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Reports Europe

European stock market, economy and companies update (August 27, 2014)

August 27, 2014, Wednesday, 09:16 GMT | 04:16 EST | 12:46 IST | 15:16 SGT
Contributed by Trade The News


***Notes/Observations***
- European data continues to miss expectations (session saw misses in Germany Import prices, German GFK Consumer Survey, French Finland and Italy Confidence series)
- German 10-year Bund continues to hit fresh record lows; Poland PM Tusk stated that 'regular' Russian troops operate in Eastern Ukraine and offsets any optimism from the recent Ukraine/Russia talks


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities***
Indices [Stoxx50 -0.1%, FTSE 100 flat at 6,826, DAX flat at 9,583, CAC-40 -0.1% at 4,390, IBEX-35 +0.3% at 10,857, FTSE MIB +0.2% at 20,686, SMI -0.2% at 8,656, S&P 500 Futures +0.1% at 1,999]

- Market Focal Points/Key Themes: Equity markets open mixed following the gains seen on Tuesday, Seadrill declines as revenues miss ests, Marine Harvest cuts FY forecast amid concerns about impact of Russian sanctions

By Sector
-Technology [Agfa Gevaert AGFB.BE +5% (Q2 profits rose)]
- Financials [Foxtons FOXT.UK -5% (concerns about outlook for H2)]
- Consumer Discretionary [Emmi EMMN.CH -3% (cut outlook); Asos ASC.UK +15% (takeover speculation), Lufthansa LHA.DE +3% (easing strike concerns)]
- Energy [Seadrill SDRL.NO -5% (Q2 sales below ests)]
- Telecom [Telecom Italia TIT.IT +2% and Portugal Telecom PTC.PT +4% (speculation related to Brazi's TIM Particpacoes)]
- Stoxx50 sectors [Energy -0.6%, Consumer Cyclical -0.4%, Basic Materials -0.3%, Consumer Non-Cyclical -0.3%, Industrials -0.2%; Telecom +0.4%, Utilities +0.3%, Technology +0.2%, Financials +0.2%]

**Speakers***
- IMF's Lagarde has no plans to resign after being put under formal investigation for negligence stemming from the French political fraud investigation
- Italy Fin Min Padoan: To cut Italy 2014 GDP forecast but maintain the 3% budget deficit to GDP target
- France Fin Min Sapin: New govt doesn't mean line has changed
- France Econ Min Macron: Wants to restore investor confidence
- Sweden's NIER think tank updated economic forecasts which lowered its view on the Riksbank Repo Rate for 2014-16 period and cut its 2014 GDP growth outlook
- Poland PM Tusk outlined his govt plans till next general elections in 2015. He noted that economic performance was satisfactory but Polish deflation meant smaller inflows to budget. He added that the Central Bank could cut interest rates to avoid deflation. Lastly the govt was planning a one-off pension increase in 2015. He later stated that 'regular' Russian troops were operating in Eastern Ukraine
- Finland said to see 2015 state revenues seen lower by €500M than expected
- Japan Post Insurance (Kampo) CEO Nishmuro: Not thinking about changing stance on JGB investment; large revision to JGB holdings would impact market
- PBoC added CNY20B relending quota for agriculture and cut relending rates for agricultural loans by 100bps (**Part of its targeted stimulus program)

Currencies/Fixed Income:
- The USD consolidated its recent gains despite some economic misses out of the EMU data front today. The EUR/USD was trying to regain some posture above the 1.32 handle. The pair hit a fresh 11-month ow in Asia at 1.3152. Some Euro short-covering was encountered after reports that Germany Fin Min Schaeuble believed that ECBs' Draghi's comments at Jackson Hole on growth austerity debate might have been 'over interpreted'. Overall dealers continue to believe that Euro upside would be curtailed given the weakness in data.

Political/In the Papers:
- (UR) Minsk discussion saw no breakthrough (as expected). Ukraine President Poroshenko stated that a roadmap" will be prepared to end fighting between troops and pro-Russian separatists in the east while Russia's Putin stated that Russia wanted to do all it can to promote peace in eastern Ukraine and would assist a dialogue, but stopping the fighting was a matter for Ukraine itself
- (FR) France President's office confirms new cabinet members; PM Valls to lead new cabinet, Sapin to remain as Fin Min; Macron named Economy and Industry Min
- (PT) Portugal Govt said to approve amended 2014 budget (as expected) - financial press; The amended budget ensures that Portugal will achieve 4% deficit target for 2014.
- (JP) Japan PM Abe advisor Honda: Sees risk in raising sales tax to 10% in Oct as planned - Sankei News interview
- (JP) Japan Vice Econ Min Nishimura: Caution is needed on next sales-tax increase decision; Sales tax hike impact seems prolonged; concerned about consumption this summer

