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US stock market opening report (March 12, 2010, Friday)

Contributed by Paddy Power Trader

By Paddy Power Trader

The triple A rating of the US is at risk, S&P has warned, unless the country adopts a credible medium-term plan to rein in fiscal spending. In a report published yesterday, the ratings agency said that there were risks that “external creditors could reduce their US dollar holdings, especially if they conclude that Eurozone members are adopting stronger macroeconomic policies”. (FT)

In other news, Fed’s Yellen is said to be Obama’s choice for Federal Reserve vice chair. Also in the news, White House’s Summers said US recovery has a very long way to go, however US economy is very close to employment growth and deficit must come down after recovery strengthens. (BBG)

Indices And Company News

European bourses opened in minor positive territory and further gained strength into the European session following better than expected Eurozone Industrial Production figures, providing strength to the industrials sector. Financials also gained strength on the back of news that a possible Greek bailout is forthcoming (refer to European Government Bonds section). Basic Materials sector also observed noticeable strength as a weak USD index lifted commodity prices, which in turn provided support to commodity-linked shares.

Forex

The USD index traded in negative territory for most of the European session, in turn giving strength to commodities. It is worth noting two pieces of news: first Obama favouring Yellen, who is considered dovish towards economic policies, for Fed’s vice-chairman post, and second the news in FT regarding US sovereign rating (refer to US section). In other news, the GBP gained strength as stops were triggered to the upside in GBP/USD at 1.5150. Elsewhere, EUR gained strength across the board following better than expected Eurozone Industrial Production data. Elsewhere, USD/CAD dropped to its lowest since July 2008 after better than expected Canadian employment figures.

- Canadian Net Change in Employment (Feb) M/M 20.9K vs. Exp. 15.5K (Prev. 43.0K)

- Canadian Unemployment Rate (Feb) M/M 8.2% vs. Exp. 8.3% (Prev. 8.3%) (BBG)

In other news, the US should not make a political issue out of the CNY, China’s central bank deputy governor Su Ning said. Also, the Bank of Canada believes interest rates should stay at near-zero levels for another few months even though the economy is showing signs of quicker than expected recovery, the central bank chief Carney said, adding that there was no need for Canada to align its interest rate moves with those of the US. (RTRS)

Commodities

Heading into the North American open, WTI crude traded higher but in a tight range, supported by a weaker USD and latest report from the IEA which boosted its global oil demand forecast.

In OPEC news:

- Bloomberg survey of 44 analysts sees no OPEC change on March 17.

In oil related news:

- The International Energy Agency (IEA) boosted its global oil demand further in its monthly outlook on expected demand growth in non- Organisation for Economic Co-operation & Development (OECD).

- Global oil demand is estimated at 85 million barrels in 2009 and is expected to rise 1.8% to 86.6mln bpd in 2010, assuming the world’s economic recovery is sustained. The demand growth will come entirely from non-OECD countries, with Asia alone representing over half of the increase, IEA said.

- IEA estimated a 2.2% growth in non-OECD oil demand to 39.5mln bpd in 2009 and a 4.35 increase to 41.2mln bpd in 2010 on a 28% year-on-year demand surge in China in January.

In geopolitical news:

- Gates says US has broad international support for tougher Iran sanctions.