Investment Research — General Market Conditions

26 July 2010

Danske Daily
Markets overnight
The results of the Committee of European Bank Supervisors’ (CEBS) stress test Market movers today:
of the European banking sector were largely as expected. Most banks have enough
cash to survive both another severe recession and another rout of distress in debt Markets will digest CEBS’
markets, see Implications of the European stress test. Out of 91 banks, only seven European bank stress test – 7
banks failed the stress tests and need to raise a combined EUR3.5bn, much less than banks failed the test (out of 91).
expected in general. These are Germany's Hypo Real Estate, Greece's ATE Bank and All Nordic banks passed
five Spanish regional banks. Hypo Real Estate has already been taken over by the comfortably as expected.
German government.
SEK: Trade balance (09.30CET)
The test showed that all Nordic banks are resilient to both another economic
USD: New home sales (16.00CET)
slowdown and a sovereign debt crisis, see Nordic Banks Relax Tests. Some
investors have been worrying about the reliability of the tests, but CEBS said in a No important Q2 earnings results
statement that the results "confirm the overall resilience of the EU banking system." today – later in the week Deutsche
We think the test has done some to improve transparency in the European banking Bank, Boeing, Peugeot, Siemens,
sector and consider it a good step forward to reduce investor concerns on the financial Statoil and Volkswagen will report.
sector going forward.
Equity markets have generally reacted positively to the stress test results; the US Market overview
S&P500 index ended 0.8% higher on Friday and the Japanese Nikkei225 is up around
07:30 1 day +/-,%
the same at the time of writing. South Korean Q2 GDP surprised on the upside by
advancing 7.2% y/y. FX markets have been relatively quiet overnight; EUR/USD S&P500 (clo se) 1102,7  0,82
S&P500 fut (chng fro m clo se) 1101,8  0,11
trades around 1.2930 while the Scandies are broadly unchanged against the euro. Nikkei 9498,6  0,72
Hang Seng 20860,0  0,22
Reports from Germany and the UK showed Friday that Europe's economy is
17:00 07:30 +/-, bp
growing further. With the largest increase in 20 years, the German IFO index rose to
the highest in three years in July and UK GDP rose more than 1% q/q in Q2. US 2y gov 0,57 0,58  1,6
US 10y gov 2,94 2,98  3,9
BP plans to name Robert Dudley, the director of BP’s oil spill unit, to succeed
iTraxx Europe (IG) 111 112  1,3
Tony Hayward as CEO. The nearest crude oil future has traded flat overnight around iTraxx Xover (Non IG) 412 508  96,3
USD79 per barrel.
+/-, %
EUR/USD 1,283 1,292  0,71
Global Daily USD/JPY 87,300 87,540  0,27
EUR/CHF 1,35 1,36  0,69
Financial markets will probably spend some time digesting the results of the EUR/GBP 0,832 0,836  0,49
EUR/SEK 9,458 9,446  -0,12
European bank stress tests today. Did the stress test pass the exam itself? EUR/NOK 7,97 7,98  0,14

The data calendar is rather thin today. Data is expected to show that new home USD
sales in the US picked up in June after a sharp drop in May. No large companies Oil Brent, USD 77,3 77,6  0,41
Gold, USD 1190,6 1192,3  0,14
report Q2 earnings today. Note:
* The iTraxx Europe Index show the spread development
Scandi Daily for the most liquid investment grade CDS contracts in
the euro credit market.
This week offer some decently interesting data from Sweden like PPI, NIER
business and consumer confidence, retail sales and Q2 GDP. The GDP figure is a **The iTraxx Europe Crossover show the spread
development of the most liquid non-investment grade
flash estimate and the earliness of the release means forecasts are based on less CDS contracts in the euro credit market.
information than usual (e.g. June figures still lacking). Analysts' estimates are found Source: Bloomberg
in a quite narrow range of 2.9-3.5% y/y (ours is at the upper end). The data flood
kicks off today with trade balance for June. Our estimate is +5bn where we expect
that exports rose marginally more than what is seasonally normal while imports fell From 12-30 July Danske Daily will be
slightly. published in a reduced summer edition

Senior Analyst
John Hydeskov
+45 45 12 84 97
johy@danskebank.com

www.danskeresearch.com
Danske Daily

Key figures and events

Monday, July 26, 2010 Period Danske Bank Consensus Previous

1:50 JPY Trade balance JPY bn (s.a) Jun 690.9 (539.0) 324.2 (416.1)
9:30 SEK Trade balance SEK bn Jun 5.0 2.7
16:00 USD New home sales 1000 (m/m) Jun 320 (6.7%) 300 (-32.7%)

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Danske Daily

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