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Reports Europe

European stock market, economy and companies update (February 03, 2014)

February 3, 2014, Monday, 11:41 GMT | 06:41 EST | 16:11 IST | 18:41 SGT
Contributed by Trade The News

- Safe havens flows remain evident in FX but not elsewhere; concerns linger about growth prospects in Emerging Markets
- China Jan Manufacturing PMI come in at 6-month low (50.5 v 50.5e)
- China Jan Non-Manufacturing PMI hits a 23 month low (53.4 vs. 54.6 prior)
- Major European Manufacturing PMI data seen as 'encouraging'
- Euro Zone and Germany PMI Manufacturing readings hit 32-month highs; Greece returns to growth for the first time since Aug 2009 (52 months ago)
Indices [Stoxx50 -0.7%, FTSE 100 -0.3% at 6,492, DAX -0.5% at 9,255, CAC-40 -0.5% at 4, 144, IBEX-35 -0.9% at 9,836, FTSE MIB -0.9% at 19,255, SMI -0.2% at 8,174, S&P 500 Futures -0.1% at 1,774]
- Market Focal Points: Equity markets open mixed then decline amid weakness in Asia and deflation concerns, Euro zone PMI data mostly above estimates (Greece shows expansion for first time in 52 months) , UK PMI below ests, Ryanair expects Q4 price declines to slow, Julius Baer FY profits below ests, Lloyds expects additional Q4 provisions and issued dividend guidance, Mining equipment firm Sandvik said demand decline is slowing, Nikkei 225 ends lower by 2% and enters correction, Central bank decisions for this week (Australia RBA, ECB, Bank of England) , US payrolls data due on Friday
By Sector
- Financials [Julius Baer BAER.CH -3% (FY profits below ests), Lloyds LLOY.UK -2.5% (to take additional Q4 provisions, issued dividend guidance)]
- Healthcare [Ablynx ABLX.BE +4% (licensing agreement)]
- Industrials [Sandvik SAND.SE -2.5% (Q4 profits below ests); Imtech IM.NL +3% (Q4 sales update)]
- Consumer Discretionary [Colryt COLR.BE -8% (profit warning); Ryanair RYA.UK +5% (reaffirmed forecast)]
- Technology [RM PLC RM.UK +8% (raised dividend), Blinkx BLNX.UK +7% (partnership agreement)] -
- Basic Materials/Resources [Randgold RRS.UK +2.5% (guided 2014 production higher y/y)]
Stoxx 50 Sectors [Financials -1%, Telecom -1%, Consumer Cyclical -0.5%, Industrials -0.5%, Energy -0.3% Technology -0.1%, Basic Materials -0.1%; Consumer Non-Cyclical +0.3%, Utilities flat]
- Italy Labor Min: Sees Q4 GDP growth between +0.2-0.3% with trend continuing into 2014
- German Fin Min Schaeuble reiterates view that more aid for Greece is possible; would be much less extensive that earlier programs (**Note weekend press noted that Germany was putting together options for a third Greek package including a new haircut and more cash and could be world €10B-€20B)
- South Africa Fin Min Gordhan commented that it had no FX target and that the country must cope with ZAR currency (Rand). Ideally the ZAR currency should be at a level that increases exports without causing inflation
- Turkey Fin Min Simsek reiterates that it was not seeing significant outflows in Turkey and that it had to learn to live with moderate growth
- Sweden Central Bank (Riksbank) to exchange two EU payments in Feb 2014
- Spain Catalonia Region President Mas: Spain cannot block a non-binding vote on independence
- Philippines Central Bank (BSP) Gov Tetangco: To continue policy of strategic presence in fx market and saw no need for any drastic policy action
- Thailand political opposition party was said to be planning to ask top court to annul the recent general election
- Credit Suisse sees potential Brazil sovereign downgrade in H1
Currencies/Fixed Income:
- European session saw better PMI readings for the most part which maintained the view that the worst of the region's economic woes was perhaps over. However a six-month low in China official PMI helped to maintain a risk-off theme in the session. Safe-haven flows continued to be noticed. Dealers noted that the EUR/CHF cross registered a six month low just above the 1.22 level
- The EUR/USD was hovering at the Jan lows throughout most of the session and had difficulty maintaining momentum above the 1.35 level. The pair at 1.3510 as the NY morning approached
- GBP/USD (Sterling) fell to a two-week low below 1.6370 after its miss in PMI Manufacturing data
- USD/JPY pair hovered just above last week's lows of 101.70 and having difficulty staying above the 102 handle with the Nikkei225 stock Index off approx. 2% in thin Asian trading.
