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Reports Europe

European stock market, economy and companies update (February 12, 2014)

February 12, 2014, Wednesday, 10:31 GMT | 05:31 EST | 15:01 IST | 17:31 SGT
Contributed by Trade The News

- House of Representatives passed "clean" debt ceiling bill, raising the debt limit through March 15, 2015 with no conditions (passed as expected)
- China Jan Trade Balance larger than expected ($31.9B v $23.8Be ) with constructive components as both exports and imports exceed expectations
- South Korea Jan Unemployment Rate: 3.2% v 3.0%e
- Data from China and Fed Chair Yellen market friendly testimony calm Emerging markets for the time being
- Focus whether BOE amends its forward guidance
Indices [Stoxx 50 +0.7%, FTSE 100 +0.3% at 6,695, DAX +0.9% at 9,561, CAC-40 +0.6% at 4,306, IBEX-35 +0.4% at 10,128, FTSE MIB +0.6% at 20,004, SMI +0.6% at 8,410, S&P 500 Futures +0.2% at 1,817]
- Market Focal Points; Equity markets open higher on China trade data as traders digest comments from Fed Chair Yellen, German DAX outperforms, Better than expected bank earnings (ING, SocGen), Barclays shares remain heavy following earnings report
By Sector
- Financials [ING INGA.NL +4% (Q4 results above ests), SocGen +4% (Q4 results above ests, raised dividend)]
- Consumer Discretionary [Technicolor TCH.FR +7% (licensing agreement), Heineken HEIA.NL +2% (FY margins rose y/y); TUI AG TUI1.DE -1% (Q1 results in line)]
- Consumer Staples [WM Morrison MRW.UK +3% (takeover speculation)]
- Industrials [Smurfit Kappa SKG.UK +4% (Q4 results rose y/y); Leoni LEO.DE -1% (Q4 results below ests), Airbus AIR.FR -0.5% (broker commentary)]
- Energy [Total FP.FR +1% (reaffirmed production forecast, raised dividend); Shell RDSA.UK -0.9% (ex dividend)]
- Telecom [Drillisch DRI.DE +2.5% (FY profits rose y/y); Telenor TEL.NO -4% (Q4 EBITDA below ests), KPN KPN.NL -2.5% (American Movil said to have lowered stake)]
- ECB's Coene (Belgium) reiterated long standing view that monetary policy could only buy time in solving the Euro crisis and needed an agreement on Single Resolution Mechanism (SRM)
- Finland Fin Min Urpilainen commented that its primary concerns were growth and employment with the second area being fiscal policy. Finland was committed to turning debt-to-GDP ratio downward. The €9.0B reform package will take some time to implement and must preserve growth carefully when implementing its austerity measures in 2015
- Spain Budget Min Montoro: VAT revenue as of Jan 30th up about €1B y/y
- Bank of Spain (BOS) Gov Linde stated that the domestic labor market had surprised positively and that price stability to continue this year. Spain inflation to remain lower than the EU average
- Iceland Central Bank commuted after its rate decision that its saw GDP growth gaining pace over next few years with 2014 GDP growth seen at 2.6% and rising to 3.7% in 2015. CPI to be lower than prior forecast and it still planned monetary tightening as output gap emerged.
- EU issued a non-binding FX Loan opinion Hungary FX Loans and stated that Hungary court could change unfair Fx-denominated loan clauses and examine fairness of FX loans
- Japan PM Abe reiterates that it was up to the BOJ on deciding specific monetary policies. He again stressed that BOJ should take appropriate policy decision and take account of risks to economy and prices. He also added that it was BOJ's responsibility to design exit strategy from current easing policy.
- Thailand Constitutional Court rejects opposition request to annul Feb 2nd elections citing not enough evidence that it was breech of constitution
Currencies/Fixed Income:
- FX markets were quiet and steady ahead of the pivot BOE quarterly inflation report. There was speculation the BOE would ditch its forward guidance in its current form as part of its inflation report as unemployment rate moves towards its 7.0% threshold. . Some analysts see the threshold being lowered to 6.0-6.5% area. Other speculation focused on BOE possibly adopting more vague set of guidance (e.g. nominal GDP target/inflation metrics) or adopting a Nordic-style of Rate Path forecasting or timeline scenario
- AUD continued to hold above the 0.90n handle
Political/In the Papers:
- (PT) Portugal Debt Agency (IGCP): Have started to prefund for 2015 to build a cash buffer
- (IT) Italy Deputy PM Alfano (PdL party): The PdL party continues to support PM Letta's government
- DE) Germany: unions said to seek 3.5% wage increase for public sector workers combined with €100 per month increase for all workers (**Note: Overall request is effectively a 6% increase)
- (CN) Goldman Sachs chief China strategist: sees China 2014 GDP target 7.6% v 7.7% prior; buying opportunity for Chinese stocks; 2014 liquidity to be tighter y/y.
