• European stock market, economy and companies update (September 14, 2015)

    Notes/Observations
    - Markets on cautious footing ahead of the Fed's decision this week; emerging markets currencies remain soft
    - China Industrial Production data reflects continued headwinds for its economy
    - Campaigning for Greek election enters its final week before the Sept. 20th vote


    SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
    Equities
    Indices [Stoxx50 +0.4%, FTSE +0.6% at 6,156, DAX +0.4% at 10,167, CAC-40 +0.4% at 4,565, IBEX-35 +0.3% at 9,767, FTSE MIB -0.3% at 21,690, SMI +0.1% at 8,783, S&P 500 Futures +0.2% at 1,954]

    - Market Focal Points/Key Themes: he FTSE and European indices trade higher this morning with the FTSE being led by the mining sector (RIO.UK and BLT.UK) as commodities prices continues it's bounce from lows. European shares show resilience, trading in positive territory, to uncertainty over Chinese growth (lower than expected reported August YoY Chinese Industrial Production but higher than expected August YoY Retail Sales yesterday).

    By Sector:
    - Consumer discretionary: REL.UK +1.52% (Exane BNP Paribas Raised REL.UK to Outperform from Underperform), TNI.UK + 6.83% (Discussions to acquire stake in Local World Holdings)
    - Materials: [AAL.UK +1.56%, BLT.UK +1.94%, RIO.UK +1.93% (Rising copper prices)]

    Speakers
    - ECB's Bonnici (Malta) reiterated view that too early to consider changes in QE bond buying program. Expectation of further ECB action was overdone. Core inflation remains within a reasonable range. Saw some improvement in domestic demand and investment
    - Impact of weaker Euro currency to help region's exporters
    - Sweden Central Bank (Riksbank): Lower inflation target would result in lower Repo Rate
    - Australia Communication Min Malcolm Turnbull resigneds from Cabinet; to challenge PM citing lack of economic confidence
    - Australia PM Abbott confirmed leadership challenge and would hold party room ballot today. Have received support from colleagues and expected to win the challenge

    Currencies
    - European FX markets began the week on a quiet note as investors awaited the FOMC rate decision on Thursday which will be the main driver of price action. The big question being whether global trade slowdown and its spillover effects would put the Fed on pause in its normalization process. Emerging market currencies were on soft footing as the potential Fed liftoff this week remained a possibility. The USD/TRY hit a record high as it approached the 3.07 area.
    - The EUR/USD was holding below 2-week highs just under 1.1350 area
    - The GBP/USD was fractionally higher aided by weekend comments from BoE MPC member Weale who wrote an op ed article reiterating MPC view that interest rates would need to rise relatively soon.
    - The USD/JPY saw a stronger yen ahead of Tuesday's BOJ monetary policy decision. The pair was holding above the 120 level with yen firmer by approx. 0.4%

    Fixed Income:
    - Bund futures trade at 155.30 up 5 ticks in quite trade. Support moves to 154.70 followed by 154.47 with analysts still looking for 154.20 filling the gap. A move below this would target 153.75. To the upside a break of the highs would put pressure on 155.45 the 200MA, with 155.72 the next target. Above this sees 156.24 offering resistance.
    - UK Gilt futures trades 118.41 down 2 ticks, little changed after earlier weakness was bought up. Analysts look for continued strength back to 118.63 followed 118.85 then 119.34. Support is seen at the 118.00 followed by 117.84 with the next target 117.59 then 117.27.
    - Monday's liquidity report showed Friday's excess liquidity rose to 513.1B a rise of 0.8B from 512.3B prior. This was primarily due to AFs and MonPol portfolios rising to negative 99.2B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to 61M from 21M.
    - Corporate Issuance is expected to be lighter this week after over $50B came to market last week. Analysts estimate $20-25B of $ denominated issuance this week, which will likely be done before the FED rate decision on Thursday.
    Weekly Supply
    - Europe sees roughly 15.5B of issuance to come to market this week.
    Wednesday sees Germany tap its 31y Bund for 2B.
    Thursday sees France tap its 2y, 5y Oats for 7.0-8.0B as well as its 9y OATi, 15y and 25y OATie for 1-1.5B. Spain will also tap its 3y, 5y, and 10y SPGB for an estimated 4.5B.
    Net cash flow for the week is slightly negative as 3.72B in C&R is to be repaid by Austria, Finland and Italy on Tuesday.
    - UK is to sell 3.25B in 10y Gilts this week. Cash flow is positive 0.98B with 4.23B to be repurchased by the BoE during the first part of the week, and no C&R to be repaid.
    - US will sell its 10y Bond for a total of $13.0B this week. Cash flow is negative $38.94B with $32.06B in C&R to be repaid Tuesday.

