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Reports Europe

European stock market, economy and companies update (February 06, 2014)

February 6, 2014, Thursday, 12:00 GMT | 07:00 EST | 16:30 IST | 19:00 SGT
Contributed by Trade The News


***Notes/Observations***
- Australia Dec Trade Balance registers its second month of surplus following revisions (+A$468M v -A$200Me)
- Spain bond results solid and again saw borrowing costs fall to fresh record lows at auction
- Key European Rate decisions during NY morning. Minority view that ECB could surprise with a Main Refi cut; BOE could issue statement to clarify its forward guidance stance as unemployment threshold nears
 
 
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities**
Indices [Stoxx50 +1.1%, FTSE 100 +0.7% at 6,505, DAX +1.2% at 9,222, CAC-40 +1% at 4,163, IBEX-35 +1.2% at 9,891, FTSE MIB +1.4% at 19,338, SMI +0.7% at 8,171, S&P 500 Futures +0.6% at 1,754]
 
- Market Focal Points: European equity markets open higher following better than expected earnings from Daimler and Alcatel-Lucent, Overall heavy day for European corporate results, Drug makers decline on earnings (Sanofi, Astrazeneca), Central Bank meetings in focus (ECB and BoE) , Credit Suisse Q4 net profit hurt by legal provisions
 
By Sector
- Financials [Pohjola Bank POH1S.FI +18% (takeover offer), Danske Bank DANSKE.DK +2% (resumed dividend); Credit Suisse CSGN.CH -2% (Q4 net profit below ests)]
- Industrials [Volvo VOLVB.SE +4% (Q4 results above ests), Daimler DAI.DE +3.5% (Q4 results above ests, raised dividend); Gea Group G1A.DE -3% (FY sales below ests)]
- Basic Materials/Resources [Akzo Nobel AKZA.NL +6% (swung to Q4 profit), Wacker Chemie WCH.DE +4% (Q4 profits above ests)]
- Technology [Imagination Technologies IMG.UK +17% (licensing agreement with Apple); Dassault Systems DSY.FR -6% (cautious outlook)]
- Healthcare [AstraZeneca AZN.UK -3% (Q4 profits below ests), Sanofi SAN.FR -1.5% (Q4 results below ests)]
- Telecom [Alcatel-Lucent ALU.FR +9% (swung to Q4 profit), Sky Deutschland SKYD.DE +6% (FY14 outlook), Vodafone VOD.UK +1.5% (Q3 organic revenues better than ests)]
- Stoxx50 sectors [Industrials +1.2%, Consumer Cyclical +0.9%,Telecom +0.6%, Telecom +0.4%, Utilities +0.3%, Basic Materials +0.1%, financials flat; Consumer Non-Cyclical -0.2%, Energy -0.1%]
 
Speakers:
- Slovakia Finance Ministry raised its 2014 GDP forecast to 2.3% from 2.2% prior and cut CPI forecast to 0.8% from 1.7%. It maintained 2015 GDP growth at 3.0%, CPI at +2.1%
- Romania President Basescu: 2014 GDP growth might be between 3-4% (**Note: Recent IMF put GDP at 2.2%)
- Ukraine Central Banker Lytvytskyi: UAH currency (Hryvnia) situation is under control
- Japan PM Abe commented that there was no planned summit with China during Russia trip and that China and South Korea talks should be held without conditions
- Japan upper house enacted its ¥5.47T extra budget for current fiscal year (as expected)
- Indonesia Central Bank (BI) Gov Martowardojo: To maintain tightening bias in 2014. It also noted that Bitcoin was not a valid currency
 
Currencies/Fixed Income:
- Major currency pairs were little changed in quiet trading ahead of key rate decisions today.
- The ECB meeting and press conference will be the highlight. There were a minority of analysts from several large banks looking for the Main Refi rate to be cut today. The EUR/USD hovered in the low-to-mid 1.35s ahead of the key event.
- No changes were expected from the BOE but dealers noted that it could issue a statement to clarify its forward guidance now that ILO unemployment is just above the 7.0% threshold. Previously the BOE updated its guidance during the quarterly inflation report and not at the rate decision. The next quarterly inflation report is due out on Wed, Feb 12th
- AUD currency maintained a firm tone for the second straight session after another set of firm data. The AUD/USD was in the mid-portion of the 0.89 area throughout the session. Dealers noted that RBA verbal intervention had previously occurred when Aussy was above the 0.90 level.
 
