Reports » Europe

European stock market, economy and companies update (August 31, 2012)

Contributed by Trade The News

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- German Chancellor Merkel asked Italy PM Monti & will ask Spain PM Rajoy to delay any bailout requests to calm tensions with Buba's Weidmann
- German Bundesbank President Weidmann said to have considered resignation but has decided against for now
-ECB's Nowotny: ECB likely to lower forecasts for 2012 & 2013; uncertainty increasing massively
- Markets await policy hints from Fed Chairman Bernanke at Jackson Hole forum
- Japan and Korea industrial data weaker than expected
- Spain will not request bailout until terms are clear
- Euro Zone Unemployment remains at record high level
- Euro Zone CPI hotter than expected and above the 2.0% target ahead of next week ECB policy meeting

***Equities***
FTSE 100 +0.20% at 5732, DAX +0.50% at 6927, CAC-40 +0.60% at 3400, FTSE MIB +1.1% at 14,941, SMI +0.20% at 6393, S&P 500 Futures +0.40% at 1402

- European equity indices are broadly higher, led by the Italian FTSE MIB, which has been supported by better than expected unemployment data out of Italy. Overall, equity indices have so far ignored the rise in Spanish bond yields as the focus of traders appears to be on the latter today comments out of Fed Chairman Bernanke at the Jackson Hole conference (expected at around 10 AM EST). Additionally, markets are expected to focus on the China official manufacturing PMI data for Aug due to be released tomorrow. According to the HSBC Aug flash manufacturing PMI data for China (released on Aug 22nd), activity hit a 9-month low of 47.8 and contracted for the 10th straight month.
- In France, luxury retailer Hermes [RMS.FR] is trading higher, as the firm raised its FY sales growth forecast after issuing H1 results. ADP [ADR.FR] has lost over 3% after reporting H1 results. Iliad [ILD.FR] is higher by more than 4%, following the release of H1 results. Italian bank, Banca Monte Paschi de Siena [BMPS.IT has risen by over 3%, amid reports that the Italian government's stake in the firm could exceed 9%.Germany airline Lufthansa [LHA.DE] has traded higher, despite the company having to cancel flights due to the strike action by its cabin crew union. Praktiker [PRA.DE] has gained over 12% on reports that the firm is seeking to enter into a new financing agreement.

Speakers:
- German Govt spokesperson stated that Chancellor Merkel backed Bundesbank President Weidmann and favored a strong German influence at the ECB
- ECB Nowotny commented that ECB purchases of govt bonds on primary markets would be problematic and any purchases on the secondary markets should be with conditions. He saw Euro Zone outlook worsening with differences between Northern and Southern Europe increasing. He forecasted negative 2012 GDP growth for most Southern Members of EMU and stressed that anti-crisis measures must stay in time for positive changes to occur. It was difficult to say how much time crisis countries' reforms needed. Lastly he noted that demand driven inflation was under control
- ECB Coeure reiterated the view that that inflation expectations remained very well anchored in the euro zone aided by negative output gap and confidence in the ECB. The crisis had not eroded trust in the Euro as a currency
- Bundesbank spokesperson declined to comment regarding speculation on Weidmann resignation from the central bank
- German Foreign Min Westerwelle: Reiterates view that Greece cannot be allowed to weaken its reform measures
- Greece Fin Min Stournaras commented that he had outlined the recession impact to EU partners and was working on identifying resources for growth
- Morgan Stanley commented on upcoming German Constitutional Court Ruling on Sept 12th and saw as 40% chance that it did not get ratified. The German Constitutional Court could voice concerns about the ESM and, potentially, also the fiscal compact on September 12. Given that the EFSF was still in operation, given that the Court viewed the scope of the German constitution as being exploited already, and given its record of voicing concerns about European integration
- India PM advisor commented that the domestic economy had turned the corner with growth expected to pick up in H2

Currencies:
- Dealers were expecting a busy last day of August ahead of the highly anticipated Jackson Hole speech by Fed Chairman Bernanke which traditional is perceived as laying the groundwork for future policy actions. Markets have managed their lower to some extent on the scope for no action with risks still skewed for more disappointment on potential QE
- The EUR/USD remained within the upper end of its August price range as the month draws to a close and around 60 pips higher from its Far East open. The hotter Euro Zone CPI was one factor for the price action. Thin-month end conditions also contributed with Middle Eastern names said to be bidding for Euros at a steady clip this session.

