From RanSquawk
- German finance minister and Greek finance ministry are confident the Greek PSI deal will be completed by tomorrow evening’s deadline.
- German Factory Orders disappoint, recording a contraction in January.
- Mitt Romney wins Ohio primary, however voters remain split on a Republican candidate.
Market Re-Cap
Markets appear to be tentatively recovering some of yesterday’s heavy losses, recording modest gains so far this morning. Comments made overnight by the German finance minister as well as senior officials from the Greek finance ministry may have mercifully given market participants some hope as they are confident the Greek PSI deal will be completed by the deadline tomorrow evening.
The DAX index has underperformed the other European equity indices in recent trade following the release of some disappointing factory orders data for January, with markets expecting an expansion of 0.6%, however the reading came in at -2.7%, moving DAX stock futures into negative territory.
WTI crude and Brent have also retraced some of their losses made earlier in the week following a drawdown in US gasoline inventories reported last night as well as a generally weak USD index in the FX markets today.
Markets are awaiting US ADP employment change later in the session, as well as the weekly DOE oil inventories casting further light on the US energy stocks.
US Headlines
Mitt Romney narrowly beat Rick Santorum in the Ohio primary, as Republican voters across 10 US states delivered a split verdict on their choice of presidential nominee to take on President Barack Obama in November. (FT-More)
Romney also won races in Virginia, Massachusetts, Vermont, Idaho and Alaska, but was defeated by Santorum in Tennessee, Oklahoma and North Dakota. Gingrich prevailed in his home state of Georgia, while Romney’s final win in Alaska leaves Ron Paul, who hoped for a win in the state, without a single victory on Super Tuesday.
EU and UK Headlines
A senior Greek finance ministry official told CNBC that the Greek PSI debt swap deal will finish on time. (CNBC/Ekathimerini) Elsewhere it was reported that holdouts from the Greek debt swaps will either be offered a much more onerous deal than those who take part in the restructuring or they will not be offered new bonds as sweeteners.
The Greek finance ministry confirmed that Greece's 6 biggest banks have decided to take part in bond swap voluntarily. (Sources) In related news, a Greek official added that 8-9 state pension funds have agreed to take part in the debt swap but 4 refused to do so.
German finance minister Schaeuble has predicted a sufficient majority of banks will accept a reduction in the value of Greek government bonds. (Bayerischer Rundfunk) Schaeuble added he is confident the deal will be completed by the March 8th deadline.
German Factory Orders (Jan) M/M -2.7% vs Exp. 0.6% (Prev. 1.7%, Rev. 1.6%)
German Factory Orders (Jan) Y/Y -4.9% vs Exp. -1.7% (Prev. 0.0%) (Sources)
Germany have released their factory orders data for January recording an unexpected contraction, with expectations of around 0.6% growth in orders, markets reacted negatively to the -2.7% figure.
The Dutch finance minister has been vocal this morning, commenting that the Netherlands is willing to increase the size of the Eurozone rescue fund. He has also said the fallout from failing to help Greece would cause shocks to Southern European banks that may cause failure, likening the subsequent impact of this to the Lehman Brothers collapse. (Sources)
BRC Shop Price Index (Feb) Y/Y 1.2% (Prev. 1.4%) (RTRS)
UK shop price inflation has slowed to its lowest in just under two years in February as clothing and electrical-goods stores cut prices to increase demand from consumers, according to the British Retail Consortium. Promotional activity has been sustained over the last three months as consumer confidence remains fragile, according to Nielsen.
EQUITIES
European equity markets are clawing back some of the losses made over the past few days following a modest increase in market confidence possibly due to a reassurance from the German finance minister and the Greek Finance Ministry saying they are confident the PSI deal will be completed on time.
The DAX index is underperforming its European peers following the release of disappointing factory orders data earlier in the session.
In individual equity news, UK stock Admiral are performing particularly well following reports that they have increased their pretax profits by 13% to GBP 299mln. Company shares currently trade up 10%. In contrast, German stock Adidas are trading poorly, despite reporting above-expected revenues earlier in the session, their outlook for profit growth fell below analyst’s estimates. Company shares currently trade down around 2%.
UK Banks and Insurers may face a GBP 3bln bill after being told to write letters to as many as 12mln customers explaining that they may have been mis-sold PPI. The number of consumers that have not yet made a complaint could dwarf the number of cases received so far. (FT-More)
Top performing sectors in the BE500: Industrials (+1.00%), Basic Materials (+0.80%), Consumer Services (+0.77%)
Worst performing sectors in the BE500: Utilities (-0.34%), Oil & Gas (-0.21%), Telecommunications (+0.08%)
FX
Fairly limited movements in FX markets so far today, with FX markets looking ahead to risk events later in the week, including the ECB rate decision tomorrow, as well as non-farm payrolls from the US on Friday.
AUD/USD opened lower following some disappointing GDP data from Australia, however the currency pair has erased its losses and trades in positive territory ahead of the US open. Australia’s PM has defended the figure saying that the growth is strong in spite of an uncertain global outlook and rising risks from Europe.
COMMODITIES
After making losses for the last two days, WTI and Brent crude futures are trading in positive territory ahead of the US open, with upwards pressure following API reports of a drawdown in gasoline inventories as well as a generally weaker USD.
Oil & Gas News:
• A senior Chinese Navy official has denied that the Shirakaba gas field in the East China Sea is subject to joint development with Japan, despite agreements in 2008 that both nations would develop the field together.
• Iraq’s first of four offshore crude export facilities will start pumping 750,000BPD starting today, according to the Iraqi oil minister.
• US President Obama has said he is concerned about oil output around the world as gasoline prices soar. Obama added that he is looking to ease bottlenecks in the US to relieve pressure on domestic prices.
• Saudi Arabian oil minister Naimi has said the country must reduce its reliance on revenue from oil exports, adding that they must develop their downstream industry to shield the economy from international market volatility.
• South Sudan plan to export at least 10% of its 350,000BPD output by road until pipelines are ready, as the country is locked in dispute with Sudan.
Geopolitical News:
• The US and five other world powers agreed yesterday to reopen negotiations with Iran over its nuclear programme in a move seen by many diplomats as a last chance solution to an Iranian crisis and avoid an air strike by Israel.
• France’s foreign minister has said he is sceptical on renewed talks between six world powers and Iran as Tehran is still not sincere in its willingness to negotiate over the future of its nuclear programme.