    Political/In the Papers:
    - (EU) German Fin Min Schaeuble: refugee crisis cannot be used as an excuse to break EU budget rules
    - (GR) Recent Polls stemming from upcoming Greece election show Syriza party only a razor-thin lead. Sunday's election likely to deliver a hung parliament. Opinion polls continue to show Syriza Party leader Tsipras almost neck-and-neck with the main opposition conservative New Democracy party. MRB poll: Syriza with 25.9 percent of the vote vs. 25.5 percent for New Democracy. Avghi Poll predicted a tie with both parties at 31 percent.

    Looking Ahead
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - (EU) EU General Affairs Ministers hold meeting in Brussels
    - (EU) EU Interior Ministers meet in Brussels on Migration Crisis
    - (CH) Swiss Parliament holds Autumn Session throughout week in Bern
    - 05:30 (DE) Germany to sell 2.0B in 6-month Bubills
    - 06:00 (IE) Ireland July Trade Balance: No est v 4.1Be
    - 06:45 (US) Daily Libor Fixing
    - 07:00 OPEC Monthly Report
    - 07:25 (BR) Brazil Central Bank Weekly Economists Survey
    - 08:00 (IN) India Aug CPI Y/Y: 3.6% e v 3.8% prior
    - 08:00 (PL) Poland Aug M3 Money Supply M/M: 1.2%e v 0.9% prior; Y/Y: 8.0%e v 8.6% prior
    - 08:00 (PL) Poland July Current Account Balance: -0.5Be v -0.9B prior; Trade Balance: 0.1Be v 0.1B prior; Exports: 14.3Be v 14.3B prior; Imports: 14.2Be v 14.2B prior
    - 08:00 (IN) India announces details of upcoming bond auction
    - 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
    - 08:30 (CA) Canada Aug Teranet/National Bank HPI M/M: No est v 1.2% prior; Y/Y: No est v 5.1% prior; House Price Index: No est v 174.33 prior
    - 08:30 (CH) Swiss Government question time in Parliament
    - 08:50 (FR) France Debt Agency (AFT) to sell combined 5.4-6.6B in 3-month, 6-month and 12-month bills
    - 09:00 (RU) Russia Aug Industrial Production Y/Y: -4.3%e v -4.7% prior (maybe)
    - 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
    - 09:45 (EU) ECB announces Covered-Bond Purchases
    -09:45 (UK) BOE to buy 1.41B in 3-7year Gilts (residual)
    - 11:30 (US) Treasuries to sell in 3-Month and 6-Month Bills
    - 16:00 (US) Weekly Crop Condition Report
    - 17:00 (CO) Colombia Jun Economic Activity Index (Monthly GDP) Y/Y: No est v 3.3% prior
    - 21:30 (AU) RBA Sept. Meeting Minutes
    - 23:00 (JP) BOJ Interest Rate Decision: Expected to maintain Annual Rise in Monetary Base at 80T
    - 23:00 (TH) Thailand Central Bank to sell combined THB60B in 3-month and 6-month Bills
    - 23:30 (HK) Hong Kong to sell 3-month, 6-Month and 12-month Bills
    - (MX) Mexico Aug Total Formal Job Creation: No est v +44.7K prior


    Economic data
    - (FI) Finland Aug CPI M/M: 0.2% v 0.1%e; Y/Y: -0.2% v -0.2%e
    - (IN) India Aug Wholesale Prices (WPI) Y/Y: -5.0% v -4.4%e
    - (CH) Swiss Aug Producer & Import Prices M/M: -0.7% v -0.5%e; Y/Y: -6.8% v -6.7%e
    - (CH) Swiss July Real Retail Sales Y/Y: -0.1% v -1.2% prior
    - (IE) Italy Aug Final CPI M/M: 0.2% v 0.2% prelim; Y/Y: 0.2% v 0.2% prelim; CPI FOI Index Ex Tobacco: 107.4 v 107.2 prior
    - (IE) Italy Aug CPI EU Harmonized M/M: -0.1% v 0.0% prelim; Y/Y: 0.4% v 0.5% prelim
    - (CZ) Czech July Current Account Monthly (CZK): -21.5B v +0.7Be
    - (HK) Hong Kong Q2 Industrial Production Y/Y: -1.3% v -1.5% prior
    - (HK) Hong Kong Q2 PPI Y/Y: -2.7% v -0.6% prior
    - (IT) Italy July General Government Debt: 2.199T v 2.20T prior
    - (EU) Euro Zone July Industrial Production M/M: 0.6% v 0.3%e; Y/Y: 1.9% v 0.7%e

    Fixed Income Issuance:
    - (NO) Norway sold NOK8.0B vs. NOK8.0B indicated in 12-mont Bills: Avg Yield: 0.65% v 0.95% prior; Bid-to-cover: 2.18x v 1.76x prior

    Contributed by Trade The News
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