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Reports Europe

European stock market, economy and companies update (December 17, 2013)

December 17, 2013, Tuesday, 11:16 GMT | 06:16 EST | 15:46 IST | 18:16 SGT
Contributed by Trade The News


***Notes/Observations***
- Australia mid-year economic and fiscal outlook painted a deteriorating picture; cut its FY14/15 GDP target to 2.5% v 3.0% prior in Aug and cut its FY16/17 budget forecast to deficit A$17.7B v surplus A$4.2B prior forecast
- RBA Dec Minutes reiterated not closing off potential for further rate cuts but prudent to hold rates steady; AUD still uncomfortably high
- Sweden Central Bank cuts its Repo Rate and lowered its Rate Path outlook citing lower inflation
- UK CPI edging close back towards its 2% target and at lowest level since Nov 2009 (YoY was 2.1% v 2.2%e)
- German ZEW Survey sentiment at highest level since April 2006 and optimistic on 2014 prospects
- Spain Bill auction results steady while borrowing costs


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities**
Indices [Stoxx50 -0.7%, FTSE 100 -0.5% at 6,491, DAX -0.4% at 9,126, CAC-40 -1% at 4,078, IBEX-35 -0.4% at 9,387, SMI +0.3% at 7,877, S&P 500 Futures -0.1% at 1,778]

- Market Focal Points: European equity markets open lower following gains on Monday as Wednesday's Fed decision remains the focus, Oil services firm CGG and German property firm Patrizia issue profit warnings, Moncler sees slight profit taking in second day of trading , China equities decline for 6 straight sessions, ZEW above ests and highest level since April 2006

By Sector
- Consumer Discretionary [Moncler MONC.IT -4% (profit taking)]
- Financials [Patrizia P1Z.DE -1% (profit warning), SwissRe SREN.CH -0.5% (CFO resignation); Zurich Insurance ZURN.CH +1.5% (new CFO)]
- Healthcare [Glaxo GSK.UK -0.5% (broker commentary)
- Industrials [Koenig & Bauer SKB.DE -4% (reorganization plan)]
- Basic Resources/Materials [Talvivaara MiningTALV.UK +23% (court approves debt restructuring plan)]
- Stoxx50 sectors [Industrials -1%, Basic Materials -0.9%, Consumer Non-Cyclical -0.8%, Financials -0.8%, Utilities -0.7%, Energy -0.7%, Technology -0.4%, Telecom -0.3%, Consumer Cyclical -0.2%]

Speakers:
- Sweden Central Bank (Riksbank) statement after cutting its Repo Rate by 25bps and lowering its path outlook that today's decision to cut repo rate was unanimous at 6-0 as low inflation justified the move. It tweaked its view on potential rate hikes and now saw slow increases in Repo Rate would not begin until start of 2015 (**Previously stated that rates were not expected to be raised until end 2014)
- Sweden Central Bank (Riksbank) Gov Ingves post rate decision press conference noted that the recovery abroad very important and that its domestic household debt was an increasing risk for the foreseeable future. Inflation expectations were well anchored
- France Fin Min Moscovic forecasted 2013 GDP growth between 0.1-0.2% with 2014 GDP above +1.0%. He saw 2015 GDP at 1.7-2.0%. Lastly he predicted that EU would reach a banking union agreement this week (by Thursday)
- Netherlands Planning Bureau (CPB) raised its 2013 GDP from -1.25% to -1.00% and forecasted 2014 GDP growth at +0.5% with Unemployment Rate at 7.5%
- Swiss KOF Institute Dec Economic Forecast which raised its 2014 GDP growth forecasts from 2.1% to 2.2% and maintained its 2015 GDP growth forecast at 2.3%. it also lowered 2014 inflation view from 0.5% to 0.3% and set its initial 2015 inflation view at 0.7%
- German IFO forecasted 2014 GDP growth at 1.9% vs. 0.4% seen this year with exports aiding recovery
- ZEW Economists stated that it expected further improvement in both German and Euro Zone economy. It noted that 85% of survey participants saw no change in short-term interest rates in next 6 months