Political/In the Papers:
- (DE) Germany 550K chemical industry workers negotiated a 3.7% pay raise under a new 14-month contract - De Tijd
- (US) Fed's Lockhart: Current taper pace is considered the 'default'; would require serious adverse change in economic outlook to change pace - comments to reporters; Notes could increase speed of taper if the economy outperforms, but it is most probable pace of taper will remain at its current level; Stock selloff not surprising, doubtful market was in a bubble; recent selloff is likely just correction
- (US) Fed's Plosser (hawk, 2014 voter): Should scale back QE faster to reflect strength in the economy; Volatility in the emerging markets is not a significant risk to the US
-(US) Moody's: Debt limit deadline not likely to affect US sovereign Aaa rating; Sees debt ceiling being raised
-(US) Reportedly House Republican leadership lacks votes to support either of their top two options for debt ceiling concessions, making a 'clean' increase more likely - Washington Post
-(JP) Japan BOJ Dep Gov Nakaso: BOJ will act to achieve 2% target if necessary; Expects growth in developed economies to accelerate, as well as effect to spread to emerging markets
-(JP) BOJ Dep Gov Iwata: Will not stop easing abruptly without inflation target achieved; Japan making steady progress towards BOJ's 2% inflation target
 
**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (CO) Colombia Jan CPI Core M/M: No est v 0.2% prior; Y/Y: No est v 2.4% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds
- 06:00 (DE) Germany Dec Factory Orders M/M: 0.2%e v 2.1% prior; Y/Y: 6.3%e v 6.8% prior
- 06:00 (RU) Russia Gold and Forex Reserve w/e Jan 31st: No est v $496.7B prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to leave both Interest Rate and Asset Purchase Target (APT) unchanged at 0.50% and £375B respectively
- 07:00 (UK) Possible BOE statement after rate decision
- 07:00 (CZ) Czech Central Bank Interest Rate Decision: Expected to leave Repurchase Rate unchanged at 0.05% and maintain floor in EUR/CZK cross at 27.00
- 07:00 (CL) Chile Dec Real Wage M/M: No est v 1.0% prior; Y/Y: No est v 2.9% prior
- 07:30 (US) Jan Challenger Job Cuts: No est v 30.6K prior; Y/Y: No est v -5.9% prior
- 07:30 (BR) Brazil Jan Vehicle Production: No est v 235.9K prior; Vehicle Sales: No est v 353.8K prior; Vehicle Exports: No est v 40.3K prior
- 07:45 (EU) ECB Interest Rate Decision: Expected to leave key rates unchanged: Expected to leave main Refi Rate unchanged at 0.25%; Leave Deposit Facility Rate unchanged at 0.00%; Leave Marginal Lending Facility unchanged at 0.75%
- 08:30 (US) Q4 Preliminary Nonfarm Productivity: 2.5%e v 3.0% prior; Unit Labor Costs: -0.5%e v -1.4% prior
- 08:30 (US) Initial Jobless Claims: 335Ke v 348K prior; Continuing Claims: 3.00Me v 3.00M prior
- 08:30 (US) Dec Trade Balance: -$36.0Be v -$34.3B prior
- 08:30 (CA) Canada Dec Int'l Merchandise Trade: -C$0.650Me v -C$940M prior
- 08:30 (US) Weekly USDA Net Export Sales
- 08:30 (EU) ECB'S Draghi holds post rate decision press conference
- 09:00 (MX) Mexico Dec Leading Indicators M/M: No est v 0.1 prior
- 10:00 (MX) Mexico Central Bank Economist Survey
- 10:00 (CA) Canada Jan Ivey Purchasing Managers Index (Seasonally Adj): 51.0e v 46.3 prior; PMI unadj: No est v 40.2 prior
- 10:00 (US) Fed's Tarullo testifies on financial stability
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (DE) German Bundesbank's Nagel in Dusseldorf
- 11:00 (US) Fed to purchase $1.00-1.25B in bonds
- 11:00 (BR) Brazil to sell 2014, 2016 and 2018 Bills
- 11:00 (BR) Brazil to sell 2021 and 2025 in Fixed-rate bonds
- 17:30 (US) Fed's Rosengren speaks at New College in Sarasota, Florida
- 19:30 (AU) RBA Quarterly Statement on Monetary Policy
- 20:00 (NZ) New Zealand PM Key speaks in Sydney
- 20:45 (CN) China Jan HSBC/Markit Services PMI: No est v 50.9 prior
 
