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Europe Factors to Watch-Stocks set to drop at open
September 26, 2012 / 5:31 AM / 5 years ago

Europe Factors to Watch-Stocks set to drop at open

PARIS, Sept 26 (Reuters) - European stocks were set to drop on Wednesday,
tracking losses on Wall Street and in Asia on signs Spain's economic crisis is
worsening.
    At 0626 GMT, futures for Euro STOXX 50, for Germany's DAX 
and for France's CAC were down 0.8-1.0 percent.
    In Madrid on Tuesday, protesters clashed with police as the government
prepares a new round of unpopular austerity measures for the 2013 budget that
will be announced on Thursday. The police said at least 15 people had been
arrested and at least 6 injured. 
    "With the demonstrations in Madrid on Tuesday, the euro zone crisis is
intensifying again, and this had an immediate impact on U.S. indexes last
night," FXCM analyst Nicolas Cheron said.
    Also fuelling negative sentiment, Philadelphia Fed President Charles Plosser
said on Tuesday the Fed's latest monetary stimulus will not do much to boost
economic growth or lower unemployment and raises the risk of longer-run
inflation. 
    "Complacency has suddenly vanished, with the VIX closing nearly 10 percent
higher yesterday," FXCM's Cheron said. "This could be the start of a medium-term
correction, so beware of rising volatility and don't forget stop-losses."
    The CBOE Volatility Index, or VIX, Wall Street's favorite barometer
of investor sentiment, surged 9 percent on Tuesday, signalling a sharp rise in
risk aversion.
    European stocks have risen sharply since early June - with the euro zone's
blue chip Euro STOXX 50 index gaining 25 percent - boosted by bold
action from the European Central Bank and the U.S. Federal Reserve to fight the
euro zone debt crisis and revive growth. 
    But the sharp four-month rally has lost steam over the past two weeks,
halted by a string of grim macro data and Spain's reluctance to request a
bailout that would ease tensions over the region's debt crisis.
    Spain's Prime Minister Mariano Rajoy said on Wednesday in an interview with
the Wall Street Journal that he was ready to seek a new rescue package for his
troubled country but only if its debt financing costs remain too high for too
long.
    "Any revolt by (Spain's) people will make the transition of a country
reliant upon bailouts very difficult and uncertain. The bigger the noise the
bigger the safe haven trading plays," GFT strategist Andrew Taylor wrote in a
note.
    The euro zone's blue chip Euro STOXX 50 index's next support
level is at 2,556 points, representing the 23.6 percent Fibonacci retracement of
the latest upward acceleration started in late August. Below that, the next
support level will be 2,536 points, a low hit last week.
    Late on Tuesday, Germany, the Netherlands and Finland issued a joint
declaration that appeared to unravel much of what was agreed at the last
European summit in June, when EU leaders paved the way for the direct
recapitalisation of problem banks. 
    Italian Prime Minister Mario Monti said on Tuesday he would not run in
elections due in spring, in an interview in which he said Italy no longer risked
igniting a debt crisis in the euro zone. 
    On Wednesday, the European Parliament will debate plans for a euro zone
banking union, with member countries likely to raise concerns that the project
designed to ease the currency bloc's crisis could sow divisions within the wider
EU. 
    
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 MARKET SNAPSHOT AT 0637 GMT                            
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,441.59  -1.05 %    -15.3
 NIKKEI                              8,906.70  -2.03 %  -184.84
 MSCI ASIA EX-JP                       510.03  -0.87 %    -4.49
 EUR/USD                               1.2872   -0.2 %  -0.0026
 USD/JPY                                77.73  -0.08 %  -0.0600
 10-YR US TSY YLD                       1.665       --    -0.01
 10-YR BUND YLD                         1.533       --    -0.03
 SPOT GOLD                          $1,762.20   0.12 %    $2.16
 US CRUDE                              $90.67  -0.77 %    -0.70
 
  > GLOBAL MARKETS-Asian shares fall on wariness over Spain 
  > US STOCKS-Caterpillar, Apple push Wall Street lower 
  > Nikkei falls below key 9,000 level as slew of firms trade ex-div 
  > FOREX-Euro steady, seen capped with Spain in focus 
  > PRECIOUS-Gold steady on stimulus support; euro zone weighs 
  > METALS-Copper drops on renewed euro zone concerns 
  > Brent below $110 on economic woes; Iran tension limits losses 
    
    COMPANY NEWS:
    
    BANCO SANTANDER 
    Banco Santander priced a share offering for its Mexican unit at 31.25 pesos
per share, in the middle of the range set by the company. Santander is set to
raise more than $4 billion in the dual-country offering of its Mexican unit's
shares, aimed at helping the bank shore up its operations in the ailing Spanish
economy. 
    
    EUROPEAN AUTO MAKERS
    Japanese automakers including Toyota Motor Corp and Nissan Motor
Co. are cutting back production in China in the wake of anti-Japan
protests that shuttered dealerships and darkened their sales outlook in the
world's biggest car market. 
    
    CGGVERITAS 
    The firm said on Wednesday it is raising funds to finance the planned
acquisition of the seismic data division of Dutch engineering company Fugro
 with a 414 million euro ($536.64 million) rights issue. 

    CREDIT SUISSE 
    Credit Suisse is preparing to dismantle its sub-scale asset management unit,
integrating the business into its larger private bank and investment bank to
clamp down on costs, two people within the Swiss bank told Reuters. For more,
click on 
    
    DEUTSCHE BANK 
    Germany's biggest lender expects to see one-off costs in the third quarter
linked to its job cuts, litigation expenses and the reduction of risk-weighted
assets, Co-Chief Executive Anshu Jain told a financial conference.
 
   Separately, Deutsche Bank supervisory board chairman Paul Achleitner told
Handelsblatt bonuses for management board members are limited to a single digit
million amount.
    
    HANNOVER RE 
    Hannover Re may plump up its dividend for 2012 to bolster its majority
owner, insurer Talanx, which is readying an initial public offering,
a German newspaper reported on Tuesday, citing Hannover's chief executive.
 
    
    TOTAL  
    Energy companies should not drill for crude oil in Arctic waters because the
environmental risks are too high, the oil company's Chief Executive Officer
Christophe de Margerie said in the Financial Times. 
    
    EADS 
   U.S. aircraft giant Boeing is still getting U.S. subsidies despite
Washington's claim to have stopped the handouts, the European Union said in the
latest round of the world's biggest trade dispute. 

    FIAT 
    Chief Executive Sergio Marchionne confirmed on Tuesday plans to have Fiat's
Italian factories make cars that will be sold outside Europe, particularly in
the United States, as the company looks to counter a five-year market slump in
Europe. 
    
    IMPREGILO 
    Italian construction company Impregilo and peer Salini approved a
cooperation deal on Tuesday as a first step towards their merger that could
bring extra contracts worth up to 6.4 billion euros ($8.30 billion) by 2017.

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