Currencies/Fixed Income:
- Citigroup saw CNY currency (yuan) at 6.05 by end-year and that the Yuan to deliver more modest appreciation as China's growth to slow amid govt reform plans
- EUR/SEK Cross tested above 9.07 after Riksbank cut the Repo Rate and lowered its rate path outlook. The pair was at 9.02 just before the rate decision

Political/In the Papers:
- (AU) Moody's: Australia Mid-Year Economic and Fiscal Outlook (MYEFO) debt projections worse than expected; Govt's GDP revisions, larger deficit forecasts clearly credit negative, but do not change Stable outlook
- (CN) PBoC won't conduct open market operations (OMO) in today's session (4th consecutive session of halted operations)
- (JP) BOJ to postpone sales of its stock holdings by 2 years from the end of March 2014 to the end of March 2016 - financial press; Cites recent developments in domestic and foreign financial markets.
- (JP) BoJ Gov Kuroda suggests Japan is half way there on inflation target
- (JP) Japan was reported to look at increasing its military capacity in the disputed Senkaku islands area
- (EU) ECB's Draghi: ECB exit from loose monetary policy is still very distant; Not easy to assess what the impact will be from the eventual Fed taper, but should not be a major impact on Europe; Asked if the ECB is considering more LTROs, Draghi says a lack of funding is not the main reason banks are not lending at the moment
- (EU) Eurogroup chief Dijsselbloem: Still expects to reach agreement on SRM before the end of 2013
- (IT) Italy reportedly planning to revise rules to make it easier for banks to issue hybrid bonds to boost capital levels ahead of AQR - financial press
- (PT) Portugal Vice PM Portas: confirms formally passed bail out review by Troika and remained on track to exit program in June, as expected.

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (US) Federal Reserve FOMC begins 2-day Meeting (decision on Wed)
- (MX) Mexico Banamex Survey of Economists
- (IL) Israel Nov Leading 'S' Indicator M/M: No est v 0.2% prior
- (GR) Greece Debt Agency (PDMA) to sell €1.0B in 13-week bills
- 05:30 (UK) BOE Gov Carney testifies in House of Lords Economic Affairs Committee
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
- 05:30 (BE) Belgium Debt Agency to sell up to €2.0B in 3-Month and 12-Month Bills
- 06:00 (UK) Dec CBI Industrial Trends Total Orders: 11e v 11 prior; Trends Selling Prices: 5e v 5 prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (EU) ECB to drain €184.0B in 7-day Term Deposit Tender to offset govt bond purchases under SMP program
- 07:00 (CZ) Czech Central Bank Interest Rate Decision: Expected to leave Repurchase Rate unchanged at 0.05%; maintain FX Intervention
- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave Key Rates unchanged: Expected to leave Benchmark Repurchase unchanged at 4.50%; Expected to leave Overnight Lending Rate unchanged at 7.75%; Expected to leave Overnight Borrowing Rate unchanged at 3.50%
- 07:45 (US) Weekly ICSC Chain Store Sales
- 08:00 (HU) Hungary Central Bank Interest Rate Decision: Expected to cut Base Rate by 20bps to 3.00%
- 08:00 (PL) Poland Nov Average Gross Wages M/M: 1.5%e v 1.7% prior; Y/Y: 2.9%e v 3.1% prior
- 08:00 (PL) Poland Nov Employment M/M: 0.0%e v 0.1% prior; Y/Y: +0.1%e v -0.2% prior
- 08:00 (BR) Brazil Dec CNI Industrial Confidence: No est v 54.5 prior
- 08:30 (US) Nov CPI M/M: +0.1%e v -0.1% prior; Y/Y: 1.3%e v 1.0% prior
- 08:30 (US) Nov CPI Ex Food and Energy M/M: 0.1%e v 0.1% prior; Y/Y: 1.7%e v 1.7% prior
- 08:30 (US) Nov CPI NSA: 233.109e v 233.546 prior; CPI Core: No est v 234.877 prior
- 08:30 (US) Nov Q3 Current Account Balance: -$100.5Be v -$98.9B prior
- 08:30 (CA) Canada Oct Manufacturing Sales M/M: -0.3%e v +0.6% prior
- 08:55 (US) Weekly Redbook Retail Sales
- 09:00 (EU) Weekly ECB Forex Reserves: No est v €207.1B prior
- 10:00 (MX) Mexico weekly International Reserves
- 10:00 (US) Dec NAHB Housing Market Index: 55e v 54 prior
- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month Bills
- 11:00 (US. Fed to purchase $1.25-1.75B in Notes
- 11:30 (SE) Sweden Central Bank (Riksbank) dep gov Skingsley
- 11:30 (US) Treasury to sell $40B in 4-Week Bills
- 13:00 (US) Treasury to sell $32B in 2-Year Notes
- 13:30 (EU) Euro Area Finance Ministers (Eurogroup) meet in Brussels
- 16:30 (US) Weekly API Oil Inventories
- 17:30 (AU) RBA gov Stevens testifies
- 18:50 (JP) Japan Nov Trade Balance: No est v -¥1.091T prior; Trade Balance Adjusted: No est v -¥1.0725T


