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Reports Europe

European stock market, economy and companies update (December 16, 2013)

December 16, 2013, Monday, 16:36 GMT | 11:36 EST | 21:06 IST | 23:36 SGT
Contributed by Trade The News


***Notes/Observations***
- China Dec HSBC flash PMI Manufacturing falls to 3-month lows (50.5 v 50.9e)
- Japan Q4 Tankan Large Manufacturers registers highest reading in six years (16 v 15e) and diminishes prospects for more BOJ easing
- Indian inflation data continues to come in hot ahead of Wed RBI decison
- German SPD members vote in favor of coalition with Merkel's CDU/CSU; Schaeuble stays on as Fin Min; ECB's Assmussen to leave central bank Board to serve as Dep Labor Min
- European Major PMI readings come in mixed. France PMI Manufacturing contracts for the 22nd straight month and a 7-month low (47.1 vs. 49.0e); Both German and Eurozone beat on manufacturing portions while missing on services components but readings remained in growth territory
- Spain Housing prices rises for first time in 2 years
- Focus on Fed with Wed decision looming.


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities**
Indices [Stoxx50 +0.4%, FTSE 100 +0.3% at 6,458, DAX +0.5% at 9,052, CAC-40 +0.4% at 4,076, IBEX-35 +1.1% at 9,368, FTSE MIB +0.9% at 17,971, SMI +0.2% at 7,846, S&P 500 Futures +0.1% at 1,770]

- Market Focal Points: European equity markets open mixed ahead of Fed meeting (Dec 17-18th), IBEX-35 outperforms on banking sector amid improvement in property price data, SMI lags, Deutsche Telekom rises on speculation related to T-Mobile USA, H&M Nov SSS above ests, Moncler rises over 40% in trading debut, Germany manufacturing PMI above ests, China PMI below ests, Japan Tankan data, Upcoming US Nov Industrial Production

By Sector
- Basic Resources [Talvivaara Mining TALV.UK +17% (support agreement)]
- Telecom [Deutsche Telecom DTE.DE +3.5% (speculation related to T-Mobile USA)]
- Consumer Discretionary [Moncler MONC.IT +40% (first day of trading), Aggreko AGK.UK +5% (upbeat outlook), H&M HMB.SE +2% (Nov SSS above ests); Peugeot UG.FR -3% (follow-through selling)]
- Financials [Klepierre LI.FR +3% (asset sale), Commerzbank CBK.DE +1% (asset sale); RSA Insurance RSA.UK -1.5% (follow through selling)]
- Stoxx50 sectors [Telecom +1.4%, Industrials +0.9%, Financials +0.7%, Consumer Non-Cyclical +0.3%, Utilities +0.2%, Basic Materials +0.2%, Consumer Cyclical +0.1%, Energy flat; Technology -0.4%]

Speakers:
- European Investment Bank (EIB) Urged more urgent measures to increase investor confidence in Europe so economy can recover. It did endorse a move to joint bank oversight
- Sweden National Financial Management Authority (ESV): To post Deficit to GDP deficit of 2.3% in 2014 and 1.2% in 2015
- Goldman Sachs commented in a client note that a Dec Fed taper was unlikely as data since Oct had been mixed. Goldman also noted that it believed Fed would also consider CPI alongside non-farm payroll trend in its taper decision. It saw possible taper as more likely in March
- Former PBoC Gov Dai Xianglong: China should make the yuan capital account convertible. China should enable pension fund to invest in equities; China should increase QDII and QFII quotas
- Former PBoC Vice Gov Wu Xiaoling: GDP growth of 7% is a better target than current 7.5% official view

Currencies/Fixed Income:
- Dealers anticipated a potential volatile trading environment in perhaps the last full trading week of 2013. The highlight will be the FOMC announcement mid-week and the possibility of tapering beginning. Other key rate decision include India, Sweden and Japan
- The strong Tankan Survey for Large Manufacturing helped the yen firm up during the Asian session from recent 5-year lows against various pairs. However, the USD/JPY pair found a way to regain the 103 handle during the European morning.
- The mix major European PMI data had little impact. Overall the data seem to re-enforce the ECB view that the worst of the recession is being left behind but the recovery would be bumpy. The EUR/USD remains within striking distance of hitting fresh 2013 highs above the 1.3830 area.

