Forex Overnight: EUR trading weak
The EUR is trading under pressure against most of the major currencies, this morning, amid rising concerns about the ability of the European governments to refinance their public debt, and ahead of the €8.0 billion French bond auction later today. Additionally, warning from the Greek Prime Minister, Lucas Papademos, that Greece may face a “disorderly default” as soon as March, also weighed on the market sentiment. At 6 am, the EUR has declined 0.2 percent and 0.1 percent against the USD and the GBP, to trade at $1.2916 and £0.8280, respectively.
The JPY has weakened marginally against the USD, while it has gained 0.2 percent against the EUR.
The AUD has declined 0.4 percent against the USD, after data showed that the Australian trade surplus narrowed unexpectedly in November.
UK Stocks: Likely to open in positive territory
The FTSE 100 is likely to open 12 to 13 points in the green.
Services Purchasing Managers’ Index (PMI), Halifax House Prices and Changes in Official Reserves are the key economic indicators scheduled for release today.
No major corporate releases are scheduled for today.
Rio Tinto has declared force majeure on shipments from two aluminum smelters in eastern Canada, citing a technical glitch and labour dispute.
According to Reuters, Royal Bank of Scotland has hired investment bank, Lazard Limited, to advise it on a scale-back of its investment banking arm, including options to sell parts of the business.
Asia: Trading mixed
Asian markets are trading mixed this morning.
In Japan, Elpida Memory has lost value, amid reports that it is seeking financial aid from other companies. News that Toyota Motor Corporation has asked for price cuts from steelmakers has led Nippon Steel Corporation and JFE Holdings lower. Sumco Corporation and Shin-Etsu Chemical have dropped, following reports of a rise in poly-silicon prices. Point Inc has declined, after it reported a drop in its same store sales in December. At 6 am, the Nikkei 225 index has edged 0.7 percent lower to trade at 8,495.5.
In South Korea, Dongbu HiTek has advanced, after it announced plans to expand into the medical equipment semiconductor business. In Hong Kong, Cnooc Limited and PetroChina have edged up. Industrial & Commercial Bank of China has advanced, after China’s National Audit Office indicated that local governments have reduced almost half of the debt previously found to have irregularities. In China, banking sector stocks, Shanghai Pudong Development Bank, China Citic Bank Corporation and China Construction Bank Corporation have added value, amid market speculation of a possible reduction in the reserve ratio by the Chinese central bank.
US Stocks: Futures trading weak
At 6 am, S&P 500 futures are trading 1.6 points lower.
Key economic indicators scheduled for release today include ISM Non-Manufacturing Composite Index, Initial & Continuing Jobless Claims, ADP Employment Change and RBC Consumer Outlook Index.
Monsanto Company, Apollo Group, Family Dollar Stores, Constellation Brands and Worthington Industries are scheduled to report their results later today.
In after hours trade yesterday, Seagate Technology jumped 7.4 percent, after it guided to stronger-than-anticipated revenue for the second quarter. Zumiez Inc soared 10.8 percent, following better-than-expected same-store sales in December and as it raised its fourth quarter guidance. Amongst other key gainers, National Instruments Corporation and Education Realty Trust added 7.6 percent and 6.3 percent, respectively. On the other hand, weaker-than-estimated first quarter revenue led Sonic Corporation to edge 2.2 percent lower. Suntech Power Holdings and BancorpSouth featured amongst the other laggards, declining 4.8 percent and 3.3 percent, respectively.
The S&P 500 index closed marginally higher in the regular trading session yesterday, as improving sales at retailers and automakers outweighed concerns about lower-than-expected factory orders. Netflix surged 11.4 percent, after it reported higher-than-estimated online viewing numbers for the fourth quarter. Cabot Oil & Gas Corporation rallied 7.2 percent, after it announced a two-for-one stock split and raised its dividend by 33.0 percent. Ford Motor Company added 1.5 percent, following better-than-expected sales in December. Retail sector stocks, Ralph Lauren Corporation, Lowe’s Companies, Coach and Urban Outfitters advanced 4.2 percent, 3.7 percent, 2.6 percent and 2.4 percent, respectively, after the International Council of Shopping Centers estimated robust retail sales growth in December. On the other hand, MasterCard and Visa fell 3.3 percent and 1.8 percent, respectively, after a broker downgraded its rating on both the stocks to “Neutral” from “Buy”. Yahoo! dropped 3.1 percent, following the appointment of Scott Thompson as its new Chief Executive Officer.
European Stocks: Expected to open in the green
The DAX and CAC are expected to open 3 to 9 points and around 4 points firmer, respectively.
Key economic indicators scheduled for release today include German Retail Sales, French Consumer Confidence Indicator, Eurozone Producer Price Index and Industrial New Orders.Van de Velde NV is scheduled to report its results later today.
Deutsche Bank AG has hired three ex-bankers of Bank of America Merrill Lynch to spur its corporate finance business in Indonesia.
Societe Generale SA has indicated that its plans to lay off about 1,580 employees at its corporate and investment banking unit globally.
Handelszeitung has reported that Beiersdorf AG will reduce jobs and shed the top management level in Switzerland, as it seeks to run operations from its headquarter in Hamburg, Germany.
Areva SA has signed a $500.0 million contract with U.S. based, Xcel Energy, to supply its Monticello nuclear power plant with fuel and services.
Macro Update
Greek PM warns of default risk in March
Lucas Papademos, the Greek Prime Minister, has warned that the country faces the risk of a “disorderly default” in March if it fails to secure funding from the European peers and the IMF for the nation’s second bailout.
Australia’s trade surplus declines
Australia’s trade surplus has declined unexpectedly to A$1.38 billion in November, following a downwardly revised surplus of A$1.42 billion recorded in October.
Australian service sector activity rises
The seasonally adjusted Australian Performance of Services Index has climbed to a reading of 49.0 in December, compared to a reading of 47.7 recorded in November.
China HSBC services PMI remains unchanged
The China HSBC services PMI has recorded a reading of 52.5 in December, unchanged from November.
Japan’s monetary base advances
On an annual basis, the monetary base in Japan has climbed 13.5 percent to ¥1.18 trillion in December, following a 19.5 percent rise recorded in November.
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