Political/ In the Papers:
- The Irish stats office (CSO) reported a decrease in home ownership from almost 75% (2006) to 69.7% 2011; and a surge in renters by 47% from 323,007 to 474,788 for the same period. Additional tidbits included in the report found that one in 12 households with a mortgage is headed by person who is unemployed. In half of these cases, no one in the house has a job. There were over 289,000 vacant dwellings comprised of 168.4k houses, 61.6k apartments, and 59.4k holiday homes.
- The Bank of England released July consumer credit data which showed that credit card payoff rate for British consumers were at its highest since Aug 2006, paying back £147 million.
- According to the financial press, some analysts have said that at current yield levels, Spain does not require a full bailout. JP Morgan strategist Pavan Wadhwa said with front-end Spanish yields below 4%, there is no compelling reason for the country to ask for aid.
- A German Bundesbank spokesperson declined to comment on speculation that its president was planning to resign. The German Bild had reported that ECB President Weidmann was considering the possibility of resigning to a small group of people within the Bundesbank, but changed his decision following the suggestion to do otherwise by the government.

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (ES) Spain July YTD Budget Balance: No est v -€43.10B prior
- (US) Aug NAPM-Milwaukee: No est v 46.7 prior
- 06:00 (AT) ECB's Nowotny on Panel in Alpbach, Austria
- 06:00 (IT) Italy July PPI M/M: +0.3%e v -0.1% prior; Y/Y: No est v 2.2% prior
- 06:10 (UK) DMO to sell combined £3.0B in 1-month, 3-month and 6-month Bills
- 07:30 (IN) India weekly Forex Reserves
- 08:00 (AT) EFSF's Regling, EU's Wieser on panel in Alpbach, Austria
- 08:00 (PL) Poland Central Bank (NBP) Aug Inflation Expectations: 3.8%e v 3.5% prior
- 08:00 (ZA) South Africa July Trade Balance (ZAR): -5.2Be v -5.7B prior
- 08:00 (BR) Brazil Q2 GDP Q/Q: 0.5%e v 0.2% prior; Y/Y: 0.7%e v 0.8% prior; GDP 4-quarters Accumulated: No est v 1.9% prior
- 08:30 (CL) Chile Central Bank Meeting Minutes
- 08:30 (CA) Canada Jun Gross Domestic Product M/M: 0.1%e v 0.1% prior; Y/Y: 2.2%e v 2.4% prior; Quarterly GDP Annualized: 1.6%e v 1.9% prior
- 09:00 (CL) Chile July Unemployment Rate: 6.6%e v 6.6% prior
- 09:30 (BR) Brazil July Primary Budget Balance (BRL): 5.7Be v 2.8B prior; Nominal Budget Balance: No est v -13.3B prior; Net Debt to GDP: 35.0%e v 35.1% prior
- 09:45 (US) Aug Chicago Purchasing Manager: 53.3e v 53.7 prior
- 09:55 (US) Aug Final University of Michigan Confidence: 73.6e v 73.6 prelim
- 10:00 (US) Fed Chairman Bernanke speaks in Jackson Hole, Wyoming
- 10:00 (US) July Factory Orders: +2.0%e v -0.5% prior
- 10:00 (US) Durable Goods Orders revisions
- 10:30 (UK) DMO Oct-Dec Gilt auction calendar
- 11:55 (US) BoE's Haldane on Financial Stability in Jackson Hole, Wyoming
- 12:00 (CO) Colombia July National Unemployment Rate: No est v 10.0% prior; Urban Unemployment Rate: 11.1%e v 11.3% prior
- 15:00 (AR) Argentina July Construction Activity M/M: No est v 2.4% prior; Y/Y: No est v -1.6% prior
- 13:10 (US) BOE's Posen discusses Monetary Policy in Jackson Hole
- 14:30 (US) IMF's Lagarde speaks at Jackson Hole, Wyoming
- 21:00 (CH) China Aug Manufacturing PMI: No est v 50.1 prior

