JPY continues to weaken following comments from opposition's Abe, who is pushing for more aggressive monetary policies from the BoJ
Further fighting in the Middle-East has supported the energy complex today
RANsquawk European Morning Briefing Video: http://youtu.be/QQbfaNhYufM
Equity markets traded lower and in a tight range as indecision prevailed for yet another day given the lack of clarity on the never-ending Greek debt drama. Handelsblatt reported that Eurozone finance ministers will only attempt to close Greece's financing gap to 2014 when they meet in Brussels next Tuesday, instead of finding a solution for as long as 2020 according to a senior European source. Further to that, Germany’s Meister reiterated that Germany will not accept any Greek debt write down, which the IMF continues to push for.
In other news, reports that Spain is mulling requesting a credit line from the IMF alone as an alternative to a European bailout were denied by Spain’s Latorre says Spain. Nevertheless, SP/GE 10s seen marginally tighter, as is IT/GE 10s. In FX, JPY continued to weaken today, after Japan's opposition party leader Abe said that he wants to work with the Bank of Japan to reverse the trend of the strong JPY and revive the economy. He also called for unlimited easing until deflation is overcome even suggesting the Bank of Japan should set interest rates at zero or below zero to enhance lending. Going forward, market participants will get to digest the latest weekly jobs report, CPI and Empire Manufacturing surveys.
Japan's opposition party leader Abe says he wants to work with the Bank of Japan to reverse the trend of the strong JPY and revive the economy, calling for unlimited easing until deflation is overcome even suggesting the Bank of Japan should set interest rates at zero or below zero to enhance lending.
Xi Jinping named as the new head of China's communist party and is set to become president in March. He is also elected chairman of the central military commission with Li Keqiang set to become Premier as expected. The Politburo Standing Committee has also been reduced to 7 members from 9 members as expected.
Overnight, Sony shares tumbled over 9% after the Co. announced a plan to raise USD 1.9bln through a sale of convertible bonds to help finance investments.
Today's session has a number of data releases out of the US with CPI, Weekly Jobs data and DoE inventories later on in the session.
EU & UK Headlines
Eurozone GDP and CPI was released this morning and all figures came in at expectations so had net-neutral impact. German GDP for Q3 just beat expectations which saw strengthening in EUR/USD.
UK Retail Sales missed expectations and previous numbers were revised down. According to analysts the fall in UK Retail Sales was due to clothing with school uniform sales boosting the previous months figure.
European equities are trading in negative territory in a tight range as uncertainties in Europe and the Middle-East are on the forefront of people's minds. A mass of European GDP data all came in broadly inline with expectations which failed to boost sentiment.
Having opened lower, the IBEX is now the best performing index in Europe following positive comments from Spanish deputy finance minister Latorre, who said he expects Spain to return to growth in the second half of 2013. This also prompted SP/GE 10s tightening, now tighter on the day by 2.5bps.
BP is expected to plead guilty to criminal misconduct in the 2010 Deepwater Horizon oil spill in a plea agreement with US Department of Justice. BP is expected to be fined USD 3-5bln in the agreement although the fine is to be paid over many years, which has supported price action in recent trade.
Wal-Mart announced earnings earlier in the session and beat expectations on the headline figure. Q3 revenues were down although the Co. reaffirmed top end of year EPS guidance.
For Glencore and Xstrata, Qatar is said to be backing the merger and continues to see merit in a combination of the two companies and is satisfied with the terms of the proposed merger.
USD/JPY - Pair continues to strengthen following the news out of Japan that the leader of the main opposition party is calling for unlimited easing if he were to get into power in elections on the 16th December. Leader of the opposition Abe, also called for interest rates to be set at zero or negative to encourage lending.
GBP/USD - Weakness was seen after UK Retail Sales fell by 0.8% when zero growth was forecast. The losses were short-lived after analysts noted the key reason for the fall in the headline figure was due to clothing sales which were boosted last month by school uniform sales.
AUD/USD traded lower throughout the session, in tandem with spot gold, however option related buying at 1.0300 helped support price action.
Despite price volatility, WTI crude futures are trading flat on the day as news is being consistently released regarding tensions in the Middle-East. Looking forward today, the US will announce the DoE inventories at 1600GMT/1000CST, with a build expected in the headline figure. The EIA Natural Gas Storage change is also to be announced today at 01530GMT/0930CST with the median expectation being a draw (-24).
Following reports early yesterday that the Israeli airforce hit multiple Gaza targets including the Hamas military chief, tension in the area saw escalation including Israeli ministers authorising selective call-up of army reserves. Although there were reports that Israel's ambassador in Cairo left Egypt with embassy staff this was disregarded by officials late yesterday. Due to the situation in Israel/Gaza the Egyptian president ordered UN representatives to call for an emergency security council meeting over Israel Gaza strikes according to a presidential spokesman.
Shell has planned on adding capacity to a plant in Singapore to tap growing petrochemical demand in Southeast Asia. The company also aims to develop profitable new gas supplies to meet the market's growing demand for clean and affordable low carbon energy.
In Europe, Gazprom have committed to building the South Stream pipeline that will deliver Russian gas to southern Europe with production expected to start in 2015.
- SMI November options expiry (1620GMT/1020CST)
- Brent Crude December futures expiry (1930GMT/1330CST)
15 Nov 2012 - 13:04 - Energy Bank Speaker - Source: RANsquawk
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