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (FI) Finland's Government to holds talks on 2015 Budget (Through Thursday)
- (PL) Poland PM Tusk to address Parliament on govt plans till next general elections in 2015
- (BR) Brazil July Total Federal Debt (BRL): No est v 2.202T prior
- 05:30 (UK) DMO to sell £0.9B in 0.625% I/L 2040 Gilts
- 06:00 (IE) Ireland July Property Prices M/M: No est v 2.9% prior; Y/Y: No est v 12.5% prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Aug 22nd: No est v +1.4% prior
- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to keep Key Rates unchanged; Benchmark Repurchase Rate at 8.25%; Overnight Lending Rate at 12.00%; Overnight Borrowing Rate at 7.50%
- 07:00 (RU) Russia cancelled OFZ Bond auction
- 08:00 (BR) Brazil July PPI Manufacturing M/M: No est v -0.1% prior; Y/Y: No est v 5.0% prior
- 08:15 (US) Baltic Dry Bulk Index
- 08:30 (CL) Chile Central Bank's Traders Survey
- 09:00 (MX) Mexico July Preliminary Trade Balance: -$810.0Me v +$423.7M prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:00 (US) Fed to purchase $0.95-1.15B in bonds
- 11:30 (BR) Brazil Weekly Currency Flows
- 12:00 (FR) France July Net Change in Jobseekers: +14.5Ke v +9.4K prior; Total Jobseekers: 3.413Me v 3.398M prior
- 11:30 (US) Treasury to sell $13B in 2-Year Floating Rate Notes Reopening
- 12:00 (CA) Canada to sell 3-Year Bonds
- 13:00 (US) Treasury to sell $35B in 5-Year Notes
- 21:30 (CN) China July Industrial Profits Y/Y: No est v 17.9% prior


***Key Economic Data in session***
- (TH) Thailand July Customs Trade Balance: -$1.1B v +$0.6Be; Customs Exports Y/Y: -0.9% v +4.1%e; Customs Imports Y/Y: -2.9% v -9.0%e
- (DE) Germany Sept GfK Consumer Confidence: 8.6 v 8.9e
- (DE) Germany July Import Price Index M/M: -0.4% v -0.1%e; Y/Y: -1.7% v -1.4%e
- (CH) Swiss July UBS Consumption Indicator: 1.66 v 2.07 prior
- (FI) Finland Aug Business Confidence: -8.0 v -9.0 prior; Consumer Confidence Index: 2.2 v 8.0e
- (FR) France Survey of Industrial Investment
- (FR) France Aug Business Confidence: 91 v 93e; Manufacturing Confidence: 96 v 96e; Production Outlook Indicator: -20 v -19 prior; Own-Company Production Outlook: -7 v 0 prior
- (SE) Sweden Aug Consumer Confidence: 96.9 v 101.1e; Manufacturing Confidence: 106.7 v 101.0e; Economic Tendency Survey: 103.2 v 101.3e
- (ES) Spain Jun Total Mortgage Lending Y/Y: +13.2% v -9.2% prior; House Mortgage Approvals Y/Y: +19.0% v -3.4% prior
- (HU) Hungary July Unemployment Rate: 7.9% v 8.0%e
- (EU) ECB €136M borrowed in overnight loan facility vs. €0.0M prior; €24.4B parked in deposit facility vs. €25.3B prior - Daily Eurosystem Liquidity Conditions
- (SE) Sweden July Household Lending Y/Y: 5.5% v 5.5%e
- (SE) Sweden July Trade Balance (SEK): 1.9B v 3.8Be
- (NO) Norway Jun AKU Unemployment Rate: 3.3% v 3.2%e
- (IT) Italy Aug Consumer Confidence Index: 101.9 v 104.0e
- (TW) Taiwan July Leading Index M/M: 0.1 v 0.1% prior; Coincident Index M/M: 0.4 v 0.4% prior
- (IS) Iceland Aug CPI M/M: +0.2 v -0.2% prior; Y/Y: 2.2% v 2.4% prior

Fixed Income:
- (FI) Finland opened books to sell EUR-denominated in new Sept 2020 bond via syndicate; guidance seen -13bps to mid-swaps
- (IN) India sold total INR130B vs. INR130B indicated in 3-month and 6-month Bills
- (EU) ECB allotted $75B in 7-day USD Liquidity Tender at fixed 0.59% vs. $75M prior
(SE) Sweden sold total SEK15B in 3-month and 4-month Bills
- (IT) Italy Debt Agency (Tesoro) sold €7.5B vs. €7.5B indicated in 6-month Bills; Avg Yield: 0.136% (record low) v 0.236% prior; Bid-to-cover: 1.63x v 1.75x prior
- (EU) ECB allotted €7.2B in 3-month LTRO operation at fixed 0.15% vs. €10.0Be

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