With a lack of any US macro data today US equity markets have once again been driven lower by concerns emanating from Europe. The market continues to churn up rumours on Greece’s membership within the Euro as sources suggest the EU/IMF believe the firewall will need to be increased if Greece does leave the Euro Zone – a scenario they are preparing for. The Greek President has also said that German Chancellor Merkel suggested a Euro referendum at the upcoming elections, a quote that Germany has since denied. Still more bad news for Spain this evening as LCH Clearnet raised margin requirements on some Spanish debt and reports that three Spanish regions have revealed larger budget deficits for 2011.
24 Hour Market News
Europe Market News – Stocks end the week with varied losses
May 18, 2012
A relatively low key afternoon has seen European equities unable to hold onto the gains they made shortly after lunch to close with modest losses for both the CAC and DAX and slightly more substantial losses for the FTSE. Data was been very light but downward revisions for US March Factory and Durable Goods Orders weakened sentiment along with a report in the Irish Times from Deutsche Bank suggesting that Ireland may require another bailout. Bunds however have been unable to post gains at the end of a very strong week for safe-haven government bonds touching session lows following recent comments from the EU’s Ollie Rehn. Canadian inflation data, which came in hotter than expected, sparked a move lower in the Loonie as the US Dollar has weakened across the board possibly as investors take profits going into the weekend.
Europe Market News – Midday Report – Equities pare losses during the final hour of the morning
May 18, 2012
We’ve seen sentiment improve as the session has gone on this morning after equities came under significant selling pressure from the off following the overnight barrage of rating agency downgrades but managed to pare losses as Greek polls showed growing support for the pro-bailout parties and the EU Commission denied reports that it, along with the ECB, is making plans for a Greek Euro exit. The most startling turnaround has been in the Spanish IBEX which managed to shed losses of almost 2.5% to turn positive as a Spanish paper reported that the country’s lenders are putting pressure on the market regulator to reinstate a short selling ban. Bunds and Gilts post smaller gains than they had, the Gilt in particular boosted by dovish commentary by the Bank of England’s Adam Posen while in Europe’s peripheries Spanish and Italian bond yields are in decline. In the currency market the US Dollar continues its strong week posting modest gains on a trade weighted basis while Sterling has held up well in spite of Posen’s remarks.
Asia Market News – Global risk aversion hits markets ahead of the weekend
May 18, 2012
Markets remained risk averse in Asia on the fears about the weakening Chinese economy and Eurozone peripherals, with Moody’s adding to the concerns by downgrading 16 Spanish banks after the bell in the US. Regional stocks continue to fall into the close adding to already steep losses, the Nikkei, Hang Seng and Kospi all around 3% lower, while a flight to safety drives demand for Aussie and Japanese bonds with the 10-year JGB yield hovering around a 9-year low. News from the Chinese government affiliated think tank the State Information Centre is also weighing on market sentiment as it reports that the pace of China’s GDP growth will slow to 7.5% y/y in the second quarter of 2012 from +8.1% y/y in the first quarter, pushing the AUD/USD below the 0.98 level and to fresh multi month lows. Staying with China, property prices in the 70 major cities fell 1.2% y/y in April, marking the second year-on-year since the government imposed its strict curbs on property. Elsewhere Japan’s Fin Min Azumi was back on the wires warning that FX moves will be closely watched and appropriate action will be taken, after the overnight surge in the JPY.
US Market News – European concerns continue to drive the market lower
May 17, 2012
US equity markets have continued their decline lower this evening with very little positives to persuade them otherwise. Stocks were on the back following the weak Philadelphia Fed reading early in the session and rumours of an imminent downgrade for Spanish banks before the closing bell. The downgrade for Spanish banks has yet to come to fruition although Fitch has cut Greece this evening and warned that the rest of the Euro Zone is at risk if they feel an exit for Greece becomes a likely scenario after the upcoming elections. News has predominantly centred on Europe although we did hear from the Fed’s Bullard once again who said that the recent data has been mixed in the US and is not significant enough for an alteration of forecasts and the 10 Year TIPS auction saw a record low negative yield and also the highest bid to cover since April 2010.