Political/In the Papers:
- (EU) ECB's Draghi: ECB has done all it can to stimulate growth in the euro zone; Stands ready to act at a later stage - French press
- (EU) ECB's Hansson (Estonia): Current economic developments confirm forecasts
- (DE) Germany's SPD party caucus formally approves joining grand coalition with Merkel's CDU/CSU (as expected)
- (DE) ECB's Asmussen (Germany) said to leave the ECB; to take position at Ministry of Labor in next German govt; Likely replacement seen as Sabine Lautenschlger, current VP of the Bundesbank; other frontrunners include BaFin's Koenig and Halle Institute's Buch-(EU) EU's SRM said to be facing complications - financial press ; According to a letter from German Fin Min Schaeuble (dated Dec 12th) differences remain on how to finalize an SRM (single-resolution mechanism) before the European summit.
-(GR) Greece PM Samaras: Eurozone should make further decisions on reducing Greek debt levels in the spring - Greek press
-(GR) Greece PM Samaras: No snap elections in May, current govt will try to serve its full 4-yr term
- (IT) Matteo Renzi confirmed as the leader of Italy's center-left Democratic Party and would support the ruling coalition government until 2015 in order to implement all the necessary reforms to revamp the economy
- (RU) Russia has stationed missiles with a range of about 500 kilometers along its border with the Baltic states of Estonia, Latvia and Lithuania
- (US) Former Fed vice chair Kohn: Would recommend that FOMC holds off until 2014 until the start of the taper
-(US) US budget deal in Senate remains short on votes - financial press citing Senator Durbin (D-IL)**Note: The Senate is expected to vote in the coming days prior to the holiday recess
- (CN) China may set 2014 GDP growth target at about 7.5% following its week-long annual Central Economic Work Conference

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (EU) EU Foreign Ministers hold Meeting in Brussels
- (IR) Russia Foreign Min Lavrov to meet EU's Ashton
- (EU) European Investment bank (EIB) sovereign debt report
- (ES) OECD report on Spain
- (ES) IMF to Publish Preliminary Conclusions on Spain Banks
- 06:00 (IL) Israel to sell 2016, 2018 and 2023 bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (HU) Hungary Top Court meets on FX loans
- 07:15 (DE) German coalition agreement to be formally signed
- 08:00 (PL) Poland Nov CPI Core M/M: -0.2%e v 0.4% prior; Y/Y: 1.1%e v 1.4% prior
- 08:00 (RO) Romania to sell Bills
- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming Bill/bond auctions
- 08:30 (US) Dec Empire Manufacturing: +5.00e v -2.21 prior
- 08:30 (US) Q3 Final Nonfarm Productivity: 2.8%e v 1.9% prelim; Unit Labor Costs-1.4%e v -0.6% prelim
- 08:30 (CA) Canada Oct Int'l Securities Transactions: No est v 8.4B prior
- 08:50 (FR) France Debt Agency (AFT) to sell combined €6.5B in 3-month, 6-month and 12-month Bills
- 08:58 (US) Dec Preliminary Markit US PMI Manufacturing: 55.0e v 54.3 prior
- 09:00 (EU) ECB's Draghi in EU Parliament
- 09:00 (PL) Poland Nov YTD Budget Balance Level (PLN): No est v -39.5B prior; Budget Balance Performance: No est v 76.5% prior
- 09:00 (BE) Belgium Oct Trade Balance: No est v €125.0M prior
- 09:00 (CA) Canada Nov Existing Home Sales M/M: No est v -3.2% prior
- 09:00 (US) Oct Total Net TIC Flows: No est v -$106.8B prior; Net Long-term TIC Flows: $40.0Be v $25.5B prior
- 09:15 (US) Nov Industrial Production M/M: +0.6%e v -0.1% prior; Capacity Utilization: 78.4%e v 78.1% prior; Manufacturing Production: 0.4%e v 0.3% prior
- 09:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender at fixed 0.25%
- 09:30 (EU) ECB announces prior settlements in SMP program to offset bond purchases - 11:00 (US) Fed to purchase $2.75-3.00B in Notes
- 10:15 (EU) ECB's Draghi in EU Parliament
- 11:00 (BR) Brazil Nov Tax Collections (BRL): 110.9Be v 101.0B prior
- 11:30 (US) Treasuries to sell combined €59B in 3-Month and 6-Month Bills
- 16:00 (KR) South Korea Nov PPI Y/Y: No est v -1.4% prior
- 16:00 (CO) Colombia Oct Trade Balance: +$250.0Me v -$65.50M prior; Total Imports: $4.7Be v $5.2B prior
- 19:30 (AU) RBA December Minutes
- (NZ) New Zealand Half-Year Economic, Fiscal Update
- (MX) Mexico Nov Same-Store Sales Y/Y: No est v -2.1% prior
- (PE) Peru Oct Economic Activity Y/Y: No est v 4.4% prior
- (PE) Peru Nov Unemployment Rate: No est v 5.8% prior


