logo-loader

EUROPEAN OPENING NEWS INCLUDING: Japanese PM Abe wants to use extra revenue, not new debt to fund stimulus spending

Last updated: 09:51 24 Oct 2013 BST, First published: 08:51 24 Oct 2013 BST

no_picture_pai

Asia

Chinese HSBC Flash Manufacturing PMI (Oct) M/M 50.9 vs. Exp. 50.4 (Prev. 50.2); New orders at 7 month high.

China's central government will not introduce any bailout package or have large-scale stimulus policy as it did in 2008, according State Information Centre economist Fan Jianping. (China Daily)

China's Ministry of Industry and Information Technology said that China still faces problem of insufficient demand and overcapacity. The MIIT added that downward pressure on China's industries is easing, that China lacks effective overseas demand and that it is to proactively expand effective domestic demand. (Newswires)

Japanese PM Abe said he wants to use extra revenue, not new debt to fund stimulus spending. (Newswires)

10yr JGBs advanced in early trade (+3 ticks at 144.94) which saw long-end yields touch semi-annual lows. However, 10yr JGBs were then pressured following return from the Japanese break to pare the majority of gains. There was also the release of the weekly bonds and stocks flows data, which showed Japan upped their buying of foreign bonds. The Nikkei 225 traded lower overnight (-0.4%) as sentiment was weighed amid worries about the liquidity of the Chinese banking system. Last price taken at 0625BST. (RANsquawk)

Europe

Fitch affirmed Portugal at 'BB+'; outlook negative. Fitch said sees Portugal current account surplus 0.5% of GDP in 2013. Sees economic growth of 0.2% in 2014. Sees Portugal general government gross debt peak 2014 - 2015 at 130% GDP vs. gross debt peak 124% of GDP by 2014 & 116% of GDP 2020.

EU's Barroso commented that Greece still has to deliver on some reforms and added that the European Commission doesn't favour a 2nd Greek writedown. (Bild)

Barclays month-end extension: Euro Agg +0.08y

UK

Barclays month-end extension: Sterling Agg +0.02y

FX

In the FX markets, AUD climbed higher after a better than expected Chinese HSBC Flash manufacturing PMI. USD continued its recent trend of weakening to the benefit of the European majors. Elsewhere, NZD/USD advanced at early trade from a narrower than expected New Zealand trade deficit of 199mln vs. Exp. 680mln, but has since pared much of the earlier strength. (RANsquawk)

RBA deputy governor Lowe said AUD may realign as mining boom wanes and the global economy recovers. Lowe added that weaker AUD since April is a welcome development, adding that the impact of low interest rates evident and has further to run. RBA's Lowe further stated that inflation is only a touch higher, overall still looks pretty benign and commented that high exchange rate is the biggest structural headwind to the economy. (Newswires)

Commodities

WTI crude futures gained overnight (up USD 0.59 at USD 97.45) and were further supported following the release of Chinese HSBC Flash Manufacturing PMI which beat expectations as it pointed to pick up in the World’s 2nd largest economy, with new orders printing a 7-month high. (RANsquawk)

US

US Treasuries finished yesterday's session with gains, after trading higher overnight following reports that China's largest banks tripled the amount of bad loans written off in the first half of 2013. At the open, T-notes did come under selling pressure led by CTA selling as the 10y yield saw an initial break below 2.50% prompting profit taking seen mostly in the belly of the curve. Nevertheless, T-notes reversed to surge to a fresh new 4 month high bolstered by several large corporate offerings and weakness in equities as the 10y yield fell to 2.47%, the lowest level in over 3 months. At the pit close, T-notes settled 127.21, 6 ticks. T-notes pulled back marginally overnight, falling 1+ ticks to trade at 127.19+ as of 0620BST. (RANsquawk)

Barclays month-end extension: Treasury +0.06y

You can now follow real-time news headlines on the move with the new RANsquawk app available to download for free at ransquawk.com/mobile_app for Apple iPhone, Blackberry and Android users. Please note the headlines can be viewed on the app between 0630BST/0030CST to 2200BST/1600CST Monday to Friday but does not include Asian-Pacific news.

FTSE starts flat, Unilever jumps on ice cream overhaul - Market Report

The FTSE 100 has opened flat, with the largest gain coming from multinational consumer goods heavyweight Unilever. The company lifted more than 5% in early trading after launching plans to sack 7,500 workers as part of an overhaul of its ice cream business. Over in the pharmaceutical...

1 hour, 21 minutes ago