- Emerging market currencies were relative stable in the session. Ukraine UAH currency (Hryvnia) did hit a fresh 4-year low at 8.6750
Political/In the Papers:
- (EU) Parts of the ECB council said to feel that ending the bond sterilizations program could help increase liquidity for the financial industry - financial press
- (EU) ECB's Coeure: The ECB has tools to combat downside risks to price stability even when rates are at the zero bound
- (PT) Portugal Econ Min Lima: Portugal to decide in Apr is a credit line is needed - Les Echos; The country is expected to exit its bailout program on May 17th
-(ES) Spain PM Rajoy: Plans to review fiscal model for autonomous regions; Expects tax reform in Spain to eventually result in lower tax rates
-(US) Fed's Fisher: Fed has to focus on US needs when making policy
- (US) Fed's George (non voter, hawk): Worried the continued reliance on ultra accommodative policy could lead to a reach for yield and open the door to instability
**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (US) Yellen to be sworn in as Fed Chair
- (CZ) Czech Jan Budget Balance (CZK): No est v -80.9B prior
- (RO) Romania Jan International Reserves: No est v $35.4B prior
- (RU) Russia Jan Reserve Fund: No est v $87.4B prior; Wellbeing Fund: No est v $88.6B prior
- (ZA) South Africa Jan Naamsa Vehicle Sales Y/Y: No est v 0.1% prior (revised from 1.1%)
- (IT) Italy Jan Budget Balance: No est v €15.0B prior
- 05:30 (BR) Brazil Central Bank Weekly Economists Survey
- 06:00 (NL) Netherlands Debt Agency (DSTA) to sell up to €4.0B in 3-Month and 6-Month Bills
- 06:00 (NO) Norway to sell Bills
- 06:45 (US) Daily Libor Fixing
- 07:00 (US Vehicle Sales data release through the US session
- 07:00 (BR) Brazil Jan PMI Manufacturing: No est v 50.5 prior
- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
- 08:30 (CA) Canada Dec Industrial Product Price M/M: 0.3%e v 0.1% prior; Raw Materials Price Index M/M: +2.0%e v -4.1% prior
- 08:50 (FR) France Debt Agency (AFT) to sell combined €7.9B in 3-month, 6-month and 12-month Bills
- 08:58 (US) Jan Final Markit PMI Manufacturing: 53.8e v 53.7 prelim
- 09:00 (US) Treasury Sec Lew speaks at Bipartisan Policy Center
- 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
- 10:00 (US) Jan ISM Manufacturing: 56.0e v 57.0 prior; Prices Paid: 54.0e v 53.5 prior
- 10:00 (US) Dec Construction Spending M/M: 0.3%e v 1.1% prior
- 11:30 (US) Treasury to sell $48B in 3-Month and 6-Month Bills
- 12:00 (BR) Brazil Jan Trade Balance: No est v $2.7B prior; Total Exports: No est v $20.9B prior; Total Imports: No est v $18.2B prior
- 12:00 (IT) Italy Jan New Car Registrations Y/Y: No est v 1.4% prior
- 12:00 (CA) Canada Min Raitt speaks at Canadian Club
- 12:30 (EU) EU Parliament panel hearing on ECB Oversight Board position
- 13:00 (MX) Mexico Jan IMEF Manufacturing Index: No est v 50.3 prior; Non-Manufacturing Index: No est v 53.2 prior
- 13:00 (MX) Mexico Jan IMEF Manufacturing Index Unadj: No est v 49.8 prior; Non-Manufacturing Index Unadj: No est v 54.7 prior
- 13:30 (NZ) New Zealand PM Key speaks in Auckland
