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

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news