LONDON (SHARECAST) - Asmussen (ECB): Calm on financial markets is deceptive
Asmussen (ECB): Cannot give Greece more time
Rehn (EU): Expects Eurogroup to give Greece its support
Spanish 10 year bond yields down 4bp to 5.65%
FTSE Mibtel: -1.78%
Ibex 35: -0.94%
Stoxx 600: -0.89%
Shares are now near their worst levels of the day. That as investors key in on the prospects for economic growth and company profits world wide. Not to be missed in that regard, Alcoa will kick-off the US quarterly earnings season tomorrow.
Also contributing to the above is the fact that in its semi-annual World Economic Outlook (WEO) –which is slated for release tomorrow- the International Monetary Fund (IMF) is expected to cuts its forecast for world growth. This as some observers worry that “global rebalancing” is proceeding too slowly.
In line with the above, much has been made this morning of the fact that the World Bank cut its growth forecast for economic growth in “developing East Asia” this year to 7.2% from 8.3% in 2011, its slowest pace since 2011 and below the 7.6% forecast in May. However, its downwards revisions for growth in China –for example- are no more than a reflection of a similar cut which was already announced by the Asian Development Bank last Wednesday. As well, it must not be forgotten that, at least for now, a moderate reacceleration in Chinese growth is forecast for next year (from 7.7% in 2012 to 8.1% in 2013).
Of more immediate concern, investors are closely watching events in Greece and Spain. More specifically, European Central Bank (ECB) governing council member Jorg Asmussen was cited over the weekend as saying that Greece cannot be given more time –by the central bank- to meet its commitments as that would amount to state financing (although Eurozone states do have that option at their disposal).
On a more positive note, European Union commissioner Olli Rehn believes that the Eurogroup will show its support for Greece when it meets today. Merkel’s chief spokesman, Steffen Seibert, however, has been cited as saying that Greece must implement the measures agreed with the IMF and EU within the established timelines.
That comes before German Chancellor Angela Merkel visits Greece tomorrow.
Greek banking M&A dominates headlines
Greek lenders National Bank of Greece and Eurobank Ergasias led gains this morning on reports of a possible merger.
From a sector stand-point, and on the corporate front, the worst performance is now to be seen in the following industrial groups within the DJ Stoxx 600: Automobiles (-1.69%), Basic resources (-1.52%) and Banks (-1.51%).
German industrial production ahead of forecasts, but flat GDP expected
German industrial production fell by 0.5% month-on-month in August (Consensus: -0.6%). However, economists at Barclays Research had this to say: "Today’s release, despite being better than expected, mirrors the decrease in German factory orders in August as well as the current deterioration of sentiment at a global level. Data in the coming months will be crucial in order to access how well the German economy is able to weather the generalised slowdown in activity and trade expected in H2 12. We continue to forecast a flat reading for GDP in Q3."
The Sentix survey of Eurozone investors´ confidence has come in at -22.2 for November (Consensus: -20.9), versus -23.2 for the month before.
The Swiss consumer price index for the month of September has come in at -0.4% year-on-year, as expected, and above last month´s reading of -0.5%.
The French central bank´s business confidence index for the month of September has come in at 92 points, versus 93 for the previous month (Consensus: 91).
The German trade surplus for the month of August rose to €16.3bn; ahead of the €15.3bn forecast by the consensus, that on the back of a 2.4% month-on-month increase in exports (Consensus: -0.5%).
Germany´s current account surplus on the other hand fell back towards €11.1bn in August, versus the €11.7bn seen in July.
Swiss unemployment remained unchanged at 2.8% in September.
Slight retreat in the single currency
The euro/dollar is now down by 0.61% to 1.2954.
Front month Brent crude futures are falling by 0.837 dollars to the 111.09 dollar mark on the ICE.