Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


IG Markets - Afternoon thoughts 2/3/12

Across Asia, markets have risen today after risk assets bounced on improved sentiment in European and US trade. It was also encouraging to see markets shake off mostly disappointing economic figures. After the previous day’s volatility due to the LTROs and Fed Chairman Ben Bernanke’s comments, investors would have been happy to have a relatively quiet day. Although Mr Bernanke did speak again yesterday, it was the same script as the previous day so markets had therefore discounted his thoughts. In the Asian region, markets have generally been in a holding pattern after coming off early highs. There have not been any significant developments in the Asian session.

The yen has remained a talking point as it weakened against most major counterparts. USD/JPY is approaching a nine-month low after a government report showed the nation’s consumer prices fell for a fourth month, fanning speculation the central bank will expand monetary easing. Japan’s Nikkei is currently 0.6% higher. The Aussie market is also firmer (+0.3%), although significantly off its highs on a big recovery in the resource stocks following a bounce in commodities overnight. Hong Kong’s Hang Seng is nearly 1% higher with the financials leading the charge. Given the relative strength we have seen in the Asian region, US and European markets are pointing to a firmer start. Investors will be hoping to see the S&P hold above 1370.

Next week brings the Reserve Bank of Australia’s March interest rate decision. The RBA is widely expected to leave rates unchanged particularly given Europe has made significant progress in rectifying the crisis which plagued it last year. This is likely to keep the Aussie dollar well supported at elevated levels. The accompanying statement is likely to be more important than the interest rate announcement itself.

The highlight of European trade was the Institutional Swaps & Derivatives Association (ISDA) announcing that the terms of the Greek debt swap did so far not constitute a credit event so there will be no payout. However, the important point is that this decision has been made on the current terms and the decision can change if, for example, collective action clauses are added to the debt swap. Most analysts feel that private sector participation will not be high enough to avoid CAC's and therefore the ISDA announcement does not change a great deal in reality. From a market perspective, the relatively muted response to the news was therefore understandable and the broader impact of a CDS event will not be known probably for another week or so (until the CAC's are introduced).

Although the February ISM numbers were below consensus at 52.4 (falling from Januarys number of 54.1), it seems market attention was more on jobless claims which were in line with consensus at 351k. Most of the data out of Europe was weak with a series of PMI’s released. However, ECB President Draghi commented late during the session that there were tentative signs of stabilisation, though the situation was 'very fragile'. The ECB was also 'reasonably satisfied' with the second LTRO operation. Such positive rhetoric from the ECB is quite encouraging for investors particularly after the roller coaster ride we’ve had with Europe. There is not much on the economic calendar tonight but investors will be looking out for further comments out of Day 2 of the EU Economic Summit. The discussions will be focused on the eurozone firewall and growth policies. New discussions such as the Greek PSI, the Irish referendum and external contribution to the firewall are also expected to play a part.

The big move seen in oil futures to over $110 a barrel was on the back of reports of a pipeline explosion in Saudi Arabia. However, this has since been denied and Nymex oil futures have since retreated from a nine-month high of $110.55 a barrel. . The price action shows investors remain very nervous about the oil market and potential supply disruptions arising from the Middle East. From an investment perspective, high oil prices are quite negative for global growth.


ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news