MARKETS / MARCHES

08:45 A.M

ETX Capital Calls the FTSE100 +20 points, DAX +25 points, CAC-40 +23 points

European markets are set to climb higher today, helped by gains across US and Asian markets. However, bank stocks will be under considerable pressure following news that Barclays CEO Bob Diamond has resigned. Furthermore, volatility is expected be high given a number of event risks this week, such as the ECB’s rate decision on Thursday and US payrolls on Friday. Economic data will be under scrutiny until central bank policy decision day [Thursday]. Further deterioration in key indicators will increase the volume on calls for further easing measures. Today, UK net consumer credit, euro zone PPI and US industrial new orders will all be in focus.

Ishaq Siddiqi - Market Strategist - ETX Capital - www.etxcapital.com

09:00 A.M

European equity markets are trading moderately higher this morning managing to hold on to yesterday’s solid gains. Support is coming once again out of China today where the troubled real estate market is finally showing some signs of life and expectations are continuing to grow that there will be more monetary stimulus in the near future.

With European economic data schedule rather on the light side today focus will remain on the Libor scandal especially with Barclay’s CEO Bob Diamond surprisingly announcing his resignation this morning. No doubt the buck won’t be stopping with Barclays with focus likely to fall on several other major banks soon who were also involved into manipulating the Libor.

It will be interesting to see if stocks can keep the current rally going as much seems to be built on expectations that the ECB will lower rates on Thursday due to a flood of rather dismal economic data since the last meeting. However judging from the past a cut in interest rates is anything else than a done deal with the ECB having resisted pressure to do so several times before.

In the US focus will be on factory orders and the annual report by the IMF on the US economy with both expected to confirm slower growth in the months ahead as companies continue to struggle with the fallout of the European financial crisis and consumers as well as employers are becoming more cautious and less optimistic what the future is concerned.

Equity markets are expected to continue to underperform most European markets today with earnings season scheduled to begin next week where most companies are likely to paint a somber outlook with a strong US Dollar and global slowing growth being the main drag on earnings. Furthermore ahead of tomorrow’s Independence Day volume is expected to be on the light side and declining as the day progresses.

Markus Huber - Head of German HNW Trading - ETX Capital - www.etxcapital.com

12:00 P.M

Gros soulagement sur les marchés européens…

Les marchés européens ont fortement rebondi vendredi dans le sillage du Sommet européen. Ces derniers refusaient de baisser depuis quelques semaines déjà dans l’attente d’un accord d’envergure et une fois n’est pas coutume, les attentes n’ont pas été déçues. En effet, les dirigeants européens ont pris la mesure de la situation, l’Allemagne lâchant du lest sur le terrain de la rigueur en validant plusieurs étapes des évolutions de gouvernance européenne. Le résultat est certes positif car désormais le Mécanisme Européen de Stabilité financière pourra recapitaliser directement les banques qui à l’avenir n’auront pas besoin de faire appel aux Etats et inversement. Mais beaucoup de détails manquent sur le volet de la mutualisation de la dette publique alors que la situation des économies de la périphérie demeure toujours très instable.

Dans ce contexte de baisse de l’aversion au risque, les rendements espagnols et italiens se sont fortement détendus vendredi, l’euro/dollar s’est apprécié de 2% et le cours du baril de 3%. Le CAC 40 affiche finalement un bilan semestriel positif de 1,36%. Sans surprise les indices des pays jugés plus résistants à la crise s’en tirent mieux avec un DAX et un S&P 500 qui gagnent plus de 8%. Les marchés pourraient prolonger leur ascension cette semaine dans l’attente de la réunion monétaire de la BCE jeudi qui devrait annoncer une baisse de son taux directeur de 25 points de base. Gare à trop d’euphorie toutefois, de nouvelles tensions pouvant apparaître avec dans quelques jours les publications trimestrielles des entreprises dont certaines pourraient décevoir au regard du nombre de profit warning annoncés dernièrement.

Cholet Dupont - Chronique Boursière du 2 juillet 2012

12:30 P.M

Risk-on again today, with stocks across Europe climbing higher – basic resources tack on amid recovering commodity prices. The euro remains range bound but has recovered from recent lows. Core government bonds have fallen by contrast, demonstrating that clients are comfortable with building riskier positions. Markets on Wall Street currently indicate a flat open after yesterday’s push higher.

Hopes that additional easing measures by central banks are in the pipeline are offering markets upside momentum here. Despite continued weakness in global macro data, markets are pricing in a rate cut by the ECB and further QE by the BOE this Thursday. Forecasts for US payrolls have also been downgraded over recent weeks, with markets hoping that ongoing weakness in the labour market will force the Fed to act with more QE.

As such, the risk-rally that was sparked by EU leaders at last week’s summit has extended today and may continue to do so until the end of the week, given the ECB and BOE meet or exceed market expectations with measures.

Shares in Barclays have rebounded from opening lows after CEO Bob Diamond announced his exit from the bank. The news came as a shock at first, given the hasty U-turn as Diamond suggested he will remain at the top yesterday. His departure, however, was not too much of a surprise given the pressure he faced in light of the Libor scandal. The stock has been hammered following news of the Libor scandal last week, offering investors an entry point to pick up the stock at a lower price.

