Reports » Europe

European stock market, economy and companies update (May 13, 2010)

Contributed by Trade The News

By Trade The News

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

- Equities:- Following the earlier gains in US and Asian equities, European equities opened the session higher. In early trading, stocks were supported by companies which rose following their respective earnings reports including the UK's Sainsbury and BT. However, after 4:00 EST, equities started to pare their opening gains led by losses on the IBEX and French banks. As of 5:30 EST, the FTSE 100 is higher by less than 0.10%, DAX +0.40, FTSE MIB -0.20% and the IBEX 35 is down by 1.1%.

- In Individual Stocks: Telefonica [TEF.SP]: Reported Q1 Net ?1.66B and Revenue at ?13.9B above estimates of ?1.7B and ?14B respectively. Group reiterated 2010 guidance of EPS ?2.10 and Rev growth of 1-4%. Additionally, the Group confirms its guidance through 2012, including dividend target. || Abertis [ABE.SP]: Reported Q1 Net at ?119M above estimates of ?111M. Q1 traffic decreased 4.2% compared with previous year || Keller Group [KLR.UK]: Group provided an interim statement where it guided FY sales below market expectations. Cited continued deterioration in the US construction market has led to a further reduction in volumes in US businesses. Combined with the impact of the adverse weather conditions in the first quarter, led Board to expect the result from the Group's US businesses in the first half of 2010 to be around breakeven and the full year US result to be well below our expectations at the time of announcing the Group's 2009 preliminary results. || Thomas Cooke Group [TCG.UK]: Reported H1 net loss at ?212M and Revenue at ?3.31B both lower than expectations of ?140M and ?3.8B respectively. || Sainsbury [SBRY.UK]: Reported FY10 Net profit of ?585M and Revenue at ?21.4B both above estimates of ?441M and ?20B. Like-for-like sales increased by 4.3% but company said that environment would remain challenge and consumer spending to remain under pressure. || British Telecom [BT.UK]: Reported Net at ?251M below estimates of ?285M, Adj EBITDA at ?1.5B below estimates of ?1.4B and Revenues of ?5.36B above estimates of ?5.2B. Guided FY11 Rev ?20B in line with estimates Adj EBITDA after leaver costs in line with 2009 levels, Free cash flow before specific items at ?1.8B. || Eurasian Natural Ressources [ENRC.UK]: Reported interim statement with production volumes significantly ahead of Q1 2009.

- Speakers: ECB May report as expected reiterated statements from ECB's May 6th conference. Reiterated that interest rates remain appropriate and inflation outlook is moderate. Economic recovery is expected to remain moderate and uneven. Furthermore, ECB stated bond buying would not affect liquidity of markets. ***ECB's Bini-Smaghi stated that EU aid for Greece should have come sooner and insisted that EU states cut deficit.***(EU) Former UK Chancellor Lamont stated that countries would not leave euro in the short term. Expressed surprise that euro has not recovered more.*** Spain Fin Min Salgado said did not rule out tax hikes. But tax increases are currently not an option***Confindustria Chief Economist said that the current Euro level was not far from equilibrium which is helping exports in Italy*** Chinese Premier Wen stated that sovereign debt crisis is deepening in some countries. Premier noted that China will boost demand domestically in terms of long term policy and that excessive energy speculation should be curbed *** Polish Ministry of Finance stated that the government has currently no fiscal problems but that the zloty currency and the economy could face risks due to global factors *** Germany's Chancellor Merkel maintained vision that one day all EU member states will join Euro currency.

- Currencies/Fixed income: In currencies, the Japanese yen was broadly offered in line with the early advance in equities. As of 5:40 EST, EUR/USD has moved below $1.2600, following the pullback in equities, Greek unemployment data and the ECB's May report. Coupled with the weaker Euro, EUR/CHF has approached record lows near 1.40. In other currencies, the British pound has eased against the USD following disappointing March trade data.

