• European stock market, economy and companies update (September 25, 2015)

    Notes/Observations
    - Bonds are trading lower after FED Chair Yellen expects rates to rise later this year.
    - Risk sentiment supported by yesterday's remarks from Yellen.
    - Auto shares recover, BMW up over 4%


    SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

    Equities
    Indices [Stoxx50 +2.6% at 3,097, FTSE +2.2% at 6,091, DAX +2.5% at 9,665, CAC-40 +2.9% at 4,472, IBEX-35 +2.2% at 9,500, FTSE MIB +2.7% at 21,134, SMI +2.3% at 8,472, S&P 500 Futures +0.8% at 1,934]

    - Market Focal Points/Key Themes: European stocks jump higher following comments from Fed's Yellen saying she still saw a rate hike this year; all industry groups trading higher; automakers moved higher (BMW BME.DE +4.1%, Renault RNO.FR +5.5%); Adidas supported by good results from Nike yesterday; Synergy Health jumped after US court blocked takeover from Steris; materials stocks supported by commodities

    Sectors:
    - Consumer discretionary [Adidas ADS.DE +2.8% (sympathy move)]
    - Financials [Lloyds Banking Group LLOY.UK +1.5% (UK government cuts stake)]
    - Healthcare [Sanofi SAN.FR +3.6% (potential asset sale), Synergy Health SYR.UK +42.7% (litigation), Novartis NOVN.CH +3.9% (EU approval of Entresto), Jyske Bank JYSK.DK +4.4% (broker move)]

    Speakers
    (GR) Greece Prime Min Tsipras: Determined to continue with reforms
    - Govt wants new economic model to be based on protection of work and redistribution of tax burden
    - Says Greece will have exited crisis in 4 years
    - Bailout accord leaves certain issues open for negotiation, such as regulating non performing loans and labor reforms
    (CN) PBoC: Will use multiple policy tools in flexible way
    -China economy, financial system operation stable;
    - Vows to keep Yuan stable at reasonable, equilibrium level; - Vows to closely monitor changes in international capital flow;
    - Reaffirms to continue with prudent monetary policy;

    Currencies
    - European FX markets against the dollar are a mixed bag in the morning session, with light European macroeconomic data, but all continuing the trending weakness shown in cable and euro over this week
    - The EUR/USD trades in a range between 1.1176 at the morning highs to lows of 1.1116
    - The GBP/USD remains range-bound between the highs of 1.5260 to lows of 1.5209 in the morning session
    - The USD/JPY rallieson the morning session after Japan released their core CPI results, showing economy back in deflation territory, with further cuts to economic assessment

    Fixed Income:
    Bund futures trade at 155.38, down 81 ticks after bullish remarks from FED Chair Yellen drove up yields. The break below support at 155.51 sees a continued move lower to target 154.83 initially, followed by 154.23. To the upside, analysts eye 156.49 initially, followed by 156.83 the August high.
    Today saw Italy sell 1.0B in its 6 and 9 year BTPei, the equivalent to 2k Bund or 3k BTP futures.

    UK Gilt futures trades 118.45, down 91 ticks on the day, under pressure from hawkish remarks from known Hawk McAfferty. Analysts still look for downside to 118.14, followed by 117.76. To the upside, 119.26 fills the gap with a break seeing continued strength to 119.46 contract highs.

    Friday's liquidity report showed Thurday's excess liquidity fell to 470.9B, a drop of 3.8B from 474.7B prior. This was primarily due to AFs and MonPol portfolios falling to negative B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to 32M from 31M.

    Corporate Issuance this week has been lighter amid the market downturn with the most notable being a $1B offering from Iron Mountain.
    On a YTD basis US denominated corporate bond volume has surpassed $1 trillion via 1027 deals; this is an 11% rise on the prior year which saw issuance amount to $921.9B via 1210 deals. Investment grade has seen a 22% jump in volume to $802.1B with High Yield issuance having declined 16% y/y to $223.8B.

    Political/In the Papers:
    - None seen.

