TradeTheNews.com EU Market Update: European shares hit a five-month high
Friday, August 17, 2012
TradeTheNews.com EU Market Update: European shares hit a five-month high
***Economic Data*** - (RU) Russia Narrow Money Supply w/e Aug 13th (RUB): 7.17T v 7.12T prior - (DE) Germany July Producer Prices M/M: 0.0% v 0.3%e; Y/Y: 0.9% v 1.2%e - (SE) Sweden July PES Unemployment Rate: 4.6% v 4.5%e - (SE) Sweden Q2 Industry Capacity: 88.2 v 88.2% prior - (EU) Euro Zone Jun Current Account nsa: +€15.7B v -€3.2B prior; Current Account Seasonally Adj: €12.7B v €10.3B prior - (TW) Taiwan Q2 Final GDP: -0.2% v -0.2%e - (GR) Greece June Central Govt Debt at €303.5B - (PL) Central/Eastern European Aug ZEW Indicator: -9.3 v -7.6 prior - (EU) Euro Zone Jun Trade Balance seasonally adj: €10.5B v €5.0Be; Trade Balance: €14.9B v €9.5Be
Fixed Income: - (IN) India sold total INR150B vs. INR150B indicated in 2020, 2026, 2032 and 241 bonds - (ZA) South Africa sold total ZAR800M in I/L 2025, 2038 and 2050 Bonds
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM *** ***Notes/Observations*** -German Chancellor Merkel backs ECB's Draghi's condition to aid Europe - Finland's Foreign Min Tuomioja: Need to be prepared for the possibility of a euro break up but comments refuted by its European Affairs commissioner - Markets continue to expect that the PBoC will announce a rate cut to support the slowing economy
***Equities*** </ >FTSE 100 +0.20% at 5847, DAX +0.25% at 7013, CAC-40 +0.24% at 3488, IBEX-35 +2.1% at 7568, FTSE MIB +1.7% at 15,185, S&P 500 Futures flat 1413.25
- Although trading conditions have remained thin, European equity indices are trading higher led by the Spanish IBEX-35 and Italian FTSE-MIB, amid the sharp declines being seen in 2-year peripheral government bond yields, as Germany's Chancellor Merkel appeared to express support for ECB President Draghi's plans to support the euro zone. Overall, the comments made by Merkel on yesterday's session, were her first direct comments since mid July. European banks are trading broadly higher, and outperformers include Intesa [ISP.IT], Unicredit [UCG.IT] and Deutsche Bank [DBK.DE]. Additionally, resource related firms are mostly higher, despite the declines being seen for energy prices. - UK-listed platinum miner Lonmin [LMI.UK] is lower by over 4%, following reports that more than 20 people were killed during a clash between police officials and workers at the Marikana mine in South Africa. Melrose Resources [MRS.U] has gained over 3%, after disclosing a merger agreement with Petroceltic International [PCI.UK]. In Italy, Mediaset [MS.IT] is higher by over 2% on possible short covering and bid speculation. Lufthansa's [LHA.DE] shares are trading lower, amid concerns that the BerlinAirport project could face further delays. Shares of Bankia [BKIA.ES] are higher by over 6%, as a Spanish government official reiterated that the firm will soon receive some of its €19B in aid funds. Swiss Life [SLNH.CH] has gained over 3% after reporting better than expected H1 net profits. Shares of Air France [AF.FR] have gained over 4%, as more than 65% of its pilots agreed to support the firm's restructuring plan.
Speakers: </ >- Finland European Affairs Min Stubbs commented that that Finland remained 100% committed to Europe and that the foreign minister's speculation of Euro break-up did not reflect government position. Budget discipline was critical for the Euro future and working on making sure countries were sticking to commitments. He noted that it was not helpful to speculate over Euro break up and that in the long run Europe would resolve its problems - German ruling CDU party parliamentary group chairman Fuchs reiterated the view that Greece would not receive additional aid if prior bailout agreement were not kept. It was up to Greece to decide on its EMU membership and he doubted that Germany would back a third Greek package. ECB could not keep helping Greece if the Troika verdict was negative and stressed that Germany faced growing risks from ECB bond buying - Greece PM Samaras was not expected to request program extension to its bailout program at next week meeting with Chancellor Merkel and would wait until Oct EU summit after Troika report was released - Spain June Bank Bad Loan Ratio: 9.4% v +9.0% prior; deposits -6.6% y/y (-5.8% prior) - Poland Fin Min Rostowski stated that the pace of reduction in budget deficit was slower than planned but was determined to reduce 2012 deficit to GDP below 3% </ >- India PM Economic Panel cut its FY13 GDP forecast to 6.7% from prior view between 7.5-8.0% range and raised FY13 inflation forecast to 6.5-7.0% range from prior 5.0-6.0%
Currencies: - While European shares hit a five-month high during the session the EUR/USD remained locked within its August range with the session devoid of major scheduled events. The risk in risk appetite was putting some mild pressure on both the USD and JPY currencies against the European pairs. The EUR/USD stayed above the 1.2350 area aid by Thursday's comments from German Chancellor Merkel after she voiced support for ECB Draghi's crisis-fighting strategy. Finland European Affairs Min Stubb clarified that Finland remained 100% committed to Europe - The USD/JPY pair continued it technical advance as the pair moved above the 79.40 level.
