• European stock market, economy and companies update (September 16, 2015)

    - Heading into the FOMC meeting on Thursday, equity markets are rebounding, oil is stabilizing and the USD is holding firm
    - Various ECB members hint of possibility an extension or expansion of the its asset purchase program
    - UK Hourly earnings beats expectations to highest level since early 2009 (2.9% vs. 2.5%e); ILO unemployment hits BoE's Nairu threshold at 5.5%
    - Euro Zone Aug Final CPI YoY readings revised lower

    Indices [Stoxx50 +1.3%, FTSE +0.6% at 6,172, DAX +0.7% at 10,260, CAC-40 +1.3% at 4,628, IBEX-35 +1.0% at 9,878, FTSE MIB +1.1%% at 22,136, SMI +0.9% at 8,870, S&P 500 Futures unch at 1,968]

    - Market Focal Points/Key Themes: European stocks start higher, led by luxury shares; oil moved higher supporting energy stocks; Richemont (CFR.CH +6.8%) reported 5-month sales above expectations, supporting Swatch (UHR.CH +2.9%); optimism in China helped support equities, with analysts estimating that Fed action had been somewhat priced into equities; RBS reached a settlement regarding claims it sold MBS to US credit unions; UK labor data came in better than expected, supporting UK stock outlook and speculation of potential BOE action; FOMC meeting starts today

    - Consumer discretionary [SAB Miller [SAB.UK] +20% (bid interest)Inditex ITX.ES +2.9% (earnings), JD Sports JD.UK +0.7% (earnings)]
    - Financials [Sercro SRP.UK +1.3% (asset sale)]
    - Industrials [Zodiac ZC.FR -21.5% (earnings)]
    - Materials [Glencore GLEN.UK +0.9% (equity raising results)]
    - Technology [Imagination Technologies IMG.UK -5.5% (profit warning)]
    - Telecom [Telecom Italia TIT.IT +2.1%]
    - Utilities [Abertis ABE.ES -3.5% (stake placement)]

    - ECB' Constancio (Portugal) stated that there was scope to increase QE if necessary, scheme was small compared to similar FED, BOE and BOJ programs. Euro area facing protracted period of low growth. Stage set for Greece to gradually unwind capital controls; hope haircut was not needed
    - France Fin Min Sapin released its forecasts related to the 2016 budget and saw 2016 GDP growth at 1.5% v 1.0% in 2015 with 2016 inflation at 1.0% v 0.1% in 2015. He reiterated that govt would achieve the 2017 Budget Deficit to GDP Ratio of under 3.0%
    - Sweden Central Bank (Riksbank) Sept Minutes reiterated that inflation was starting to pick up and to remain on clear upward trend
    Gov Ingves: Time is not right to consider mortgage bonds
    Dep Gov Ohlsson: Saw no need for further rate cuts but needed to complete the planned purchases of government bonds in order to increase inflation and inflation expectations
    Member Floden: Saw room for 1 more Repo Rate cut and more bond purchases (QE)
    - German DIW institute reaffirmed German 2015 and 2016 GDP growth outlook of 1.8% and 1.9% respectively
    - OECD cuts both 2015 and 2016 global growth forecasts. Cut 2015 global GDP from 3.1% to 3.0% and 2016 global GDP from 3.8% to 3.6%. Scale and not timing of Fed moves was what matters; early move would remove uncertainty. China growth dynamics difficult to assess; larger slowdown would be a risk
    - Bank of Japan' (BOJ) Monthly Economic Report for September (formal release) cut its assessment for industrial output (note: in line with Sept 15th BOJ rate decision and statement). It saw Q3 Industrial output as likely flat and exports likely to stay largely flat for the time being
    - Libya said to plan spending 'billions of dollars' to help bring oil production to 2M bpd (Reminder: On Sept 2nd Libya NOC stated that oil production was at 363K bpd, little changed from mid-Aug and still 25% of capacity)
    - Morgan Stanley analyst saw Fed lift-off in Dec with 2-3 hikes over next 12 months

