Greece announces their debt buyback plan with the midpoint of the indicative price range being higher than the speculated amount of EUR 0.35 per EUR 1.00
Spain makes a formal request for EU bank bailout funds with aid to be disbursed around December 12th
Chinese Manufacturing PMI at a 13-month high
Moodys downgraded the Eurozone's permanent bailout fund, the ESM, to Aa1 from Aaa and the EFSF to Aa1 from Aaa
RANsquawk European Morning Briefing Video: http://youtu.be/3GMSXnbZiTU
European equities opened higher this morning and have held onto solid gains as strong Chinese data overnight has boosted sentiment, with Chinese Manufacturing PMI hitting a 13-month high. A detailed breakdown showed the recovery in China is not on as solid a footing with the Import Index and the Employment Index both below the 50-threshold.
Earlier in the session, Greece announced their debt buyback plan which is to run until 1700GMT in December 7th. Initial optimism was observed as the midpoint of the indicative price range of the debt buyback is higher than the speculated amount of EUR 0.35 per EUR 1. In reaction to the news Greek 10s spiked higher and the announcement has alleviated any concerns over low participation from both domestic and foreign investors. EUR/USD reached six-week highs and USD-index falling to month lows following the announcement. GBP/USD has also reached one-month high and the pair continues to be supported by dividend related flows said to be from a major UK bank.
Looking ahead, the Eurogroup meeting is set to commence at 1400GMT with a press conference set for 2200GMT. Elsewhere, there is ISM Manufacturing Data out of the US as well as Total Vehicle sales.
Chinese HSBC Manufacturing PMI for November beat expectations at 50.5 vs. Exp. 50.4 which was a 13-month high. Further analysis showed the recovery remains soft given cautious macro policy easing in 2012 and external uncertainties in the US and Europe. The employment index, remained below the 50-threshold for the sixth month in a row.
EU & UK Headlines
Greece announced their debt buyback plan which is to run to 1700GMT on December 7th. They have set a minimum purchase for 2023 bonds at 38.1 and maximum price at 40.1. They have set a minimum purchase for 2042 bonds at 30.2 and maximum price at 32.2. Greece announced they are to buy back as much as EUR 10bln of bonds.
Spain makes a formal request for EU bank bailout funds with aid to be disbursed around December 12th.
Moodys downgraded the Eurozone's permanent bailout fund, the ESM, to Aa1 from Aaa and the EFSF to Aa1 from Aaa; maintains negative outlook. The move follows on from the French downgrade which is the EFSF's second largest contributor.
German Chancellor Merkel said that a public sector debt write-down may be possible for Greece, once the country no longer requires additional loans.
US Treasury Secretary Timothy Geithner has said there will be no deal to avert a "fiscal cliff" unless Republicans accept a tax hike for the wealthy. Geithner told Republicans in Congress they needed to make the next move in the fiscal cliff negotiations after they dismissed the Obama administration’s opening effort last week.
European equities have held onto early gains this morning with all sectors in Europe trading in positive territory, Technology (+1.01%) and Industrials (+0.99%) leading the way. The CAC has outperformed other European bourses, currently trading over 1.0%, in part due to speculation that EADS is considering buying up a large portion of its own shares as part of the planned restructuring.
In the financials sector, the EU commission have said they are not ready to legally implement Basel III bank rules by the January 2013 deadline.
Weakness in AUD was observed across the board, and AUD/USD moved lower after two sets of disappointing data from Australia, firstly Australia's AiG Performance of Manufacturing Index for November was 43.6 (Prev. 45.2) and secondly Australian Retail Sales SA for October was 0.0% vs. Exp. 0.4% (Prev. 0.5%). Weak Australian data points have added to speculation that there will be a cut at tomorrows RBA rate decision, which is the reserve bank's last decision until February.
GBP/USD rose to a one-month high of 1.6069 although currently trades at 1.6060 (+49 pips) as demand for GBP has increased due to a quarterly dividend payment and better than expected Manufacturing PMI from the UK.
EUR/USD hits 6-week highs earlier in the session as the EUR has been boosted by the announcement of the Greek debt buyback. The EUR continues to be resilient to bad news after markets have shrugged aside Moody's downgrade of the EFSF.
WTI crude futures are trading flat today as concerns over supply are abated due to the continued ceasefire in the Middle-East. Chinese Manufacturing PMI data beating expectations saw oil prices increase although a detailed breakdown showed the recovery is still not on a solid footing and the gains were pared.
Commentary from Qatari's energy ministry said global crude oil reserves are at healthy levels and that oil prices are affected by speculation and geopolitical situation rather than fundamentals.
In geopolitical news, Britain and France are said to be considering recalling ambassadors from Tel-Aviv over Israeli plans to construct 3,000 new homes in the occupied West Bank.
Print 13:00, 03 Dec 2012 - Market Analysis - Source: RANsquawk
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