From RanSquawk
- The Eurogroup has dismissed the submitted Greek bailout package, giving Greece a further 3 conditions to fulfil before a bailout can be secured.
- Further commentary regarding Greece is expected from a Greek Cabinet Meeting at 1300GMT.
- Greek far-right party leader says he cannot vote for the bailout agreement.
Market Re-Cap
Heading into the North American open, EU equity indices are trading lower following reports that Eurozone Finance Ministers have dismissed as incomplete a budget presented to them by the Greek party leaders. In addition to that, EU lawmakers have warned Greece of more intensive involvement in the Greek economy to improve tax collection and accelerate the sale of state-owned assets. The Greek Finance Minister Venizelos said that Greece must make a “final, strategic” decision Greek membership in the Eurozone over the next six days as it decides on new austerity and reform measures or faces leaving the single currency. However, according to sources, German finance minister told MPs, Greek reform plans would bring debt to 136% of GDP by 2020, instead of targeted 120%. So it remains to be seen as to whether Greece will be able to meet the looming redemptions in March. Of note, analysts at Fitch said that the ongoing Greece talks stating that the country must secure an agreement to cut its debt burden in the next few days to prevent a “disorderly” default.
US Headlines
US markets today can expect US Trade Balance data, expected at 1330GMT, and the University of Michigan Confidence survey at 1455GMT, with analysts expecting a slight decrease.
Asian Headlines
Japanese Finance Minister Azumi has said it is too early to discuss whether Japan will make a funding contribution to the IMF. (Sources)
Japanese Economy Minister Furukawa has said he wants the BoJ to support the economy via monetary policy. (Sources)
A report from a Chinese State Counsellor has stated that China is to maintain a relatively tight monetary policy, adding that the situation of excess liquidity has not yet completely changed. The report goes on to say that China can keep policy flexibility through RRR adjustments and open market operations. (Sources)
A Chinese Customs Official has commented on a decline in exports for January citing seasonal factors and expects a significant bounce back for February.
Chinese Trade Balance (USD) (Jan) Y/Y 27.28bln vs. Exp. 10.40bln (Prev. 16.52bln)
Chinese Exports (Jan) Y/Y -0.5% vs. Exp. -1.4% (Prev. 13.4%)
Chinese Imports (Jan) Y/Y 15.3% vs. Exp. -3.6% (Prev. 11.8%) (Sources)
EU and UK Headlines
Eurozone Finance Ministers have dismissed as incomplete a budget presented to them by the Greek party leaders. (FT-More) The Eurogroup have warned Greece of more intensive involvement in the Greek economy to improve tax collection and accelerate the sale of state-owned assets.
-The further conditions demanded by the Eurogroup are a further EUR 325mln in savings, approval of the package this Sunday in Greek parliament and an agreement that parties will continue supporting the measures after general elections. (Sources)
Greek far-right party leader Karatzaferis has said he cannot vote for bailout agreement, however he will continue to support the government. (Sources)
Markets are awaiting further commentary from Greece following a scheduled Greek Cabinet meeting at 1300GMT.
UK PPI data was released this morning, with both input and output figures recording above expected figures.
UK PPI Input NSA (Jan) M/M 0.5% vs. Exp. 0.2% (Prev. -0.6%)
UK PPI Input NSA (Jan) Y/Y 7.0% vs. Exp. 6.8% (Prev. 8.7%, Rev. 8.9%)
UK PPI Output NSA (Jan) M/M 0.5% vs. Exp. 0.1% (Prev. -0.2%)
UK PPI Output NSA (Jan) Y/Y 4.1% vs. Exp. 3.7% (Prev. 4.8%) (Sources)
Germany have released their final CPI figures for January, roughly in line with expectations at 2.1%.
German CPI (Jan F) Y/Y 2.1% vs. Exp. 2.0% (Prev. 2.0%)
German CPI (Jan F) M/M -0.4% vs. Exp. -0.4% (Prev. -0.4%) (Sources)
EQUITIES
European equity indices are trading in negative territory, however, risk appetite is being weighed down upon by news from Greece that the Eurogroup have dismissed a proposed bailout program.
Reported earnings from the UK today, Barclays have reported below expected net income for FY 2011, however the company have said that the BarCap arm has made an encouraging start to 2012.
The strongest performing individual equity in Europe today is Alcatel-Lucent, following corporate earnings showing a significant beat over expected net incomes for Q4 of 2011. Company shares currently trade up 14.93%. The company has reported that it is targeting a strong positive net cash position for 2012.
Other notable earnings from Europe include Total, who narrowly beat expected adjusted net (the adjusted net excludes changes in their share stake in Sanofi, however the company has announced it will sell EUR 2bln shares by the end of the year). The company have confirmed that their 2012 production could grow by 2-3%, but Libyan output remains uncertain. Company shares currently trade -1.22%.
Top performing sectors in the BE500: Technology (+0.69%), Health Care (-0.30%), Consumer Goods (-0.50%)
Worst performing sectors in the BE500: Basic Materials (-2.28%), Financials (-2.07%), Industrials (-0.95%)
FX
The USD index is experiencing an appreciation ahead of the North American open following risk aversion from Europe due to further delays and demands from Athens after their bailout proposal was dismissed by the Eurogroup.
GBP is also experiencing gains following higher than expected figures from PPI input and output data, as well as flows away from the EUR.
Goldman Sachs have revised their forecast for AUD/USD to 1.0800 from 1.0300 in 12 months time. (Sources)
The RBA have commented in a report that the inflation outlook for the domestic economy provides the scope to cut rates. The Australian central bank has cut its June 2012 CPI forecast to 1.75% from 2.00% and has also cut June’s GDP forecast to 3.5% from 4.0%. (Sources)
COMMODITIES
Oil prices have fallen following concerning news from Europe that a Greek austerity program has been rejected by European Finance Ministers, worsening the European debt crisis and lowering commodity demands despite tentative signs of an economic recovery in the US.
Oil & Gas News:
• The IEA have released their monthly oil market report. The report made the following important points:
-The agency have cut their 2012 oil demand by 0.3MBPD for the sixth month in a row on concerns over a weaker global economy.
-There are multiple supply fears putting a floor under prices.
-OPEC oil output for January was 30.9MBPD, highest since October 2008.
-Iranian sanctions may cause unintended woes for oil shipping, but the oil market can adjust to any loss of Iran oil exports.
• Pennsylvania environmental groups have condemned a passage of the Marcellus Shale impact fee bill by the state House of Representatives, saying the bill strips local governments of control over local planning.
Geopolitical News:
• An internal investigation by the US State Department largely cleared its handling of TransCanada's application to build the controversial Keystone XL oil pipeline, according to a report sent to Congress.
• South Sudan has ramped up the pressure on its neighbour to the north another notch as it penned a new deal to build an oil pipeline to Djibouti, a report claimed.
CME lowered Initial and Maintenance margins of gold (by 12%) and silver (13%), to USD 7500 maintenance for GC and USD 16000 maintenance for SI.