployment Change: -21K v -30K; Unemployment Rate: 7.7% v 7.7%e - (CZ) Czech May Money Supply Y/Y: % v 5.2% prior - (IT) Italy May PPI M/M: 0.5% v 0.4%e; Y/Y: 3.8% v 3.6%e - (NO) Norway May Retail Sales Volume M/M: -0.1% v 0.5%e; Y/Y: -3.0% v -2.5%e - (UK) Q1 Final Total Business Investment Q/Q: 7.8% v 6.0%e; Y/Y: -7.7% v -11.0%e - (HK) Hong Kong May M3 Money Supply Y/Y: 4.4% v 12.8% prior - (HK) Hong Kong May Gov't Monthly Budget (HKD): -9.3B v -0.2B prior - (GR) Greece Apr Retail Sales Y/Y: -0.4% v 14.9% prior - (SP) Spain Apr Current Account: -â‚¬5.2B v -â‚¬4.3B prior - (EU) Euro Zone Jun CPI Estimate: 1.4% v 1.5%e - (IC) Iceland May Final Trade Balance (ISK): 16.6B v 16.8B prior - (IT) Italy Jun Preliminary CPI (NIC incl Tobacco) M/M: 0.0% v 0.1%e; Y/Y: 1.3% v 1.4%e - (IT) Italy Jun Preliminary CPI EU Harmonized M/M: 0.0% v 0.2%e; Y/Y: 1.4% v 1.5%e - (SZ) Swiss Jun KOF Leading Indicator: 2.25 v 2.16e
Fixed Income: - (GE) Germany Sells â‚¬4.94B in Jun 2012 Schatz; avg yield 0.53% v 0.47% prior; Bid-to-cover: 1.6x v 2.4x prior - ECB allots â‚¬131.9B in 3-month LTRO at fixed 1.0%; rec'd 191 bids
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ** ***Top Press Headlines*** - ECB allots â‚¬131.9B in 3-month LTRO at fixed 1.0%; rec'd 191 bids - A FT Alphaville report commented on today's ECB 3-month LTRO operation; In terms of estimates for how much of the 1-yr LTRO will roll into the 3-month operation, the consensus was about â‚¬220B, or half of the 12-month LTRO liquidity; a bad level would have been more than â‚¬300B and good result was seen at less than â‚¬150B or less than â‚¬250B. - London Telegraph's Ambrose Evans-Prichard says global bond markets are warning of a sharp global economic slowdown and possibly a double dip recession; Notes the levels of Treasury yields are inconsistent with assumptions on Wall Street for 3% growth in H2. - (UK) There are concerns that the UK housing market may be slowing - London Telegraph; According to Ernst & Young Item Club, the housing market is not looking good as indicators for housing prices are showing mixed signs, which suggests that we may be at a turning point. - According to an Ipsos survey, about 51% of German voters would prefer to return to the deutschmark - press
Equities: European equities opened the session slightly higher following yesterday's losses and markets extended gains following the results of the ECBs 3-month LTRO operation. As of 5:45 Euro Stoxx 50 Index +0.9% at 2,578; DAX Index +0.4% at 5,974; CAC-40 Index +0.5% at 3,450 and FTSE 100 Index +0.7% at 4,950
Telecom - Telefonica confirms increasing its offer for PT's stake in Vivo by 11% to â‚¬7.2B from â‚¬6.5B.
Financials - NBG rallied after a press report, released during yesterday's US session, indicated that Qatar was discussing taking a 5-7% stake in NBG for about â‚¬250M. Bank denied it but the shares are still moving higher.
Healthcare - AstraZeneca [AZN.UK]: CRESTOR patent was upheld by US Court.
