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Reports Europe

European stock market, economy and companies update (December 04, 2013)

December 4, 2013, Wednesday, 10:28 GMT | 05:28 EST | 14:58 IST | 17:28 SGT
Contributed by Trade The News

- (AU) Australia Q3 GDP Q/Q: 0.6% v 0.7%e; Y/Y :2.3% v 2.5%e (2-year low)
- (CN) China Nov HSBC/Markit Services PMI: 52.5 v 52.6 prior (22nd straight month of expansion)
- Major European PMI Services confirm views of bumpy and uneven recovery in Europe ( Beats Spain, Germany, Euro Zone; Misses: Italy, France)
- Euro Zone Oct Retail Sales miss expectations (M/M: -0.2% v 0.0%e)
- Focus in NY trading will be on ADP private jobs data and the employment sub-component of the Service PMI ahead of Friday Non-Farm Payroll report
- Central Bank policy decisions due in the week include Bank of Canada (Wed), BOE and ECB (Thu). The end of the week then sees key employment data from the United States and Canada

Indices [Stoxx50 +0.3% at 3,024, FTSE 100 +0.0% at 6,535, DAX +0.2% at 9,242, CAC-40 +0.4% at 4,189, IBEX-35 +0.4% at 9,650, FTSE MIB +0.0% at 18,374, SMI -0.1% at 8,097, S&P 500 Futures +0.2% at 1,794

- Market Focal Points: After selling off yesterday, European equity markets opened above the flat line and have advanced slightly into the morning. Mixed PMI's have had little effect on prices. Traders are looking forward to US ADP and ISM data points for later today for further clues.
By Sector
- Consumer Discretionary [Tesco TSCO.UK -0.4% (UK LFL (ex VAT, ex-fuel) -1.5% v -1.5%), Accor AC.FR +3.0% (upgrade)]
- Industrials [Arcadis ARCAD.NL +0.1% (updates 2014-16 strategy)]
- Technology [Sage SGE.UK +7.7% (good earnings, raises div)]
- Financials [Standard Chartered STAN.UK -6.7% (sees difficult markets), Bank of Ireland BKIR.IE -2.6% (to raise capital to repay preference shares)]
- Healthcare [Galapagos GLPG.BE +0.4% (positive phase 1 results), Elekta EKTAB.SE -4.4% (earnings lower y/y)]

- ECB's Mersch (Luxemburg): ECB should be an observer and not have voting rights in resolution authority. Capital requirements for stress tests had not decided yet and bank reserve fund contributions should be risk weighted
- Eurogroup chief Dijsselbloem: Slovenia wants to address its bank review without support
- EU Commission role might be watered down in Single Resolution Mechanism (SRM) and only given the power of a final approval/disapproval. Key issues remained unresolved ahead of deadline
- Italy Fin Min Saccomanni stated that : Ouster of Berlusconi from Parliament should make it easier for Govt to push through reforms
- Japan Post: Won't cut JBG holdings drastically, but other public funds may revise their bond-heavy holdings
- Various oil ministers commented ahead of OPEC meeting today in Vienna.
- Saudi Arabia Oil Min Naimi: 30M bpd not too much for an OPEC target; no need to reduce production. Reiterates oil market is in good place, prices good for buyers and sellers. Would welcome if the US exported crude and was not worried about Iranian production over supplying the market
- Iran Oil Min: Wants other OPEC members to open the door for their return; Will not follow any limitation once it returns to the oil market. Hope to produce 4M bps after sanctions were lifted; Would not follow any limitation once it returns to the oil market; Ruled out production sharing agreements for foreign companies
- Libya Oil Min: All ports to be open by Dec 10th and look to return to full production pf 1.5M one week after ports reopen
- UAE Oil Min: Oil market is balance
- Nigeria Oil Min: OPEC likely to leave production ceiling unchanged
- Algeria Oil Min: OPEC likely to leave production ceiling unchanged