***Economic Data***
- (IN) India Nov Wholesale Prices (WPI) Y/Y: 7.5% v 7.0%e
- (CH) SNB Sight Deposits for Week Ended Dec 13th (CHF): 316.3B v 317.4B prior
- (FR) France Dec Preliminary PMI Manufacturing: 47.1 v 49.0e (22nd straight contraction); PMI Services: 47.4 v 48.7e (2nd straight contraction)
- (CZ) Czech Oct Export Price Index Y/Y: -0.1 v +1.1% prior; Import Price Index Y/Y: -1.7 v -0.3% prior
- (CZ) Czech Nov PPI Industrial M/M: 0.8% v 0.2%e; Y/Y: 0.7% v 0.1%e
- (ES) Spain Q3 INE House Price Index Q/Q: +0.7% v -0.8% prior; Y/Y: -7.9% v -12.0% prior
- (TR) Turkey Sept Unemployment Rate: 9.9% v 10.0%e
- (DK) Denmark Nov Wholesale Price Index M/M: -0.6 v -0.5% prior; Y/Y: -2.2% v -1.7% prior
- (EU) ECB €128M borrowed in overnight loan facility vs. €206M prior; €38.3B parked in deposit facility vs. €37.0B prior - Daily Eurosystem Liquidity Conditions
- (DE) Germany Dec Advance PMI Manufacturing: 54.2 v 53.0e (6th straight month of growth); PMI Services: 54.0 v 55.3e (8th straight month of growth)
- (EU) Euro Zone Dec Advance PMI Manufacturing: 52.7 v 51.9e (6th straight month of growth); PMI Services: 51.0 v 51.5e (4th straight month of growth); PMI Composite: 52.1 v 51.9e
- (IT) Italy Oct Total Trade Balance: €4.1B v €0.8B prior; Trade Balance EU: €1.2B v €0.5B prior
- (NO) Norway Nov Trade Balance (NOK): 33.9B v 26.7B prior
- (BR) Brazil Dec FGV Inflation IGP-10 M/M: 0.4% v 0.5%e
- (EU) Euro Zone Oct Trade Balance Seasonally Adj: €14.5 b v €14.5Be; Trade Balance Unadj: €17.2B v €15.0Be

Fixed Income:
- (NO) Norway sold NOK7.0B vs. NOK7.0B indicated in 12-month Bills: Yield: 1.45%