Consumer discretionary - UK takeove panel stated that URS Corporation breached part of the takeover code when it said that it was considering increasing its offer to 245p/shr. According to code, an offeror must not make a statement to the effect that it may improve its offer * without committing itself to doing so and specifying the improvement. URS has until July 2nd to comply - Barry Callebaut reported 9-month Rev CHF3.9B v CHF3.8Be; confirmed 3-yr financial targets - HMV reported FY10 pretax profit Â£74.2M v Â£63M y/y, Rev Â£2.0B v Â£2.0Be
Industrials - Aker Solutions was awarded four-year contract valued at apprx NOK1.1B p.a. - Kazakhmys CEO expected copper prices to decline due to China's economic slow down
Energy - There was market chatter circulating that Exxon was to bid Â£4.50 for each BP's share. Yesterday there was a JP Morgan research note in which the analyst imagined a scenario where Exxon would take over BP.
- Speakers: - BOE Posen: UK is in a tentatively recovery state but still faces risk of recession and deflation - Australia Treasurer Swan: No timeline on concluding mining tax discussions; Tax negotiations to continue for the rest of the week; Will not reveal details of talks on mining tax - ECB funding to Greek banks at â‚¬89.4B at end May versus â‚¬49.7B from end 2009 - Greece Central Bank - China PBoC issues 2010 Financial Stability Report: Reiterates that China faces 'complicated situation' -Bank of Spain reiterates view that interest rates are appropriate
- Currencies/Fixed Income: The Euro spiked higher to test 1.2275 following the lower take in the ECB three-month tender operation.
- Geo-Political: Unions in Spain entered into the last day of a three-day protest against wage cuts *** UK Treasury assessments noted that the impact from the emergency budget may result in an estimated loss of 1.3 million jobs over next five years. *** Ipsos Poll: approximately 51% of German voters would prefer to return to the deutschemark.
***Notes*** - China growth fears and nervousness over European bank funding ahead of Thursday's 12-month ECB LTRO expiry. - Risk appetite rises following ECB 3-month LTRO operation.
***Looking Ahead*** - (RU) Russia Q1 Current Account: $ v $30.0Be - (PO) Portugal May Industrial Production M/M: % v -4.4% prior; Y/Y: % v 1.1% prior - (PO) Portugal May Retail Sales M/M: % v 0.4% prior; Y/Y: % v 0.8% prior - 7:00 (US) MBA Mortgage Applications w/e Jun 25th: No est v -5.9% prior - 7:30 (IN) India Q1 Current Account: -$5.8Be v -$12.0B prior - 8:00 (US) Fed's Evans speaks - 8:00 (PD) Poland Central Bank Interest rate Decision: expected to maintain the Base Rate tat the current 3.50% level - 8:00 (SA) South Africa May Trade Balance (ZAR): -2.5Be v -1.9B prior - 8:00 (PD) Poland Q1 Current Account: -â‚¬1.2Be v -â‚¬2.7B prior - 8:15 (US) Jun ADP Employment Change: 60Ke v 55k prior - 8:30 (CA) Canada Apr Gross Domestic Product M/M: 0.2%e v 0.6% prior - 8:30 (SA) South Africa May Budget (ZAR): -14.6Be v -25.1B prior - 9:00 (US) Fed's Duke speaks - 9:00 (CL) Chile May Unemployment Rate: 8.8%e v 8.6% prior - 9:00 (CL) Chile May Industrial Production Y/Y: 4.7%e v -1.3% prior; Industrial Sales Y/Y: 3.1%e v -4.8% prior - 9:00 (CL) Chile May Copper Production: No est v 455K prior - 9:00 (BE) Belgium May Budget balance YTD: No est v -â‚¬8.4B - 9:30 (BR) Brazil May Nominal Budget Balance (BRL): -3.8Be v 5.3B prior; Primary Budget Balance: 7.0Be v 19.8B prior; Net Debt to GDP Ratio: No est v 41.6% prior - 9:45 (US) Jun Chicago Purchasing Manager: 59.0e v 59.7 prior - 10:00 (US) Jun NAPM-Milwaukee: No est v 65.0 prior - 10:30 (EU) ECB Trichet and Bank of Itlay's Draghi - 12:00 (CO) Colombia May Unemployment Rate: 12.2%e v 12.4% prior - 13:30 (US) Fed's Lockhart - 15:00 (MX) Mexico May Budget balance YTD: No est v 8.5B prior
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