Sat
- The World Bank Releases Annual World Development Report
-12:25 (US) ECB's Draghi cancels Panel appearance in Jackson Hole, Wyoming

***Economic Data***
- (IN) India Q2 GDP Y/Y: 5.5% v 5.2%e
- (DE) Germany July Retail Sales M/M: -0.9% v +0.2%e; Y/Y: -1.0% v 0.1%e
- (FI) Finland Jun Final Trade Balance: €39M v €55M prior
- (UK) Aug Nationwide House Prices M/M: 1.3% v 0.1%e; Y/Y: -0.7% v -2.2%e
- (HU) Hungary July Producer Prices M/M: -0.4% v -1.6% prior; Y/Y: 6.2% v 6.7%e
- (HU) Hungary Jun Final Trade Balance: €773.1M v €761.7M prior
- (ES) Spain July Adjusted Real Retail Sales Y/Y: -7.3% v -5.2% prior; Real Retail Sales Y/Y: -6.9% v -4.4% prior
- (TR) Turkey July Trade Balance: -$7.9B v -$7.7Be
- (TH) Thailand July Current Account: $107M v $730Me; Total Trade Account Balance: $0.4B v $1.6B prior; Overall Trade Balance: $515M v $519M prior
- (TH) Thailand July Business Sentiment Index: 51.7 v 51.5 prior
- (CZ) Czech July Money Supply Y/Y: 6.3% v 6.5% prior
- (IT) Italy Q2 Unemployment Rate: 10.6% v 10.7%e
- (IT) Italy July Preliminary Unemployment Rate: 10.7% v 10.9%e
- (NO) Norway July Retail Sales Volume M/M: -0.1% v +0.4%e; Y/Y: 2.7% v 7.4% prior
- (NO) Norway Aug Unemployment Rate: 2.6% v 2.6%e
- (ES) Spain Jun Current Account: -€0.3B v -€0.8B prior
- (RU) Russia Narrow Money Supply Narrow w/e Aug 27th (RUB): 7.18T v 7.23T prior
- (HK) Hong Kong July Govt Monthly Budget Balance (HKD): -11.9B v -0.8B prior
- (HK) Hong Kong July M3 Money Supply Y/Y: 5.0% v 6.1% prior; M2 Money Supply Y/Y: 5.0% v 6.2% prior; M1 Money Supply Y/Y: 5.9% v 7.2% prior
- (GR) Greece Jun Retail Sales Volume Y/Y: % v -9.2% prior
- (EU) Euro Zone Aug CPI Estimate Y/Y: 2.6% v 2.5%e
- (EU) Euro Zone July Unemployment Rate: 11.3% v 11.3%e
- (IT) Italy Aug Preliminary CPI (NIC incl. tobacco) M/M: 0.4% v 0.3%e; Y/Y: 3.2% v 3.1%e
- (IT) Italy Aug Preliminary CPIEU Harmonized M/M: 0.2% v 0.3%e; Y/Y: 3.6 v 3.6%e
- (BE) Belgium July Unemployment Rate: 7.2% v 7.2% prior
- (IC) Iceland July Final Trade Balance (ISK): 2.4B v 3.5B prior

Fixed Income
- (IN) India sold total INR150B vs. INR150B indicated in 2020, 2026, 2032 and 2041 bonds

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- German Chancellor Merkel asked Italy PM Monti & will ask Spain PM Rajoy to delay any bailout requests to calm tensions with Buba's Weidmann
- German Bundesbank President Weidmann said to have considered resignation but has decided against for now
-ECB's Nowotny: ECB likely to lower forecasts for 2012 & 2013; uncertainty increasing massively
- Markets await policy hints from Fed Chairman Bernanke at Jackson Hole forum
- Japan and Korea industrial data weaker than expected
- Spain will not request bailout until terms are clear
- Euro Zone Unemployment remains at record high level
- Euro Zone CPI hotter than expected and above the 2.0% target ahead of next week ECB policy meeting