Americans Still Not Working

Stock-Markets / Financial Markets 2010
Mar 31, 2010 - 09:19 AM

By: PaddyPowerTrader

For the most part markets were little changed overnight with investors largely sitting tight ahead of Friday’s all-important US non-farm payrolls report. Indeed the S&P 500 closed exactly unchanged, with some strength in the industrials offset by some weakness in the financials. Stock wise 3M rallied 3.6% as Morgan Stanley said profit may top estimates after Danaher boosted its earnings forecast. Home Depot and Lowe’s climbed as the S&P/Case-Shiller index of home prices in 20 US cities and the Conference Board’s confidence gauge topped economists’ estimates.

Today the US ADP private sector payrolls report disappointed coming in at -23k against expectations for a 40k rise. This news allied with Moody’s rating agency who has further downgraded the credit ratings of five Greek banks is giving the Dow a red hue.

Today’s Market Moving Stories

•Ireland’s National Asset Management Agency said it would apply an average discount of 47% on the first block of loans that it will purchase from the local banks, compared with the Government’s earlier estimate of a 30% discount. Ireland’s regulator estimates that the local banks may need at least €31.8bn of new capital, with banks given 30 days to submit capitalisation plans. I won’t bore you with too much NAMArama analysis as it’s well covered elsewhere. I just want to say on the all the hype about the larger than expected haircut it should be noted that this discount applies to the initial tranche only (constituting around 20% of the total), which is likely to disproportionately feature development land loans that face larger writedowns. Future loan tranches are yet to be valued by NAMA, though it is expected that the eventual average discount paid for its entire loan portfolio will be lower than today’s announced level.
•The IMF scaled back its forecasts for growth in Germany this year to 1.2% (from 1.5% previously), with growth expected to strengthen to just 1.7% in 2011 (from a forecast of 1.9% previously).
•German labour market data again came in better than expected this morning as today’s unemployment data surprised again positively. In March the unadjusted number of unemployment declined by 75,000 to 3.568mln, due to the normal spring recovery. The ILO measured unemployment rate stagnated the fourth month in a row at 7.5% in February.
•UK consumer confidence deteriorated in March, dealing a blow to Prime Minister Gordon Brown as he prepares to call what promises to be one of the closest general elections in years. The GfK NOP showed its consumer confidence index slipped to -15 in March from -14 in February. Nick Moon, the managing director of GfK NOP social research, said that although the drop was small, it was significant because confidence had risen in the first two months of the year.
•Greece may pay about €13 billion more in interest on the debt it sells this year than it would have if yields had stayed at their pre-crisis levels relative to Germany’s. Interest on the three bonds it sold this year, including a seven-year note offered this week, will amount to €7.7 billion over the life of the securities, compared with €3.8 billion if they had sold them at the average extra yield, or spread, over German debt that prevailed between 2000 and 2008. Greece will incur a further €18.9 billion of interest on this year’s remaining issuance, compared with €9.4 billion before the crisis began.
•Chinese PBOC Vice Governor Zhu Min said that “there remains the latent risk of asset bubbles. The rapid rebound for the better in market risks after the financial crisis has led to the threat of asset bubbles in capital marketsâ€