Currencies/Fixed Income:
- FX price action was largely muted in the session. Dealers were still debating whether better US data could bring on an early Fed tapering. Focus will be on the ADP jobs report for hints on Friday's US payrolls.
- Revisions to the Service PMIs of Major EMU members continued to display divergent growth patterns. The FX price action was largely muted ahead of the key rate decisions from the BOE and ECB on Thursday and North American job reports on Friday. The EUR/USD was steady at 1.3585 ahead of the NY morning.
- The GBP was a touch softer after its PMI Services rebounded from 16-year highs. GBP/USD at 1.6360.
- AUD hit a 3-month low on a trade-weighted average following the miss in its Q3 GDP data. The AUD/USD was approaching the 0.90 level and off almost 1.5% since the Asian session
- Spot gold was reapproaching its July lows as the metal moved towards $1,200/oz. The level also marks the 38% Fib retracement of the 40-year move in gold after President Nixon removed the US from the gold standard.

Political/In the Papers:
- (US) Fed's Williams (dove, FOMC non-voter): Fed should be more concrete about what would spur rate hikes once unemployment falls below 6.5% threshold; would not vote to lower unemployment threshold. Rates to remain low until the second half of 2015
- (EU) Banks who have been found by the EU to have rigged rates (LIBOR, EURIBOR, TIBOR) may encounter record setting fines. Fines could come tomorrow and include RBS, Barclays, Deutsche Bank, Citi and JP Morgan
- (EU) JP Morgan, HSBC and Credit Agricole said to have pulled out of settlement talks with EU deal to end Euribor rigging investigation
- (EU) ECB's Nowotny: Germany seems to have agreed to an EU bank resolution fund, no political consensus yet on common deposit insurance
- (IT) Italy PM Letta wins confidence vote in Lower House
- (ES) Spain Fin Min de Guindos: Spain still has a long way to go on unemployment
- (UK) UK Finance Ministry: UK insurers to invest £25B in infrastructure over next 5 years
- (JP) BoJ's Sato: econ recovering moderately; no need to ease preemptively if sales tax impact temporary
- (JP) Japan's economic package will total ¥18.6T and includes¥5.5T extra budget

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- NATO Foreign Ministers meet
- (CH) Swiss Parliament to elect President for 2014
- 05:30 (DE) Germany to sell €4.0B in 1% Oct 2018 BOBL
- 06:00 (IE) Ireland Nov Live Register Monthly Change: No est v -3.7K prior; Unemployment Rate: No est v 13.2% prior; Live Register Level: no est v 409.9 prior
- 06:00 (BR) Brazil Oct Industrial Production M/M: 0.1%e v 0.7% prior; Y/Y: 0.4%e v 2.0% prior
- 06:00 (PT) Portugal Oct Industrial Production M/M: No est v -11.3% prior; Y/Y: No est v 1.3% prior
- after 06:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 2.50%
- 06:30 (CL) Chile Central Bank Minutes
- 06:30 (ES) Bank of Spain Dep Gov Restoy in Madrid
- 07:00 (UK) PM Cameron question time in House of Commons
- 07:00 (US) MBA Mortgage Applications w/e Nov 29th: No est v -0.3% prior
- 07:00 (BR) Brazil Nov PMI Services: No est v 52.1 prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia to sell combined RUB20B in 2016 and 2020 OFZ Bonds
- 08:00 (HU) Hungary Central Bank Minutes
- 08:15 (US) Nov ADP Employment Change: +170Ke v +130K prior
- 08:30 (CA) Canada Oct Int'l Merchandise Trade: -C$700Me v -C$440M prior
- 08:30 (US) Oct Trade Balance: -$40.0Be v -$41.8B prior
- 09:30 (BR) Brazil Central Bank weekly Currency Flows
- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 1.00%
- 10:00 (US) Nov ISM Non-Manufacturing: 55.0e v 55.4 prior
- 10:00 (US) Sept./Oct. New Home Sales Released Jointly Due to Shutdown
- 10:00 (AT) OPEC meeting in Vienna
- 10:00 (PL) Poland Central bank Gov Belks post rate decision press conference
- 10:00 (EU) Eurogroup chief Dijsselbloem
- 10:30 (US) Weekly DOE Oil Inventories
- 11:00 (US) Fed to purchase $2.25-3.50B in Notes
- 13:00 (IT) Italy PM Letta with EU President Van Rompuy in Rome
- 14:00 (US) Federal Reserve Beige Book
- 16:00 (CO) Colombia Nov PPI M/M: No est v -0.8% prior; Y/Y: No est v -1.9% prior
- 18:00 (KR) South Korea Q3 Final GDP Q/Q: No est v 1.1% prelim; Y/Y: No est v 3.3% prelim
- 19:30 (AU) Australia Oct Trade Balance: -A$375Me v -A$284M prior

