UK MARKET TALK ROUNDUP: BROKERS COMMENTS -2-

22nd Jun 2010 14:49

0639 GMT [Dow Jones] Bunds are higher Tuesday as China's forex move-fuelled risk rally fizzles out. Asian shares are trading lower and European equities are expected to follow suit. Attention will shift back to the troubles in the euro zone and its impact on the banking system, with Fitch Ratings Monday cutting its long term debt rating on BNP Paribas's debt by one notch to AA-. The Ifo business climate index in Germany at 0800 GMT is the only economic release of note in the euro zone, while in the primary market, The Netherlands sells bonds of up to EUR2B and Spain offers T-bills for up to EUR4B. September bunds up 0.11 at 127.51 and the 10-year bund is at 102.20 to yield 2.745% ([email protected]) 0636 GMT [Dow Jones] USD/TWD still lower at 31.825 vs 31.999 yesterday on foreign fund inflows, but off midday's 31.800 after USD/CNY extends gains in afternoon, also on Taiex's 0.3% loss, says foreign bank trader. Tips pair in 31.800-32.000 band in afternoon. "The pair is likely biased down in short term on the better economic outlook amid improving cross-Strait ties," she says. Taiwan, China will begin preparatory talks on planned wide-ranging trade agreement Thursday in Taipei to hammer out final details of the pact, island's semiofficial Straits Exchange Foundation said Tuesday. ([email protected]) 0630 GMT [Dow Jones] USD/HKD drifts higher, at 7.7773 vs 7.7721 late yesterday; trader from U.K. bank says various banks selling HKD to lock in profit, as euphoria over potentially stronger CNY has waned, though sales weren't heavy. "The key thing to look at will be the yuan. Agricultural Bank's upcoming IPO will also drive the demand for the Hong Kong dollar in the weeks ahead." Tips pair to stay in 7.7700-7.7850 range. ([email protected]) 0626 GMT [Dow Jones] Situation in Europe is such dark cloud, says Rory Robertson at Macquarie; reckons Australian central bank may be on hold for quite a while. "Having paused in June and being about to pause again in July ahead of CPI, I think the RBA would love to remain on hold for the rest of the year, in part because the situation in Europe is so bleak," says Robertson. Noting central bank had hiked in 6 of last 8 meetings, interest rate strategist adds, "whether the RBA tightens a little or a lot over next three years, it won't be doing three in a row again in this cycle." 30-day interbank futures market has next rate hike priced in for March next year. Still, only 1 week ago the next hike wasn't priced in until August of next year. ([email protected]) 0623 GMT [Dow Jones] September bunds are 0.18 higher at 127.58 although WestLB notes that the daily indicators offer little optimism except that the stochastic which is levelling off in oversold territory. Immediate resistance is at 127.73, following which resistance is at 127.93 and 128.12. Support is at 127.17, 127.03 and 126.40. ([email protected]) 0621 GMT [Dow Jones] USD/CNY extends gains in afternoon session following fresh USD demand from large state-owned Chinese banks, traders say. "We are seeing several big names buying at around CNY6.8200 and it's continuing," says Guangzhou-based trader at foreign bank. Another Shanghai-based trader at local bank says large state-owned bank bid near CNY6.8150. In OTC trade, USD/CNY last at 6.8215 vs 6.8229 intraday high, 6.7976 last close; traders, economists say state-owned banks' USD demand suggests PBOC intends to support USD/CNY after sharp fall yesterday, temper expectations of stronger CNY. "we are still monitoring to see whether this dollar demand is part of the PBOC intervention," says Guangzhou based trader; USD/CNY may test 6.8300 resistance. (JSX) 0619 GMT [Dow Jones] (An item at 0600 GMT, misstated Yang Ming Marine's closing stock price. The correct version follows:) Taiwan shares end down 0.3% at 7612.68 in quiet trade, taking breather after ending at 5-week high yesterday. Hua Nan Securities Investment Assistant Vice President Henry Miao tips Taiex in tight 7550-7650 band tomorrow as investors waiting for signing of Taiwan-China trade pact. "As long as the pact isn't signed, the market won't treat it as a negative, but after it's signed, people will start trimming positions," he says. Nasdaq's decline overnight weighs on tech shares: TSMC (2330.TW) off 1.1% to NT$62.60, Hon Hai Precision (2317.TW) down 2.4% to NT$123.50, but China-oriented companies gain on China's move to allow greater CNY flexibility: President Chain (2912.TW) +1.5% to NT$97.70, Cheng Shin Rubber (2105.TW) +1.0% to NT$68.20; Clevo (2362.TW) +2.0% to NT$72.50; Yang Ming Marine (2609.TW) ends limit up 7.0% in heavy volume at NT$15.30, highest since September 2008, as investors revise up company's 2Q earnings forecasts on shipping demand from Europe, U.S. ([email protected]) 0611 GMT [Dow Jones] PREVIEW: New Zealand's 1Q current account deficit expected to narrow, may record surplus as boosted by improvement in trade balance, according to economists. According to median forecast from Dow Jones poll of 9 economists, 1Q current account deficit at NZ$250 million vs NZ$3.57 billion in 4Q; deficit in 12 months to Mar. 31 expected at NZ$5.03 billion, 2.7% of GDP, vs NZ$5.47 billion in previous quarter. BNZ economist Craig Ebert says 1Q balance could be close to flat due to "seasonally high exports and seasonally low imports." ANZ Bank senior markets economist Khoon Goh says deficit likely to widen from now on "improving corporate profitability, rising borrowing costs and the strengthening in demand." ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 22, 2010 09:49 ET (13:49 GMT)