    Looking Ahead
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - 07:00 (BR) Brazil Sept FGV Construction Costs M/M: 0.2%e v 0.8% prior
    - 07:30 (IN) India Weekly Forex Reserves
    - 08:00 (BR) Brazil Aug PPI Manufacturing M/M: No est v 0.7% prior; Y/Y: No est v 7.6% prior
    - 08:15 (US) Baltic Dry Bulk Index
    - 08:30 (US) Q2 Final GDP Annualized Q/Q: 3.7%e v 3.7% prelim; Personal Consumption: 3.2%e v 3.1% prelim
    - 08:30 (US) Q2 Final GDP Price Index: 2.1%e v 2.1% prelim; Core PCE Q/Q: 1.8%e v 1.8% prior
    - 09:00 (MX) Mexico Aug Trade Balance: -$1.7Be v -$2.3B prior
    - 09:30 (BR) Brazil Aug Total Outstanding Loans (BRL): No est v 3.111T prior; Outstanding Loans M/M: No est v 0.3% prior; Personal Loan Default Rate: No est v 5.4% prior
    - 09:45 (US) Sept Preliminary Markit Services PMI: 55.6e v 56.1 prior; Composite PMI: No est v 55.7 prior
    - 10:00 (US) Sept Final University of Michigan Confidence: 86.5e v 85.7 prelim
    - 13:00 (US) Weekly Baker Hughes Rig Count
    - 15:00 (AR) Argentina Q2 Current Account Balance: -$1.9Be v -$3.7B prior
    - 15:00 (AR) Argentina Economic Activity Index (Monthly GDP) M/M: No est v 0.5% prior; Y/Y: 2.4%ev 3.8% prior
    - 15:00 (CO) Colombia Central Bank Interest Rate Decision: expected to leave Overnight Lending Rate unchanged at 4.50%

    Speakers/Events:
    - 09:15 (US) Fed's Bullard (hawk, non-voter) in St. Louis
    - 11:00 (EU) Potential sovereign ratings after European close
    - (PT) Portugal Sovereign Debt Rating published by Fitch Ratings
    - Lithuania Sovereign Debt Rating published by Fitch
    - (NG) Nigeria Sovereign Debt Rating published by Fitch
    - (SI) Slovenia Sovereign Debt Rating published by Fitch
    - (AT) Austria Sovereign Debt to be rated by S&P
    - (CY) Cyprus Sovereign Debt to be rated by S&P
    - (DK) Denmark Sovereign Debt to be rated by S&P
    - (FI) Finland Sovereign Debt to be rated by S&P
    - Lithuania Sovereign Debt to be rated by S&P
    - (LX) Luxembourg Sovereign Debt to Be Rated by S&P
    - (EU) EFSF Sovereign Debt May be published by Moody's
    - (EU) ESM Sovereign Debt May be published by Moody's
    - 13:35 (US) Fed's George (non-voter, hawk) in Omaha, NE


    Economic data
    - (FR) France Sept Consumer Confidence: 97 v 94e (beat)
    - (ES) Spain July Total Mortgage Lending Y/Y: 16.5 v 21.8% prior; House Mortgage Approvals Y/Y: 21.8 v 26.3% prior
    - (ES) Spain Aug PPI M/M: -1.7% v 0.1% prior; Y/Y: -2.2% v 1.3% prior
    - (AT) Austria July Industrial Production M/M: 0.6% v 0.5% prior; Y/Y: 1.3 v 0.1% prior
    - (SE) Sweden Aug Household Lending Y/Y: 7.1 v 7.1% prior
    - (EU) Euro Zone Aug M3 Money Supply Y/Y: 4.8 v 5.3%e (miss) ; M3 3-month average: 5.0% v 5.2%e (miss)
    - (IT) Italy Aug Hourly Wages M/M: 0.0% v 0.1% prior; Y/Y: 1.2% v 1.2% prior
    - (IS) Iceland Sept CPI M/M: -0.4 v 0.5% prior; Y/Y: 1.9 v 2.2% prior

    Fixed Income Issuance:
    - (IT) Italy Debt Agency (Tesoro) sells 2.0B in 0.0% Aug 2017 CTZ; Avg Yield: 0.116% v 0.166% prior; Bid-to-cover: 1.71x v 1.57x prior
    - Sells 546M in 2.1% Sept 2021 BTPei bonds; Yield 0.32% v -0.16% prior; Bid-to-cover: 2.95x v 3.67x
    - Sells 454M in 2.35% Sept I/L 2024 BTPei; Avg yield: 0.84% v 0.97% prior; Bid-to-cover: 2.63x v 1.81x

    Contributed by Trade The News
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