Europe Market News – Stocks close in the red following weak US data
May 17, 2012
European stock markets end the day with losses as disappointing US data weighed on sentiment during the afternoon session boosting safe-haven fixed income markets in the US, Germany and the UK. Both initial jobless claims and continuing claims were marginally higher than expected while the Philly Fed index came in in negative territory sparking a move lower in the US Dollar while Gold, which was already on an upward trajectory, strengthened even further. There have been various rumours throughout the afternoon including the Fed extending Operation Twist and that Germany, France and the Netherlands might the vote for ESM ratification however none of which have been confirmed. Bond yields in Europe’s periphery are slightly higher after it emerged early in the afternoon that Moody’s is set to downgrade a number of Spanish banks.
Europe Market News – Midday Report – Stocks down once more as Eurozone concerns fail to ease
May 17, 2012
With it being Ascension Day in much of mainland Europe, it has been a relatively quiet session with much of the focus on news from overnight as stocks post increasingly large losses and core European fixed income markets sit comfortably in the black. Equities began with gains aided by an upside surprise to Japanese GDP and the FOMC minutes last night revealing that more Fed members are open to further QE but progress was tempered by reports that JP Morgan’s trading loss has risen by 50%. Peripheral European government bond yields are rising having been slightly lower earlier today with the Spanish bond auction, the morning’s main event, failing to have much of an impact as yields were higher but so was demand. The Euro trades with a 1.26 handle versus the Greenback having pared its earlier gains as risk sentiment has gone into decline in the last hour with stocks probing fresh session lows despite rumours of coordinated G8 intervention.
Asia Market News – Asian equities rebound after yesterdays steep losses
May 17, 2012
Markets are a bit more stable in Asia today with a rebound in equities taking place after yesterday’s hammering. Regional stocks move into the close mostly higher although the uncertainty over Greece causing the rebound to lack conviction, with more public comments from IMF Chief Lagarde weighing on sentiment as she repeated on Dutch TV that the fund has to be prepared for a Greek exit. Despite this equities found some support from stronger than expected GDP and industrial production data from Japan, with the Nikkei up around 0.8%. Japanese officials also hogged the newswires as Econ Min Furukawa said that the economy is continuing its uptrend, while PM Noda said that it is very important for the government and the BOJ to closely communicate and work together on beating deflation and the strong yen. The yen ignored the comments as well as the economic data, sitting pretty much unchanged against the USD at around 80.30 for the majority of the session, while EUR/USD rose to a high of 1.2749. Elsewhere risk trades dipped slightly after a report from the NYT noted that the trading losses suffered by JP Morgan have increased and could be $1bln greater than previously reported.
US Market News – More Fed officials see further easing as warranted if conditions deteriorate
May 16, 2012
US equity markets were trading higher early in the session today after some solid macro data in the form of housing start and industrial production; the gains failed to last however as concerns over Europe eventually pulled stocks into the red. It was reported ECB has stopped monetary operations to some Greek banks until the recapitalisation is carried out, although we learned soon after that they have been shifted onto the ELA temporarily until the funding is completed, equity markets were spooked by the move. Also this evening we saw the release of the FOMC minutes which showed that several FOMC participants noted further easing may be necessary if there is a deterioration in conditions compared with only a couple of participants in March, the dovish tone failed to strike up a lasting rally in stocks and we continued lower soon after. We close with the DOW -0.26%, S&P -0.44% and NASDAQ -0.68%.
Europe Market News – Stocks mixed at the close in Europe
May 16, 2012
European equity markets close this afternoon with the CAC posting modest gains, the FTSE modest losses and the DAX close to unchanged. Strong US data, particularly in the form of housing starts and industrial production, helped all three major bourses move into positive territory briefly as Bunds declined and peripheral European debt strengthened. However as we moved towards the close a couple of reports on the ECB stating that they are to stop monetary operations to some Greek banks and that they have no immediate plans for further stimulus saw the DAX and FTSE give up their small gains as did the Euro versus the US Dollar. FOMC meeting minutes ahead which are set to be closely watched.