Despite today’s modest recovery for Barclays shares, the stock will remain under pressure on the back of growing uncertainties over the bank’s management team in the near term. The fallout of Diamond’s resignation has reportedly prompted the bank’s COO Jerry del Missier to walk out the door. And, with several major banks also reportedly involved in Libor manipulation, today’s events could be a sign of things to come for the UK banking system.

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This communication is issued by ETX Capital (trading name of Monecor London Limited) by the Sales or Trading Department to investors only and is not research. It is for informational purposes and is not an official confirmation of terms. It is confidential and is the intellectual property of ETX Capital and redistribution is prohibited. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice and may differ or be contrary to the opinions or recommendations of other ETX employees or the opinions expressed by other business areas or by ETX Capital itself as a result of using different assumptions and criteria. ETX Capital may maintain long or short positions in the financial instruments referred to and may transact them as principal or agent. Unless stated specifically otherwise, this is not a recommendation, offer or solicitation to buy or sell and any prices or quotations contained herein are indicative only. To the extent permitted by law ETX Capital does not accept any liability arising from the use of this communication.

Ishaq Siddiqi - Market Strategist - ETX Capital - www.etxcapital.com

17:00 P.M

Heading into the end of the session, European markets have marched higher in tandem with US stocks with clients comfortably building positions in hope that central banks will take action Thursday by adjusting current policies. In the currency market, the euro and USD both were trading in narrow ranges ahead of Thursday’s key decisions by the BOE and ECB, ignoring today’s better-than-expected US May factory orders.

This week’s poor manufacturing data from China and EMU raised calls for further central bank stimulus, leading market participants to respond to poor data with little or no reaction. The BOE is expected to beef up its asset purchase programme by an additional GBP50 billion, while the ECB is widely expected to cut the policy rate by 25 basis points with the press conference following the decision eagerly awaited for guidance.

With US markets closed for Independence day tomorrow, price action is likely to be subdued with low volumes, although it is business as usual for Europe tomorrow. Tomorrow, PMI services data from the UK and euro zone under the spotlight, together with retail sales from the EMU. Again, further deterioration in these releases will only fuel expectations that BOE and ECB will re-launch easing measures on Thursday. If markets again shrug off poor data tomorrow, the current risk-rally for equities may extend for another day, though we are likely to see clients move to the sidelines ahead of Thursday’s policy decisions.

Ishaq Siddiqi - Market Strategist - ETX Capital - www.etxcapital.com

18:00 P.M

Le niveau de risque sur les marchés boursiers reste significatif

Les investisseurs ont accueilli avec soulagement les mesures quasi inespérées engagées lors du Sommet Européen. L’annonce du plan de sauvetage obtenu par l’Italie et l’Espagne a eu un effet immédiat sur les marchés obligataires souverains, avec la détente notable des taux à 10 ans italien (5.82%) et espagnol (6.32%). Même enthousiasme sur les indices boursiers européens, qui ont vivement rebondi vendredi. Le Cac 40 a ainsi enregistré sa meilleure performance de l’année.

Toutefois, on peut s’interroger sur la nature du rebond et ce qu’il traduit en termes d’aversion au risque des investisseurs.

La vive réaction haussière intervenue sur les actions vendredi dernier ne s’est pas matérialisée par une amélioration aussi marquée des indicateurs de risque, que nous suivons attentivement chez Diamant Bleu Gestion.

L’évolution des spreads de crédit corporate, significative du niveau de risque des marchés, est assez convaincante : on observe une amélioration récente, ponctuelle, mais le niveau des spreads reste bien au-delà de ceux atteints avant la crise l’été 2011 particulièrement sur les valeurs financières. La tendance est similaire concernant l’évolution des indices de volatilité VIX et VDAX, ou l’évolution de la volatilité implicite des devises. Malgré une stabilisation récente, leurs niveaux encore élevés confirmant que l’environnement de marché demeure risqué.

A présent, deux scénarii sont possibles. Ou bien l’ajustement de ces indicateurs de risque s’opère plus lentement mais franchement dans les prochaines séances, ou bien c’est le marché actions qui s’ajuste, avec un reflux notable. Après un mouvement de près de 5% vendredi en Europe avec un gap de plus de 1.20% laissé ouvert, il n’y a pas de place pour la moindre déception ou le moindre doute sur l’exécution du plan européen et sur les intentions de la Banque Centrale Européenne.

Hugues Le Maire, Directeur Général de Diamant Bleu Gestion

RATES / TAUX

Tuesday 3 July, 2012

EURIBOR 1W 0,319
EURIBOR 1M 0,371
EURIBOR 3M 0,650
EURIBOR 6M 0,926
EURIBOR 9M 1,075
EURIBOR 12M 1,210

Eonia overnight 0.329 %

Euro LIBOR 1M 0.316 %
USD LIBOR 1M 0.246 %
GBP LIBOR 1M 0.612 %
CHF LIBOR 3M 0.085 %