- 15:00 (US) Treasuring financing estimate
- 17:00 (US) Jan Total Vehicle Sales: 15.50Me v 15.30M prior; Domestic Vehicle Sales: 12.00Me v 11.65M prior
- 18:50 (JP) Japan Jan Monetary Base Y/Y: No est v 46.6% prior
- 22:30 (AU) Australia Central Bank (RBA) Interest Rate Decision: Expected to leave Cash Rate Target unchanged at 2.50%
***Economic Data***
- (RU) Russia Manufacturing PMI: 48.0 v 49.2e; lowest since Jun 2009 and its 6th contraction in 7 months
- (IN) India Jan HSBC/Markit Manufacturing PMI: 51.4 v 50.7 prior; 3rd straight month of growth and highest since March 2013
- (JP) Japan Jan Vehicle Sales Y/Y: 27.5% v 18.7% prior; 5th straight month of positive reading
- (AU) Australia Jan Commodity Index AUD: 91.5 v 92.1 prior; Y/Y: -9.9% v -4.0% prior
- (IE) Ireland Investec Manufacturing PMI: 52.8 v 53.5 prior; weakest growth in five months
- (SE) Sweden Jan PMI Manufacturing: 56.4 v 54.2 e
- (NL) Netherlands Jan Manufacturing PMI: 54.8 v 57.0 prior; slowest pace in three months
- (NO) Norway Jan Manufacturing PMI: 52.8 v 52.6e; 6th straight month of expansion
- (TR) Turkey Jan Manufacturing PMI: 52.7 v 53.5 prior; 6th straight month in expansion territory but slowest rate since last August
- (PL) Poland Jan Manufacturing PMI; Forecast: 55.4 v 54.1e; 8th straight month of expansion and fastest rate in three years
- (HU) Hungary Jan Manufacturing PMI: 57.9 v 50.5 prior; 6th straight months of expansion and 7-year high (highest since March 2007)
- (TR) Turkey Jan CPI M/M: 1.7% v 1.7%e; Y/Y: 7.5% v 7.4%e; CPI Core Index Y/Y: 7.6% v 7.6%e
- (TR) Turkey Jan CPI PPI M/M: 3.3% v 1.1% prior; Y/Y: 10.7% v 7.0% prior
- (EU) ECB €255M borrowed in overnight loan facility vs. €479M prior; €56.1B parked in deposit facility vs. €36.9B prior - Daily Eurosystem Liquidity Conditions
- (ES) Spain Jan. Manufacturing PMI: 52.2 v 51.2e; Employment sub-index registers growth for the first time in over three years
- (CZ) Czech Republic Jan Manufacturing PMI: 55.9 v 54.7 prior; 9th straight month of expansion and highest reading since April 2011
- (CH) Swiss Jan PMI Manufacturing: 56.1 v 55.0e
- (IT) Italy Jan PMI Manufacturing: 53.1 v 53.2e; 7th straight month of expansion but moves off 2 1/2 year highs
- (FR) France Jan Final PMI Manufacturing: 49.3 v 48.8e; confirms its 23rd straight contraction but its highest reading since September
- (DE) Germany Jan Final PMI Manufacturing: 56.5 v 56.3e; confirms 7th straight month of growth and highest reading since May 2011)
- (EU) Euro Zone Jan Final PMI Manufacturing: 54.0 v 53.9e; confirms 7th straight month of growth and highest reading since May 2011
- (GR) Greece Jan Manufacturing PMI: 51.2 v 49.6 prior; first growth since Aug 2009 (52 months ago)
- (ZA) South Africa Jan Kagiso Manufacturing PMI: 49.9 v 50.2e; 2nd straight contraction
- (UK) Jan PMI Manufacturing: 56.7 v 57.3e
- (EU) Euro Area Q3 Govt Deficit: 3.1% v 3.3% prior (lowest since Q3 2008)
- (DK) Denmark Jan PMI Survey: 56.3 v 53.6 prior
Fixed Income:
- (NO) Norway sold NOK3.0B in 10-month Bills; Yield: 1.35%