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US OPENING NEWS INCLUDING: European equities are trading in negative territory this morning

January 16 2013, 1:40pm
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Goldman Sachs and JPMorgan reported pre-market, with GS beating due to investment revenue

ECB's Nowotny said the Euro exchange rate is not a matter of concern after Juncker's comment yesterday that the exchange rate is dangerously high

RANsquawk European Morning Briefing Video: http://youtu.be/w50lQzVXEss

Market Re-Cap

European equities are trading in negative territory across the board, following on from the overnight Asian session where the Nikkei 225 closed down approximately 2.5%. This followed comments from LDP secretary general who said a weaker JPY may trouble some industries and companies. In terms of sectors, Financials is the worst performing in Europe, down almost 1% which can be partly attributed to comments from the Greek finance minister who said a further debt restructuring will be possible in case of a primary surplus. JPMorgan released their earnings today with a beat on the headline EPS at USD 1.39 vs. Exp. USD 1.22 although there were several benefits that boosted the headline which has led to JPMorgan shares trading down in pre-market trade.

Data releases have been light this morning with Eurozone CPI printing in-line with expectations year on year. In Germany, the economy ministry cut their 2013 growth forecast to 0.4% from 1.0% however this was expected following source comments earlier in the week. Elsewhere, the German Bund auction resulted in the highest yield since October 24th and the strongest bid to cover of any new 10y auctions since May 2009. Spreads in Europe have tightened following the Bund auction and ahead of tomorrow’s Spanish and French issuance.

Looking ahead, US CPI data is due to be released later on today at 1330GMT as well as weekly DoE inventories at 1530GMT.

Asian Headlines

Overnight the LDP secretary general said a weaker JPY may trouble some industries and companies. The Nikkei 225 closed the session down over 2.5% following these comments.

In China, Chinese Actual FDI for December year on year printed at -4.5% vs. Exp. -2.0%.

EU & UK Headlines

ECB's Nowotny has been on the wires this morning, commenting that panic in markets over EUR is over and Euro exchange rate not a matter of major concern. These comments come after EU's Juncker's comment yesterday after he said the EUR exchange rate is dangerously high which led to selling pressure.

Today's German Bund auction resulted in a yield of 1.56%, which was the highest yield from a German Bund auction since October 25th. The auction also saw the strongest b/c of any new 10-year auctions since May 2009.

The German economy ministry cut their growth forecast for Germany from 1% to 0.4% as expected following earlier source comments during the week.

Eurozone CPI printed in-line with expectations at 2.2% vs. Exp. 2.2%.

US Headlines

Yesterday, Fed's Rosengren said an unemployment drop to 7.25% would constitute substantial improvement in labour markets that could halt asset purchases. Rosengren continued saying sees Fed capacity to enlarge purchase program; sees scope to enlarge QE if there is no progress in the jobless rate.

Equities

European equities are trading in negative territory this morning, weighed upon by the financials sector (-1.25%) after earlier remarks from the Greek finance minister Stournaras, saying that a further debt restructuring will become possible in case of a primary surplus however he did say that this will only be known at the end of 2013.

Goldman Sachs beat street expectations on their headline EPS for Q4 at USD 5.60 vs. Exp. USD 3.66, with shares trading up 2.1% in pre-market trade. Elsewhere, JPMorgan also beat on their Q4 EPS at USD 1.39 vs. Exp. USD 1.22 however there were several benefits that boosted the headline.

FX

EUR/USD moved sharply lower yesterday following Juncker's comment describing the EUR as dangerously high. EUR/USD spiked higher in Europe following ECB's Nowotny comment saying the EUR is not a matter of concern.

GBP/USD currently breaks below the psychological level of 1.6000 to trade at a one and a half month low. Earlier market talk of Middle Eastern demand in the pair sent GBP/USD higher after touching lows of 1.6003 after being influenced by negative comments from a UK clearer.

USD/JPY trades at 88.05 (-75 pips), close to a touted option expiry at 88.25 for today's 1000am NY cut. Overnight comments from LDP general secretary Ishiba said a weaker JPY may be troublesome for some industries.

Commodities

WTI crude futures trade around session highs, aided by a marginally weaker USD, paring some of the losses seen yesterday. As a reminder, today's DoE inventories are due to be released at 1530GMT/0930CST.

Earlier today, OPEC announced they cut production to 14-month low amid economic uncertainty with output falling 464,000BPD in December to 30.4mn BPD this brings supply nearer to the OPEC quota.

In geopolitical news, the UK government confirmed a terrorist attack on a BP gas field in Algeria.

 

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