    - All eyes turning towards the Fed. Dealers noted that historically the USD rallies into the first hike but the story changes once the tightening cycle was in full swing. Currently USD seems to be maintaining its bullish trajectory as the hike cycle is poise to commence. The greenback yield advantage to remain intact as tightening expectations would simply flip to later in the year
    - Euro reversed earlier gains after ECB members repeatedly noted that it had the scope to increase QE (Constancio being the latest). The EUR/USD around 1.1250 area heading into the NY morning.
    - The GBP received a boost from UK unemployment and wage data. GBP/USD popped 4% higher to test above 1.54 level.
    - The USD/JPY was steady holding above the 120 level.

    Fixed Income:
    - Bund futures trade at 154.13 up 2 ticks as the market consolidates after yesterdays steep losses. Support moves to 153.74 region yesterday low followed by 153.47. A move below this would target 153.75 followed by strong support at 152.76 the September low. 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 117.26 down 35 ticks, after stronger ILO unemployment rate and and average weekly earnings pushed Gilts sharply lower. Analysts look for continued downside to target 117.07 the 38.2% retracement level, with a move below here seeing 116.65 the 3 week low. Analysts look a break of today's high at 117.55 for continued strength back to intial resistance at 117.66, followed by 117.89. 118.14 would be needed to reassert the uptrend.
    - Wednesday's liquidity report showed Tuesday's excess liquidity fell to 505.3B a fall of 11.4B from 516.7B prior. This was primarily due to AFs and MonPol portfolios rising to negative 91.4B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to 435M from 44M.
    -Corporate Issuance saw little activity after a busy few days prior. Analysts estimate $20-25B of $ denominated issuance this week, which will likely be done before the FED rate decision on Tomorrow.

    Political/In the Papers:
    - (GR) Greece New Democracy Party (conservative opposition) now leader in polls with 27.5%, Syriza 27% according to Pulse for Action 24 TV

    Looking Ahead
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - 05:30 (DE) Germany to sell 2.0B in 2.5% Aug 2046 Bunds
    - 05:30 (UK) DMO to sell 3.25B in 2.0% 2025 Gilts
    - 05:30 (PT) Portugal Debt Agency (IGCP) to sell 1.0-1.25B in 6-Month and 12-Month Bills
    - 07:00 (RU) Russia to sell combined RUB 14.2B in 2017 and 2023 OFZ bonds
    - 07:00 (US) MBA Mortgage Applications w/e Sept 11th: No est v -6.2% prior
    - 07:00 (ZA) South Africa July Retail Sales M/M: 0.2%e v 0.1% prior; Y/Y: 2.5%e v 3.5% prior
    - 07:00 (UK) PM Cameron weekly question time in House of Commons
    - 08:00 (PL) Poland Aug CPI Core M/M: -0.1%e v +0.2% prior; Y/Y: 0.4%e v 0.4% prior
    - 08:00 (PL) Poland Aug Employment M/M: 0.0%e v 0.1% prior; Y/Y: 0.9%e v 0.9% prior
    - 08:00 (PL) Poland Aug Average Gross Wages M/M: No est v 1.4% prior; Y/Y: No est v 3.3% prior
    - 08:00 (BR) Brazil July Retail Sales M/M: -1.0%e v -0.4% prior; Y/Y: -3.8%e v -2.7% prior
    - 08:00 (BR) Brazil July Broad Retail Sales M/M: -0.2%e v -0.8% prior; Y/Y: -7.7%e v -3.5% prior
    - 08:15 (US) Baltic Dry Bulk Index
    - 08:30 (US) Aug CPI M/M: -0.1%e v +0.1% prior; Y/Y: 0.2%e v 0.2% prior
    - 08:30 (US) Aug CPI Ex Food and Energy M/M: 0.1%e v 0.1% prior; Y/Y: 1.9%e v 1.8% prior
    - 08:30 (US) Aug CPI NSA: 238.422e v 238.654 prior; CPI Core Index: 242.805ev 242.513 prior
    - 08:30 (US) Aug Real Avg Weekly Earnings Y/Y: No est v 2.2% prior
    - 08:30 (CA) Canada July Manufacturing Sales M/M: 1.1%e v 1.2% prior
    - 08:30 (CA) Canada July Int'l Securities Transactions: No est v C$8.5B prior
    - 09:00 (DE) German Chancellor Merkel with Norway PM Solberg in Berlin
    - 09:15 (UK) BOE Gov Carney with members McCafferty, Forbes and Weale in Parliament testifying on inflation report
    -09:45 (UK) BOE to buy 1.41B in 7-15-year Gilts (residual)
    - 10:00 (US) Sept NAHB Housing Market Index: 61e v 61 prior
    - 10:30 (US) Weekly DOE Crude Oil Inventories
    - 11:30 (BR) Brazil Weekly Currency Flows
    - 12:30 (DE) German Fin Min Schaeuble at event in Berlin
    - 13:05 (CA) Bank of Canada (BOC) Dep Gov Cote in Winnipeg
    - 16:00 (US) July Net Long-term TIC Flows: No est v $103.1B prior; Total Net TIC Flows: No est v -$110.3B prior
    - 18:45 (NZ) New Zealand Q2 GDP Q/Q: 0.6%e v 0.2% prior; Y/Y: 2.5%e v 2.6% prior
    - 19:50 (JP) Japan Aug Trade Balance: -540.0Be v -268.4B (revised from -268.1B); Adj Trade Balance: -377.3Be v -368.8B prior; Exports Y/Y: 4.3%e v 7.6% prior; Imports Y/Y: -2.5%e v -3.2% prior
    - 20:30 (SG) Singapore Aug Non-oil Domestic Exports M/M: No est v 2.4% prior; Electronic Exports Y/Y: No est v 2.3% prior; Non-oil Domestic Exports Y/Y: No est v -0.8% prior
    - 21:30 (AU) RBA Quarterly Bulletin
    - 22:05 (NZ) New Zealand to sell NZD100M in 2.5% 2035 Linked Bonds
    - 23:35 (JP) Japan to sell Japan to sell 3-Month Bills