***Economic Data***
- (IN) India Nov HSBC/Markit Services PMI: 47.2 v 47.1 prior; 4th straight contraction
- (RU) Russia Nov Services PMI : 52.9 v 52.0 prior; 4th straight month of growth
- (IE) Ireland Nov Investec Services PMI: 57.1 v 60.1 prior; 16th straight month of growth
- (BR) Brazil Nov FIPE CPI: 0.5% v 0.5%e
- (SE) Sweden Nov PMI Services: 57.0 v 54.0e
- (HU) Hungary Q3 Final GDP Q/Q: 0.9% v 0.8% prelim; Y/Y: 1.8% v 1.7% prelim
- (CZ) Czech Q3 Average Real Monthly Wage Y/Y: 0.1% v 0.2%e
- (CZ) Czech Q3 Preliminary GDP Q/Q: -0.1% v -0.5%e; Y/Y: -1.3% v -1.6%e
- (RO) Romania Q3 Preliminary GDP Q/Q: 1.6% v 1.6% prelim or prior; Y/Y: 4.1% v 4.1% prelim
- (HU) Hungary Oct Retail Sales Y/Y: 2.5% v 1.1%e
- (EU) ECB €243M borrowed in overnight loan facility vs. €105M prior; €56.1B parked in deposit facility vs. €55.7B prior - Daily Eurosystem Liquidity Conditions
- (ES) Spain Nov Services PMI: 51.5 v 49.7e; first growth in three months and highest reading since Jun 2010
- (CH) Swiss Q3 Industrial Output Y/Y: +0.7% v -1.1% prior
- (IT) Nov PMI Services: 47.2 v v 50.4e; 1st contraction in three months and lowest reading since June
- (FR) France Nov Final PMI Services: 48.0 v 48.8e; confirms 1st contraction in 3 months
- (DE) Germany Nov Final PMI Services: 55.7 v 54.5e; confirms 7th straight month of growth
- (EU) Euro Zone Nov Final PMI Services: 51.2v 50.9e; PMI Composite: 51.7 v 51.5e
- (UK) Nov PMI Services: 62.0v 62.0e
- (EU) Euro Zone Q3 Preliminary GDP Q/Q: 0.1% v 0.1%e; Y/Y: -0.4% v -0.4%e
- (EU) Euro Zone Q3 Preliminary Household Consumption Q/Q: 0.1% v 0.1%e; Gross Fix Capital Q/Q: 0.4% v 0.2%e; Govt Expenditures Q/Q: 0.2% v 0.1%e
- (EU) Euro Zone Oct Retail Sales M/M: -0.2% v 0.0%e; Y/Y: -0.1% v 1.0%e

Fixed Income:
- (EU) ECB alloted $0.0M in 7-Day USD Liquidity Tender at fixed 0.59% vs. $0.0M prior (12th straight week with no allotment)
- (EU) ECB allotted $28M in 3-month USD Liquidity Tender at fixed 0.59% vs. $131M prior
- (SE) Sweden sold total SEK15B in 3-month and 6-month bills