German parliament formally approves the Greek aid bill
Eurozone Unemployment at record high
RANsquawk European Morning Briefing Video: http://youtu.be/NGWC4viWoXU
European equities are trading in minor positive territory heading into the second half of the session, boosted by month-end flows adding to risk-on sentiment. Earlier this morning, German parliament formally approved the Greek aid bill with 473 voting in favour and 100 voting against the measures which has also added to confidence in European equities. Spanish bank, Bankia has seen losses of 19% today after it was announced the company is to cut about 6,000 jobs and forecast a loss of EUR 19bln for 2012. The bank is also set to sell EUR 50bln of assets through 2015 and reduce its branch network by 39%. In terms of data releases, Eurozone unemployment was released this morning and came in at record highs although this was expected so no reaction was seen across asset classes.
Overnight JPY weakness was seen across the board, and has carried through the European session, after the Japanese cabinet approved JPY 880bln in stimulus measures. The Japanese finance minister also said that he wants to work with the BoJ to end deflation. An option barrier at 82.90 could provide resistance in USD/JPY, currently trading at 82.68 (+56 pips).
Looking forward, the session remains light for tier-1 macroeconomic data although Chicago PMI for November is due to be released at 1445GMT/0845CST as well as any further economic commentary out of the US and Europe.
The Japanese cabinet have approved JPY 880bln in stimulus measures.
Japanese Industrial Production for October beat expectations at 1.8% vs. Exp. -2.0%, with National CPI Y/Y printing in-line with expectations at -0.4%.
EU & UK Headlines
German parliament have formally approved the Greek aid bill with 473 MPs voting in favour, and 100 voting against. Dutch and French parliaments still need to vote to approve the deal.
Eurozone Unemployment Rate for October was at a record high 11.7% although this was in-line with expectations.
Eurozone CPI Estimate for November printed at 2.2% vs. Exp. 2.4%; the lowest reading since December 2010.
European equities opened broadly unchanged this morning although have moved to the upside as month end flows add to risk-on sentiment. All major bourses are in positive territory with the DAX outperforming after the German parliament passed a vote on Greek aid earlier this morning. Gains were supported by EUR strength heading into month-end with most sectors trading higher with Industrials (+0.57%) and Technology (+0.52%) seeing the largest gains.
In individual stocks news, LVMH shares are up over 3% this morning after the company was raised to buy vs. neutral at Goldman Sachs. This has seen other luxury goods manufacturers see significant gains with Christian Dior shares up 3.8%. Elsewhere, Bankia shares are down 19% as it was announced the Spanish bank are to cut 6,000 jobs and have forecast losses of EUR 19bln for this year.
USD/JPY has traded higher overnight, extending to 82.75 in early trade in Europe. Talk of an one-touch barrier expiry at the 10am NY cut could provide resistance as USD/JPY continues to move higher, last trade at 82.68 (+56 pips), as of 1240GMT.
Month-end demand for EUR has seen EUR/USD breaking above the 1.3000 handle with an option expiry at this level. Risk-on sentiment, signalled by equities suggests a slow move higher is likely. EUR/USD currently trades at 1.3004 (+23 pips), as of 1240GMT.
AUD/USD is trading lower as the pair prices in expectation that the RBA will cut its cash rates by 25bps to 3.0%; trades 1.0417 (-17 pips) last, as of 1240GMT.
WTI crude futures are trading in flat to negative territory today as markets await key developments on the US fiscal cliff negotiations. As a reminder, Heating Oil and RBOB December futures expiry at 1930GMT/1330CST.
Bank of America released its crude price forecasts this morning and sees:
- WTI crude oil prices averaging USD 90 per barrel in 2013 and USD 92 per barrel in 2014
- Brent crude oil prices at USD 110 per barrel in 2013 and USD 112 per barrel in 2014 and says as monetary pressures build, Brent may touch USD 120 per barrel in the next 6 months.
In geopolitical news, Palestine's status has been upgraded at the UN from "observer entity" to "observer non-member state" despite strong opposition from the US and Israel.
- Heating Oil and RBOB December futures expiry (1930GMT/1330CST)
Print 12:54, 30 Nov 2012 - Market Analysis - Source: RANsquawk
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