Europe - Stocks (General News)

[Muhajir]

CDS: Bernanke pessimism leads to a weaker tone on the open

LONDON, June 8 (IFR) - Synthetic European credit markets are opening on the back foot once again this morning, reversing the tentative corrective gains seen yesterday. As of 06.30GMT, the iTraxx Main was a basis point wider at 104.5bp, the HiVol was 1.5bp wider at 145.5bp (a S15 record wide) and the Crossover was 3.5bp wider at 388bp, according to Tradeweb.

The worsening condition of the US economy continues to be the dominant theme in global capital markets, following the weak data from last week. Last night in a speech at the International Monetary Conference in Atlanta, Bernanke said that the economy was running "well below" potential and job creation is lagging, therefore monetary policy accommodation remains necessary, especially with medium term inflation subdued. This led to a drop in US stocks that permeated into Asian bourses and hence Europe, leading to the weaker sentiment at the open.

Thus it looks as if forthcoming data releases will become far more meaningful over the course of the summer months, starting with the Beige Book tonight, which is expected to be the weakest report so far this year.

It almost goes without saying that if we continue to see a deterioration of growth over the summer, QE3 rhetoric will begin to shift through the gears.

In all honesty yesterday was a bit of a non event in terms of price action in the secondary markets, with the exception of Moody's downgrade of EDP and Fitch's downgrade of Nokia, which caused both names to widen sharply, especially in the cash market. Today, in the absence of meaningful data (we have already seen German April exports fall the most since January 2009) it is likely to be more of the same.

Meanwhile, the Greek situation continues to be the main European focus. The new bailout, restructuring/reprofiling/rollover/default rhetoric will continue unabated no doubt without any real clarity being agreed upon.

Overnight we have seen reports that the German Finance Minister Schaeuble has written to his European counterparts and Trichet is seeking a debt maturity extension of up to 7 years, believing that bondholders should have to accept those terms, rather than it being of a more voluntary basis. That would, of course, trigger the credit event that everybody is currently at pains to avoid.

Looking ahead to today, and as mentioned above it's a blank day in the States until the Beige Book after London has headed into the sunset. In Europe the main focus will be the latest estimate of Q1 GDP, which is expected to be unchanged from the previous estimate.

[winston]

So are you expecting robust growth ?

Philips dims outlook after shock 1.3 billion euro loss by Gilbert Kreijger

AMSTERDAM (Reuters) - Philips flagged a grim outlook after a surprise quarterly loss that was driven by writedowns on recent acquisitions to reflect weak consumer demand in Europe and the United States.

Philips -- the world's biggest lighting firm, a top three hospital equipment maker, and Europe's biggest consumer electronics producer -- has been hit by rising raw material costs, sagging consumer confidence, sluggish construction markets and government budget cuts in the healthcare sector.

On Monday, the Dutch group announced an unexpected 1.4 billion euro writedown on healthcare and lighting acquisitions that dragged it to a 1.3 billion euro ($1.8 billion) second-quarter net loss, just weeks after profit warnings at two key divisions.

Philips, which is heavily exposed to the mature European and U.S. markets, has highlighted the need to expand in the fast-growing Asian and emerging economies.

It gave a bleak outlook on Monday for the next two quarters, lowered the profit margin targets for its three core businesses for 2013, and said it would cut costs by 500 million euros.

http://www.newsmeat.com/news/meat.php?a ... &buid=3281

[LenaHuat]

Look at DAX:
http://data.cnbc.com/quotes/.GDAXI/tab/2

[LenaHuat]

DAX's plunge is exceptional. Maybe the Germans are terrified of their pivotal role in the ECB.

[LenaHuat]

It is now 22% below 2 May 2011's peak of 7600.

[LenaHuat]

DAX is now 5620, 26% below the 2 May 2011 peak of 7600. The Germans could be forcing for an end to the Euro-zone.
I anticipate serious political turmoil ahead.

[millionairemind]

DAX is now 5620, 26% below the 2 May 2011 peak of 7600. The Germans could be forcing for an end to the Euro-zone.
I anticipate serious political turmoil ahead.

If the Germans want out... all hell will break loose...

[kennynah]

Germans are too deep into this..they hv to help Greece to help themselves

[LenaHuat]

DAX is now at 2-year low in which case DOW should hit 8000. I know I am being greedy when I wrote about it hitting '7000' but seriously matters are pretty bad.

[winston]

German and French Indices dropping close to 4%.