 
***Economic Data***
- (CH) Swiss Jan SECO Consumer Confidence: +2 v -1e
- (CH) Swiss Dec Trade Balance (CHF): 0.5B v 2.0B prior; Real Exports M/M: 0.9% v 3.0% prior; Real Imports M/M: 1.2% v 6.5% prior
- (UK) Jan Halifax House Prices M/M: 1.1% v 1.0%; 3M/Y:7.3% v 7.2%e
- (CZ) Czech Dec Industrial Output Y/Y: 9.3% v 9.3%e v; Construction Output Y/Y: +1.4 v -9.3% prior
- (CZ) Czech Dec Trade Balance (CZK): 9.6B v 10.9Be
- (HU) Hungary Dec Preliminary Industrial Production M/M: -1.9% v -0.2% prior; Y/Y: 6.2%e v 5.8% prior
- (PH) Philippines Central Bank (BSP) left its Overnight Borrowing Rate unchanged at 3.50%, as expected
- (EU) ECB €360M borrowed in overnight loan facility vs. €3M prior; €35.0B parked in deposit facility vs. €54.2B prior - Daily Eurosystem Liquidity Conditions
- (TW) Taiwan Jan Foreign Reserves: $416.9B v $416.8B prior
- (IL) Israel Jan Foreign Currency Balance: $83.2B v $81.8B prior
- (SE) Sweden Jan Average House Prices (SEK): 2.186M v 2.292M prior
- (UK) Jan New Car Registrations Y/Y: 7.6% v 23.8% prior
- UN Foods and Agricultural Organization (FAO) Jan Food Price Index: 203.4 v 206.2 m/m
- (CY) Cyprus Jan CPI M/M: -1.5% v -0.3% prior; Y/Y: -2.9% v -2.3% prior
 
Fixed Income:
- (ES) Spain Debt Agency (Tesoro) sold total €5.59B vs. €4.5-5.5B indicated range in 2017 and 2019 bonds
- Sold €2.3B in 2.1% Apr 2017 bono; Avg Yield: 1.562% (record EMU low) v 1.595% prior; Maximum Yield: 1.587% v 1.62% prior; Bid-to-cover: 2.02x v 2.2x prior; Tail: 2.5bps v 2.5bps
- Sold €3.29B in 2.75% Apr 2019 Bono; Avg yield 2.254% (record EMU low) v 2.382% prior; Bid-to-cover: 1.68x v 1.8x prior; Maximum Yield 2.282% v 2.411% prior; Tail 2.8bps v 2.9bps
- (FR) France Debt Agency (AFT) sold total €7.896B vs. €7-8B indicated range in 2024, 2027 and 2032 Oats
- Sold €4.055B in 2.25% 2024 Oat; Avg Yield: 2.25% v 2.51% prior; Bid-to-cover: x v 1.54x prior
- Sold €2.891B in 2.75% Oct 2027 Oats; Avg Yield 2.66% v 2.81% prior; Bid-to-cover: x v 2.57x prior
- Sold €1.04B in 5.75% Oct 2032 OAT; Avg Yield 2.88% v 2.50% prior; Bid-to-cover: x v 3.2x prior
- (SE) Sweden sold SEK1.0B in I/L 2025 bond; Yield: 0.8340 v 0.1200% prior