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EUROPEAN OPENING NEWS INCLUDING: China and India call for action

Published: 08:13 10 Nov 2011 GMT

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ASIA

JGBs rose overnight supported by worries over the Eurozone’s debt crisis and following strong demand at a 40-year bond auction. JGBs were trading at 142.90 (+0.16) at 0551GMT. (RTRS)

Japanese manufacturing sentiment slid in November on a raft of negative factors such as the JPY’s rise to record highs, softening demand from emerging markets, and the impact of floods in Thailand, according to the Reuters Tankan survey, which is highly correlated with the BoJ’s Tankan. (RTRS)

Japanese Consumer Confidence (Oct) M/M 38.6 vs. Exp. 39.0 (Prev. 38.6) (RTRS)

According to Information Daily, China may cut reserve requirement ratio this month. (Information Daily)

Chinese Trade Balance (USD) (Oct) Y/Y 17.03bln vs. Exp. 25.75bln (Prev. 14.51bln)

Chinese Exports (Oct) M/M 15.9% vs. Exp. 16.1% (Prev. 17.1%)

Chinese Imports (Oct) M/M 28.7% vs. Exp. 22.2% (Prev. 20.9%) (RTRS)

GLOBAL

China and India call for action. (FT)

China and India have urged the developed world to act more responsibly in managing debt to restore global financial stability, according to a rate joint statement published by Beijing’s finance ministry. 

US

T-notes outperformed yesterday largely on risk-aversion, with concerns over the strength of the euro-zone to deal with Italy's escalating debt situation which saw their yields reach Euro-era records. In terms of the 10y note auctions, it was reasonable if unspectacular, with a lower yield and reasonable indirect bidding, however the impact of this was reduced due to the lower bid/cover results. At the pit close, t-notes settled at 130.27, up 25+ ticks. The Dow Jones Industrial Average lost almost 400 points in yesterday's session, down 3.20%, the S&P500 finished down 3.67%, and Nasdaq 100 was down 3.58%. At 0644GMT, T-Notes were trading flat at 130.26.

According to Moody’s, the US economy could be hurt by Lehman-like financial contagion if the Eurozone crisis engulfs major European countries such as Italy. Moody’s expects the US economy to grow between 1.5%-2.5% in 2012, and has warned that any significant departure from that growth range could have implications for the US Aaa rating. However, it said that US banks are stronger now than at the time of Lehman collapse. (RTRS)

According to RealtyTrac, US foreclosure filings rose 7% in October to a seven month high as lenders started to speed up action against delinquent borrowers after a yearlong review into documentation. (Sources)

Jefferson County, Alabama, declared the largest municipal bankruptcy in the US history. (Sources)

Yesterday’s USD 24bln 10y note auction drew a yield of 2.030% vs. exp. 2.006%, the b/c was 2.64 vs. avg. 3.10 (Prev. 2.86), indirects were 41.6% vs. avg. 42.35% (prev. 35.24%) and the allotted at high was 62.35%. (RTRS)

EUROPE

German Chancellor Merkel's CDU Party wants to make it possible for EU members to exit the Euro-area according to unnamed sources. (Handelsblatt) A framework is being drafted within the party for a Euro-zone member who doesn't want to or isn't able to comply with the common currency rules to leave the Euro-region without losing membership in the EU. 

France’s Sarkozy said that two-speed EU is the only model for the future, senior officials also discussed changing the euro-zone make-up on an intellectual level, although no technical discussions were held and no such project is in the works. (RTRS) The story regarding a smaller Euro-zone was later denied by a French official.

EU's Barroso said that Europe can go no further with the current treaty and a deepening of the Euro-zone’s integration, including a treaty change, should preserve EU coherence. (Sources) Barroso also said that’s Germany's GDP could contract by 3% and Germany could lose 1mln jobs if the Eurozone shrinks to a few core members.         

Monti tipped to become finance minister. (FT)

Mario Monti has been appointed senator for life by Italy’s president in a surprise move that indicates he could play a senior role in a caretaker administration of technocrats to replace Silvio Berlusconi’s government, possibly next week. In other news, the Italian Senate is set to vote as early as today on a package of measures including asset sales and an increase in the retirement age. 

A Greek political leaders meeting is due to occur today at 0800 GMT according to a Presidency official. (Sources) 

Former ECB vice president Papademos set his terms to accept the post as the new Greek PM yesterday, terms would include both political parties signing a new EU bailout deal and the extension of the interim government beyond the Feb 19 deadline if needed. (RTRS) In latest news, according to government sources, Greek PM Papandreou and opposition leader Samaras talked about Papademos candidacy for premiership, and Papandreou told Samaras he accepted the terms set by Papademos, and asked Samaras to discuss terms with Papademos.

FX

According to the RBNZ, New Zealand’s economy is facing more threats from global market turmoil, with funding costs set to rise at a time when the government has little room to drive domestic demand because of a growing debt burden. (RTRS)

According to RBA’s assistant governor Lowe, Australia’s interest rates are “broadly neutral” and monetary policy isn’t driving the economy’s structural change. (Sources)

Australian Employment Change (Oct) M/M 10.1K vs. Exp. 10.0K (Prev. 20.4K, Rev. to 22.5K)

Australian Unemployment Rate (Oct) M/M 5.2% vs. Exp. 5.3% (Prev. 5.2%, Rev. to 5.3%)

Australian Consumer Inflation Expectation (Nov) M/M 2.5% vs. Prev. 3.1% (RTRS)

COMMODITIES

WTI crude futures remained steady overnight as hopes of resilient oil demand from China partly offset growing concerns over Europe’s debt crisis. WTI crude futures were trading at USD 95.80, up USD 0.06, at 0633GMT. (RTRS)

 

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