- Geopolitical: UK: The first meeting of the new coalition to take place 0900 BST to address key issues including proposed emergency budget. Note yesterday, Bank of England Gov King welcomed Cameron's plan to reduce budget deficit acknowledging that the deal reached between the two parties was very strong. ***New Cabinet appointments: Liberal Democrat David Laws to be Chancellor Osborne's deputy as chief secretary to the Treasury. Liberal Democrat's Treasury spokesman Vince Cable is business secretary. Former Conservative leader William Hague is the new foreign secretary. Theresa May to be home secretary - the second women to hold this title. Former Conservative Chancellor Kenneth Clarke named justice secretary. Liam Fox is head of the defense department. Liberal Democrats Chris Huhne as energy and climate-change secretary and Danny Alexander at the Scottish Office. ***Initial proposed legislation by new coalition include: Attempt to bring non-business capital gains tax rates in line with income tax rates; agreed to raise income tax threshold for low income people; may consider the separation of retail and investment banking activities; no plans to join the Euro currency.***Germany: Chancellor Merkel and Lower-house prepare for Germanys contribution of bailout package, which may be as much as ?148B.***EU/Other: EU to propose new air safety regulations, to decrease no-fly zone area. ***EU Commission reported Estonia fulfills criteria to adopt euro, recommends entry into EMU in 2011. No other Euro Zone candidate state looking to join the EMU meets criteria. Also the four nations that did not meet the criteria include Bulgaria, Cyprus, Denmark and Finland. ***To prevent future financial crisis EU Commission is requesting member states to coordinate budget plans.

- In Papers: NYT reported that NY is probing the influence of banks on rating agencied. The probe is being conducted by the NY AG relates to 8 banks (Goldman Sachs, Morgan Stanley, UBS, Citi, Deutsche Bank, Credit Agricole and Merrill Lynch). The purpose of the investigation is to determine if the banks provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities.*** WSJ commented that expectations of strong results from shipping companies may help Greek economy given that shipping industry is Greece's 2nd biggest after tourism. Feature expected companies to benefit from rising demand of shipping commodities in China. Article argued that the fiscal crisis could actually benefit the industry because of falling wages and real estate costs and that shipping industry is also protected from higher taxes.***New York Times have reported that Russia and Turkey have signed agreements for cooperative efforts on energy including establishing Turkey's first nuclear power plant and furthering plans for oil pipeline across Turkey. Agreements also include greater commitment to resolve Iran nuclear program.

***Looking ahead****
- 7:15 (EU) ECB's Gonzalez-Paramo to speak in Spain
- 8:00 (IC) Iceland Apr Unemployment Rate: No est v 9.3% prior
- 8:30 (US) Apr Import Price Index M/M: 0.8%e v 0.7% prior; Y/Y: 11.3%e v 11.4% prior
- 8:30 (US) Initial Jobless Claims: 440Ke v 444K prior; Continuing Claims: 4.590Me v 4.594M prior
around 9am-- (SA) South Africa Central Bank (SARB) Interest Rate Decision: Consensus expectations for interest rates to remain at 6.50%
- 9:00 (US) US Fed's Kohn to speak in Ottawa about monetary policy
- 12:30 (US) US Fed's Bernanke to speak at a Fed conference in Philadelphia.
- 13:00 (US) US to sell $16B in 30-yr bonds.
- 13:15 (US) US Fed's Fisher to speak in Odessa Texas
- 13:30 (US) US Fed's Kocherlakota to speak in Wisconsin
- 17:00 (CO) Colombia Mar Trade Balance:$231.7Me v $233.3M prior
- 18:00 (CL) Chile Central Bank Interest Rate Decision: Consensus expectation for the Nominal Overnight Rate Target to remain unchanged at 0.50%

***Economic Data***
- (EU) ECB May report: Forecasts ECB Q2 Eurozone GDP 2010 1.1% v 1.2 % in Q1 survey. Forecasts 2011 GDP at 1.5% v 1.6% in Q1 survey. Forecasts 2011 GDP at 1.5% v 1.6% in Q1 survey
- (UK) March Visible Trade Balance: -?7.5B V -?6.4BE; Total Trade Balance: -?3.7B V -?2.5BE; Trade balance Non-EU: -?4.1B v -?3.5Be
- (UK) March DCLG House Prices 9.7% v 7.4% prior
- (UK) UK CML: Q1 mortgages in arrears 186.3K v 196.4K q/q
- (GR) Greece Unemployment rate: 12.1% v 11.3% prior (highest reading since May 2004)
- (IR) Ireland April CPI M/M: 0.2% V 0.2%E; Y/Y -2.1% V -2.2%E: CPI EU Harmonized M/M 0.0% v 0.1%e; Y/Y: -2.5% v 2.4%e
- (MA) Malaysia Central Bank Raises Interest Rate by 25BPS to 2.50% from 2.25% as expected
- (MA) Malaysia Q1 GDP Y/Y: 10.1% V 9.8%E