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News : International Last Updated: Jan 21, 2013 - 10:12 AM


Markets: Eurozone finance ministers to discuss role of ESM and legacy bank debt
By Finfacts Team
Jan 21, 2013 - 10:08 AM

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John Roberts, Supreme Court chief justice, administers the oath of office to President Barack Obama during the official swearing-in ceremony in the Blue Room of the White House on Inauguration Day, Sunday, Jan. 20, 2013. First Lady Michelle Obama, holding the Robinson family Bible, along with daughters Malia and Sasha, stand with the president. A public swearing in will be held at 12:00 noon Eastern Time, Monday.

Eurozone finance ministers will meet in Brussels Monday to begin talks on how to channel rescue funds directly to banks. Policy makers are likely to clash over how and when the €500bn European Stability Mechanism (ESM) can bypass governments and what to do with legacy debt. An assessment of Spain, Cyprus and Greece is also expected to feature.

Economic View: European finance ministers to meet on bank debt: Juliet Tennent of Goodbody comments - - "Today will give the Irish Minister for Finance, Michael Noonan, his first opportunity of the year to push for a deal on Ireland’s legacy bank debt with both the euro group and the wider EU group of finance ministers scheduled to meet. Top of the agenda is breaking the detrimental link between sovereigns and banks which has driven the euro area debt crisis. Conflicting views on how this can be achieved have so far delayed any decisions in this regard with the politicians of the creditor countries reluctant to take any steps that would further burden their taxpayers.

This is particularly true of the German Chancellor, Angela Merkel, whose party lost a state election over the weekend and is facing federal elections in Germany later this year. The divide is highlighted by the recent mixed messages being expressed in relation to Ireland's bid for a deal on its banking debt, with the French finance minister, Pierre Moscovici, expressing his support for a deal over the weekend and the Finnish Prime Minister, Jyrki Katainen, reported in this morning’s Irish Times as opposing it. Debate on this issue is likely to be contentious and it is unlikely that any agreement will be reached this week.
Expectations about a deal for Ireland in relation to its legacy bank debt have risen since Chancellor Merkel reiterated her support last October. However, most of the efforts so far have been concentrated on bilateral discussions with the ECB on restructuring the promissory note. Legal issues around the financing of governments have meant that these negotiations have been slow but recent comments from government officials suggest that a deal is in sight. Negotiations in relation to the debt incurred by the State on behalf of the remaining banks are just beginning."

Justin Doyle, Investec Bank Ireland, said today:

  • "This week gets underway with the first Eurogroup and ECOFIN Finance Ministers meetings of the year. However the meeting is likely to be missing the now familiar need for each Eurogroup meeting to tackle a thorny financing issue on Greece, to keep Euro crisis strains in check;
  • Greece has now been tied over with aid cash which should keep things quiet, at least through to the next review. Cyprus is still pressing for aid cash, but with work still to do, it may still be a couple more months before an aid package is agreed;
  • The key data releases of the Euro area week come in the shape of the ‘flash’ PMIs for the Euro area, Germany and France on Thursday; we hold little hope of a sudden resurgence in the zone’s macro performance, with the Euro area ‘composite’ PMI having now floundered in contractionary territory for 10 months, albeit with some signs of an upturn last month;
  • All eyes will be on the Bank of Japan’s (BoJ) 21-22 January meeting. The new Prime Minister, Shinzō Abe, has been aggressively trying to shore up the Japanese economy and weaken the yen since he took office on 26 December. So far, the authorities have announced a ¥10.3 trillion fiscal spending package, the largest since 2008. They are now pushing for more aggressive central bank policy, with their sights set on next week’s BoJ meeting."

US consumer confidence data point to softening recovery in Q1: Conall Mac Coille, chief economist of Davy, comments  - - "Stock indices were little changed on Friday (January 18th), with the Euro Stoxx 50 down 0.3% and the S&P500 up 0.3%. US markets are closed today for the Martin Luther King holiday. The key macroeconomic data release on Friday was the Michigan measure of US consumer confidence. The survey reading fell to its lowest level since December 2011, indicating the toll on sentiment from the 2% payroll tax rise in January. The $100bn rise in payroll taxes is expected to reduce US consumption in Q1 by around 1%.

The weaker January Michigan confidence survey may be the first sign of some softening in the pace of the US economic recovery in Q1. That said, new highs in housing starts (954,000 in December) and lows in initial jobless claims (335,000 in the week to January 12th) suggest that the recovery in private sector demand may be becoming self-sustaining.

Overnight, the Rightmove measure of UK housing market 'asking' prices showed a 0.2% month-on-month rise in January. This means the annual growth of the Rightmove measure of prices has accelerated from 1.4% year-on-year in December to 2.4% in January. Support for UK house prices may be coming from the Bank of England's Funding for Lending Scheme, expected to boost mortgage lending and demand in Q1."

US Markets

US markets are closed for the Martin Luther King federal holiday and the public inauguration of the president will also be held today.

Asia Markets

The MSCI Asia Pacific Index fell 0.2% Monday, with Japan’s Nikkei 225 Stock Average tumbling 1.5% as the Bank of Japan began a two-day policy meeting.

China's Shanghai composite index rose 0.48%; South Korea's Kospi fell 0.05%; Australia's S&P/ASX 200 added 0.13%; in Mumbai, the Bombay Stock Exchange's Sensex 30 gained 0.21%.

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600 is up 0.20% in morning trading Monday.

In Dublin, the ISEQ  is down 0.19%.

DCC has risen 0.98%.

European Benchmarks

Irish Share Prices

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

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Currencies

The euro is trading at $1.3325 and at £0.8391.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Friday last week, the BDI rose 17 points  or 2.07% to 837 - -  the BDI is up 19.74% in 2013.

Crude oil for March 2013 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $95.16 down 40 cents from Friday's close. In London, Brent for February delivery is trading on the International Commodities Exchange at $110.61. The North Sea benchmark accounts for two-thirds of the global market.

Bloomberg reports that for the first year since the futures were created, Brent crude is poised to overtake West Texas Intermediate (WTI) oil as the world’s most-traded commodity.

Daily trading in Brent jumped 14% to average 567,000 contracts in the year to November 20 compared with all of 2011, while WTI fell 17% to 575,000, according to data from the ICE Futures Europe exchange in London and New York Mercantile Exchange compiled by Bloomberg. The number of Brent futures changing hands has exceeded those for WTI every month from April through October, the longest streak since at least 1995.

Brent, produced in the North Sea, is gaining favour among traders because of its role as the benchmark for energy prices from Saudi Arabia to Russia. Prices have climbed 34% in the past two years, reflecting everything from war in Libya to the embargo on Iran. WTI, the main grade in the US, has risen 9% as the nation, which prohibits crude exports, has struggled to clear a glut at Cushing, Oklahoma, the delivery point for Nymex futures.

Gold spot price

The spot price of an oz of gold is trading in New York at $1688.80, up $4.20 from Friday's close in New York.

Gold had hit a record high of $1,921.05 a troy ounce on Sept 06, 2011.

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.


© Copyright 2011 by Finfacts.com

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