MORNING BRIEFING: Stress Tests Day - Today results come out

[RTFX-Trading]

MORNING BRIEFING: Stress Tests Day - Today results come out

[B][I][U]What’s new:[/U][/I][/B]
Spain: Spanish Newspaper reports that some Spanish Savings banks might fail test in adverse scenario
United Kingdom: Preliminary GDP figures later today economic growth expected to double
Equity Indices: Asian indices mostly positive, after a strong session of US earnings

[B][I][U]Today:[/U][/I][/B]
[IMG]http://www.rtfx.com/images/news/CAL230710EN.gif[/IMG]


[B][I][I][U]Rates in Asia and Indices: [/U][/I][/I][/B]
EURUSD: 1.2917 - 1.2861.
USDCHF: 1.0456 - 1.0417.
GBPUSD: 1.5309- 1.5252.
EURJPY: 112.67 – 111.72.
USDJPY: 87.23 – 86.74.
DowJones: 10’322.30 +1.99%
NASDAQ: 2'245.89 +2.68%
S & P 500: 1'093.67 +2.25%
Nikkei: 9’430.96 +2.28%
Shanghai: 2'566.97 +0.18%
Gold: $ 1'196.10
Crude Oil: $ 79.05


[B][I][U]Comments: [/U][/I][/B]

Spanish newspaper ‘El Pais’ reports today that some of Spain’s 18 savings banks, allegedly failed to pass stress tests when tested for a deterioration in economic conditions and with an additional sovereign debt crisis present in several countries. Article goes on to say that this does not mean that the institutions cannot conduct normal business, but might have a shortage of capital if a crisis developed much further.

Elena Salgado, Vice president and minister of Economy says that according to a previous IMF report, Spanish Banks would require an additional 22 mln in a ‘stress scenario’ and almost 15mln have already been allocated from the Spanish State’s Fund (FROB).

On the back of these allegations (that as yet need to be verified) Euro slipped lower against the US Dollar.EUR/USD today traded in the range of 1.2861-1.2917, RTFX TraderTip reports that to the upside resistance is seen at 1.2968/1.3043, while to the downside support lies at 1.2778/1.2662.

Results are expected at 1800CET today. Reuters reports that banks are being asked to estimate how much additional capital they would need to satisfy a 6% capital ratio under these scenarios: 1) base scenario 2)an adverse scenario including 2 yrs of economic deterioration and 3) an adverse scenario with an additional sovereign shock.

Today GDP preliminary figures are expected from the United Kingdom, consensus seems to point to an increase from 0.3% to 0.6% in economic growth for the second quarter.

Earlier this morning most Asian indices registered increases, following a positive conclusion to the previous day’s US close – the increased optimism comes on the back of generally speaking, strong US earnings reported yesterday.


Good day,


Rudolf Muscat
Trading desk

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