***Economic Data***
- (JP) Japan Nov Final Machine Tool Orders Y/Y: 15.4% v 15.4% prelim
- (EU) EU27 Nov New Car Registrations Y/Y: 1.2% v 4.7% prior
- (ES) Spain Q3 Labour Costs Y/Y: +0.2 v -0.3% prior
- (DE) Denmark Association of Mortgage Banks Q3 House Prices Q/Q: -0.5%; Y/Y: -0.4%
- (EU) ECB €142M borrowed in overnight loan facility vs. €128M prior; €45.8B parked in deposit facility vs. €38.3B prior - Daily Eurosystem Liquidity Conditions
- (SE) Sweden Central Bank (Riksbank) cut Repo Rate by 25bps to 0.75%, as expected
- (HK) Hong Kong Nov Unemployment Rate: 3.3% v 3.3%e
- (AT) Austria Nov CPI M/M: +0.1% v -0.1% prior; Y/Y: 1.4% v 1.4% prior
- (UK) Nov CPI M/M: 0.1% v 0.2%e; Y/Y: 2.1% v 2.2%e; CPI Core Y/Y: 1.8% v 1.8%e
- (UK) Nov RPI M/M: 0.1% v 0.1%e; Y/Y: 2.6% v 2.7%e; RPI Ex Mortgage Interest Payments Y/Y: 2.7% v 2.7%e; Retail Price Index: 252.1 v 252.2e
- (UK) Nov PPI Input M/M: -0.7% v -0.5%e; Y/Y: -1.0% v -1.0%e
- (UK) Nov PPI Output M/M: -0.2% v 0.0%e; Y/Y: 0.8% v 0.9%e
- (UK) Nov PPI Output Core M/M: -0.1% v 0.0%e; Y/Y: 0.7% v 0.9%e
- (UK) Oct ONS House Price Y/Y: 5.5% v 4.1%e
- (DE) Germany Dec ZEW Current Situation Survey: v 29.9e; Expectations Survey: v 55.0e
- (EU) Euro Zone Nov CPI M/M: -0.1% v -0.1%e; Y/Y: 0.9% v 0.9%e; CPI Core Y/Y: 0.9% v 1.0%e
- (EU) Euro Zone Labour Costs Y/Y: 1.0% v 1.1% prior
- (EU) Euro Zone Dec ZEW Expectations Survey: 68.3 v 60.2prior

Fixed Income:
- (ES) Spain Debt Agency (Tesoro) sold total €3.5B vs. €2.5-3.5B indicated in 3-Month and 9-Month Bills
- Sold €1.77B in 3-month Bills; Avg Yield: 0.631% v 0.405% prior; Bid-to-cover: 2.52x v 3.06x prior; Max Yield: 0.670% v 0.425% prior Tail: 3.9bps v 2.0bps prior
- Sold €1.73B in 9-month Bills; Avg Yield: 0.841% v 0.662% prior; Bid-to-cover: 2.65x v 1.92x prior; Max Yield: 0.872% v 0.685% prior; Tail: 3.1bps v 2.3bps prior
- (EU) ECB allotted €118.9Bin 5-day Main Refi Tender at fixed 0.25% vs. €100.0Be