    Economic data
    - (CZ) Czech Aug PPI Industrial M/M: -0.8% v -0.4%e; Y/Y: -3.7% v -3.4%e
    - (TH) Thailand Central Bank (BoT) left its Benchmark Interest Rate unchanged at 1.50% (as expected)
    - (UK) Aug Jobless Claims Change (miss): +1.2K v -5.0Ke; Claimant Count Rate: 2.3% v 2.3%e
    - (UK) July Average Weekly Earnings (beat) 3M/Y: 2.9% v 2.5%e (highest since Jan 2009); Weekly Earnings (Ex-Bonus) 3M/Y: 2.9% v 2.9%e
    - (UK) July ILO Unemployment Rate (beat) 3M.3M: 5.5% v 5.6%e; Employment Change 3M/3M: +42.0K v +18.0Ke
    - (CH) Swiss Sept Credit Suisse ZEW Expectations Survey: 9.7 v 5.9 prior
    - (EU) Euro Zone Aug CPI (miss) M/M: 0.0% v 0.0%e; Y/Y: 0.1% v 0.2%e; CPI Core Y/Y: 0.9% v 1.0%e
    - (EU) Euro Zone Q2 Labour Costs Y/Y: 1.6% v 1.9% prior

    Fixed Income Issuance:
    - (EU) ESM opened its book to sell EUR-denominated 10-year bond; guidance seen at -3bps to mid-swaps
    - (IN) India sold total INR140B vs. INR140B indicated in 3-month and 12-month Bills
    - (EU) ECB allotted $144.0M in 7-day USD Liquidity Tender at fixed 0.71% vs. $141M prior
    - (SE) Sweden sold total SEK4.0B vs. SEK 4.0B indicated in 2023 and 2025 bonds
    - (GR) Greece Debt Agency (PDMA) sold 1.3B vs. 1.0B indicated in 13-week Bills; Avg Yield: 2.70% v 2.70% prior; Bid-to-cover: 1.3x v 1.3x prior

    Contributed by Trade The News
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