Political/ In the Papers: - Upward revision to British June retail sales has led to expectations that GDP will be revised higher for the second quarter. Some economists expect GDP to be revised to -0.5% from -0.7%. The second GDP estimate is due to be released next week. Note that construction has been one of the factors which have weighed on GDP. - Ambrose Evans-Pritchard reported that Finland's Foreign Minister Tuomioja said that his country needed to be prepared for the possibility of a euro break up, though such an event is not desired. The official said Finland, like everybody else, has some sort of operational plan for any eventuality. According to Tuomioja there is a consensus that a euro zone break-up is more costly than managing the crisis. The minister suggested that a euro break-up did not mean the end of the EU, but that the EU could function better with a breakup. - The Office for National Statistics (ONS) reported 2011 net valued increased £224 billion to £6.8 trillion. This equates to a value of approximately £110,000 per capita.
***Looking Ahead*** ***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent) - (US) Fed's Kocherlakota - 06:10 (UK) DMO to sell combined £3.0B in 1-month, 3-month and 6-month Bills - 07:30 (BR) Brazil Jun Economic Activity Index M/M: 0.6%e v 0.0% prior; Y/Y: 0.9%e v 1.1% prior - 08:00 (PT) Bank of Portugal Monthly Economic Indicators Report - 08:00 (PL) Poland July Employment M/M: -0.1%e v 0.0% prior; Y/Y: 0.0%e v 0.1% prior - 08:00 (PL) Poland July Avg Gross Wages M/M: -0.1%e v +3.8% prior; Y/Y: 4.0%e v 4.3% prior - 08:30 (CA) Canada July Consumer Price Index M/M: +0.2%e v -0.4% prior; Y/Y: 1.5%e v 1.5% prior; Consumer Price Index: 121.7e v 121.6 prior - 08:30 (CA) Canada July Core CPI M/M: +0.2%e v -0.4% prior; Y/Y: 2.0%e v 2.0% prior - 09:55 (US) Aug Preliminary University of Michigan Confidence: 72.3e v 72.3 prior final reading - 10:00 (US) American Petroleum Institute (API) Monthly Report - 10:00 (US) July Leading Indicators: +0.2%e v -0.3% prior - 15:00 (AR) Argentina Jun Economic Activity Index M/M: No est v 0.2% prior; Y/Y: -0.5%e v -0.5% prior
Friday, August 17, 2012
TradeTheNews.com US Market Update: Markets consolidate recent moves in sleepy summer trade
*Economic Data*** - (BR) Brazil Jun Economic Activity Index M/M: 0.8% v 0.6%e; Y/Y: 1.0% v 1.0%e - (IN) India Forex Reserves w/e Aug 10th: $289.2B v $289.2B prior - 08:00 (PT) Bank of Portugal Monthly Economic Indicators Report - (PL) Poland July Employment M/M: 0.0% v -0.1%e; Y/Y: % v 0.0%e - (PL) Poland July Avg Gross Wages M/M: -1.5% v -0.1%e; Y/Y: 2.4% v 4.0%e - (CA) Canada July Consumer Price Index M/M: -0.1% v +0.2%e; Y/Y: 1.3% v 1.5%e; Consumer Price Index: v 121.7e - (CA) Canada July Core CPI M/M: -0.1% v +0.2%e; Y/Y: 1.7% v 2.0%e - (US) Aug Preliminary University of Michigan Confidence: 73.6e v 72.e - (US) July Leading Indicators: 0.4% v 0.2%e
- Stock markets in both Europe and the US are consolidating the recent run to multi month highs, but trading remains subdued. Volumes are light and overall enthusiasm continues to be capped by the slow summer environment. The US Dollar index has hit session highs following the better than expected Michigan consumer sentiment and leading indicators data. Treasury prices are posting marginal gains which are keeping yields near the highest levels since early May. Crude prices are also little changed with the Sep WTI contract holding around $95.50 which happens to be the 200-day EMA. The VIX is holding near March and August lows sitting just above 14.
- Earnings season continues to wind down with a handful of retailers and tech companies releasing results last night and today. Ann Taylor, Gap Inc, and Footlocker have all seen their stocks rise following earnings and guidance. ANN has surged more than 15% while Aeropostale shares have slid 10% after offering disappointing Q3 guidance following and inline Q2. Brocade shares are posting marginal gains handily beating top line estimates but guiding Q4 towards consensus.
- Apple Inc. has hit a fresh all time high above $644 as enthusiasm builds ahead of next months expected iPhone 5 launch.
- The EUR/USD remained locked in a fairly tight range after German coalition officials debated the course for Europe needed to preserve unity. Reports circulated that Chancellor Merkel was considering easing Greece bailout conditions with other lawmakers noting that Greece could not receive additional aid if prior bailout agreements were not kept. USD/CAD his holding onto modest gains above 0.9891 after Canadian CPI data came in cooler than expected.
Fixed Income - (UK) DMO sold £3.0B in 1-month, 3-month and 6-month Bills
**Looking Ahead*** ***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent) - (US) Fed's Kocherlakota - 15:00 (AR) Argentina Jun Economic Activity Index M/M: No est v 0.2% prior; Y/Y: -0.5%e v -0.5% prior
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