ETX Capital Daily Market Bite, 1st February, 2013: Firmer Markets; All Eyes On US Jobs Data
February 1, 2013 11:34 am
February 1st, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
European financial markets have kicked off the February on a brighter tone after ending the month of January on the soft side yesterday. But, heading into mid-day, equity indices and the euro pared session gains on the announcement of the smaller than expected repayment of loans taken out by banks, offered by the ECB’s LTRO programme.
European banks will pay another EUR3.5billion to the ECB, much lower than the EUR20billion expected by the market and significantly lower than the EUR137billion paid last week which helped to prop up the price of risk-assets across the board. Core government bonds rose on the back of this announcement — traders are now tempering their earlier optimism about the overall state of the banking sector which may not be as healthy as thought last week.
Spanish banks were already under pressure before the LTRO announcement, smacked by the end to the short selling ban of the Spanish market and persist troubles relating to real estate loans. The euro as such is off its high of around $1.3640, the highest level in 14 months but is steady against its rivals on the whole. Euro zone PMI manufacturing data was actually better than forecasts, showing a slight uptick thanks to Germany and surprisingly a solid rebound in Spanish manufacturing — this release kicked up markets earlier in the session.
It wasn’t all great on the PMI manufacturing front however with the UK reading below expectations but not a surprise after the recent damp Q4 GDP numbers and ongoing fears over a triple-dip in the UK. China’s PMI manufacturing report was also disappointing, moderating after a sustained period of strength — the report however was not enough to worry the market about the China recovery story, rather a reminder that recovery may not be as quick as previously hoped.
Earnings from leading European blue-chips have been rather poor with LVMH, Electrolux and Credit Agricole all reporting poor figures — weakness due to earnings has put a lid on upside for European markets but US stock futures are performing better, indicating a firm open on Wall Street. DJIA is expected to start around 48 points higher and the S&P500 is seen up around 3.5 points.
Both indices had their best January’s in over 16 years — the DJIA’s best January before this year’s was back in 1994 and the S&P500’s was back in 1997. Attention is squarely on the nonfarm payrolls report with expectations ranging from 160k to 200k jobs to be added. The University of Michigan confidence report follows soon after which is closely followed by the ISM manufacturing report.
February 1st, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
European financial markets have kicked off the February on a brighter tone after ending the month of January on the soft side yesterday. But, heading into mid-day, equity indices and the euro pared session gains on the announcement of the smaller than expected repayment of loans taken out by banks, offered by the ECB’s LTRO programme.
European banks will pay another EUR3.5billion to the ECB, much lower than the EUR20billion expected by the market and significantly lower than the EUR137billion paid last week which helped to prop up the price of risk-assets across the board. Core government bonds rose on the back of this announcement — traders are now tempering their earlier optimism about the overall state of the banking sector which may not be as healthy as thought last week.
Spanish banks were already under pressure before the LTRO announcement, smacked by the end to the short selling ban of the Spanish market and persist troubles relating to real estate loans. The euro as such is off its high of around $1.3640, the highest level in 14 months but is steady against its rivals on the whole. Euro zone PMI manufacturing data was actually better than forecasts, showing a slight uptick thanks to Germany and surprisingly a solid rebound in Spanish manufacturing — this release kicked up markets earlier in the session.
It wasn’t all great on the PMI manufacturing front however with the UK reading below expectations but not a surprise after the recent damp Q4 GDP numbers and ongoing fears over a triple-dip in the UK. China’s PMI manufacturing report was also disappointing, moderating after a sustained period of strength — the report however was not enough to worry the market about the China recovery story, rather a reminder that recovery may not be as quick as previously hoped.
Earnings from leading European blue-chips have been rather poor with LVMH, Electrolux and Credit Agricole all reporting poor figures — weakness due to earnings has put a lid on upside for European markets but US stock futures are performing better, indicating a firm open on Wall Street. DJIA is expected to start around 48 points higher and the S&P500 is seen up around 3.5 points.
Both indices had their best January’s in over 16 years — the DJIA’s best January before this year’s was back in 1994 and the S&P500’s was back in 1997. Attention is squarely on the nonfarm payrolls report with expectations ranging from 160k to 200k jobs to be added. The University of Michigan confidence report follows soon after which is closely followed by the ISM manufacturing report.
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