- (US) Fed Chair Yellen: was surprised that the Dec and Jan payrolls reports came in below expectations, but cannot jump to conclusions based on two reports which may have been influenced by factors such as the extreme weather. At its March meeting the Fed will have a broad range of new data to consider - Q&A; Would take a "notable change" in the outlook to change course on tapering.
-(US) Fed's Plosser: Tough winter weather leads to skepticism over economic data seen recently; reiterates outlook for 2014 is unchanged; there will probably not be a bad enough number in the Feb jobs report to lead the Fed to slow the tapering program
**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (CH) Swiss Government holds regular meeting
- (DE) German Economy Ministry presents New Half-Year Economic Forecasts
- (RO) Romania Dec YTD Current Account: No est v -1.3B prior
- (CO) Colombia Central Bank's Economists Survey
- 05:30 (UK) Bank of England (BOE) Quarterly Inflation Report
- 05:30 (CH) Switzerland sells CHF in 1.25% 2024 bond
- 05:30 (DE) Germany to sell €4.0B in new 2016 Schatz
- 06:00 (CZ) Czech Republic to sell bonds
- 06:00 (PT) Portugal CPI M/M: -0.9%e v +0.4% prior; Y/Y: 0.4%e v 0.2% prior
- 06:00 (PT) Portugal CPI EU Harmonized M/M: -1.0%e v +0.3% prior; Y/Y: 0.5%e v 0.2% prior
- 06:00 (ZA) South Africa Dec Retail Sales (Constant) M/M: 0.4%e v 1.2% prior; Y/Y: 2.8%e v 4.2% prior
- 06:00 (EU) EU President Van Rompuy with WTO'a Azevedo in Brussels
- 06:00 (IT) Italy Fin Min Saccomanni in Rome
- 06:15 (BE) ECB's Praet (Belgium) in Madrid
- 06:30 (CL) Chile Central Bank's Traders Survey
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia to sell RUB10B in May 2019 OFZ bond
- 07:00 (IN) India Dec Industrial Production Y/Y: -1.2%e v -2.1% prior
- 07:00 (IN) India Jan CPI Y/Y: 9.2%e v 9.9% prior
- 07:00 (US) MBA Mortgage Applications w/e Feb 7th: No est v 0.4% prior
- 07:00 (UK) PM Cameron weekly question time in House of Commons
- 07:45 (CA) Canada Fin Min Flaherty
- 08:00 (EU) OECD chief Economist Padoan in Italian Parliament
- 08:00 (PL) Poland Dec Current Account Balance: -€1.3Be v -€1.0B prior; Trade Balance: -€490Me v +€7M prior; Exports: €1.2Be v €13.6B prior; Imports: 1.2Be v €1.4B prior
- 08:30 (IT) Italy Fin Min Saccomanni on privatization
- 08:45 (US) Fed's Bullard on monetary policy in NY
- 09:00 (CA) Canada Jan Teranet/National Bank HPI M/M: No est v 0.1% prior; Y/Y: No est v 3.8% prior; House Price Index: No est v 159.29 prior
- 09:30 (BR) Brazil Weekly Currency Flows
- 10:00 (MX) Mexico Central Bank Inflation Report
- 10:30 (US) Weekly DOE U.S. Crude Oil Inventories
- 10:30 (EU) ECB chief Draghi in Brussels
- 11:00 (US) Fed to purchase $1.00-1.25B in bonds
- 12:00 (SE) Sweden Fin Min Borg in Stockholm
- 12:00 (CA) Canada to sell 30-Year Bonds
- 13:00 (US) Treasury to sell $24B in 10-Year Notes
- 13:30 (FR) ECB's Coeure (France) in Germany
- 14:00 (US) Jan Monthly Budget Statement: -$9.5Be v +$53.2B prior
- 19:30 (AU) Australia Jan Employment Change: +15.0Ke v -22.6K prior; Unemployment Rate: 5.9%e v 5.8% prior
- 20:00 (KR) Bank of Korea (BoK) Interest Rate Decision: Expected to leave 7-Day Repo Rate unchanged at 2.50%
- 20:25 (AU) RBA Dep Gov Debelle speaks at Forum in Sydney
***Economic Data***
- (JP) Japan Jan Preliminary Machine Tool Orders Y/Y: 39.6% v 28.1% prior
- (FR) France Dec Current Account Balance: -€1.2B v -€1.9B prior
- (CZ) Czech Jan CPI M/M: 0.1% v 0.4%e; Y/Y: 0.2% v 0.4%e
- (HU) Hungary Dec Final Industrial Production M/M: -1.9% v -1.9% prelim; Y/Y: 4.4% v 4.4% prelim
- (ES) Spain Dec House transactions Y/Y: -3.6% v -15.9% prior
- (EU) ECB €100M borrowed in overnight loan facility vs. €350M prior; €43.0B parked in deposit facility vs. €44.5B prior - Daily Eurosystem Liquidity Conditions
- (CH) Swiss Jan CPI M/M: -0.3% v -0.3%e; Y/Y: 0.1% v 0.1%e
- (CH) Swiss Jan CPI EU Harmonized M/M: -0.6% v -0.3%e; Y/Y: 0.2% v 0.4%e
- (IS) Iceland Central Bank (Sedlabanki) leaves 7-day Lending Rate unchanged at 6.00%; 10th straight pause in its tightening cycle
- (CZ) Czech Dec Current Account Balance (CZK): -9.4BB v -20.0Be
- (NO) Norway Q4 GDP Q/Q: -0.2% v +0.5%e; GDP Mainland Q/Q: 0.6% v 0.4%e
- (UK) UK Dec Mortgage approvals at 58.2K, -0.7% m/m; +26.5% y/y - CML
- (EU) Euro Zone Dec Industrial Production M/M:-0.7 % v -0.3%e; Y/Y: 0.5% v 1.8%e
- (MY) Malaysia Q4 GDP Y/Y: 5.1% v 4.8%e; GDP 2013 Annual Y/Y: 4.7% v 4.7%e
- (MY) Malaysia Q4 Current Account (MYR): 16.2B v 17.5Be
Fixed Income:
- (RU) Russia sold RUB10B vs. RUB10B indicated in Aug 2023 OFZ bond; Yield: 8.05%; first auction in three weeks
- (SE) Sweden sold SEK3.5B vs. SEK3.5B indicated in 2019 bonds; Yield: 1.5530% v 1.7080% prior
- (EU) ECB allotted $0.0M in 7-Day USD Liquidity Tender at fixed 0.58% vs. $0.0M prior (21st straight week of no allotment)
- (IT) Italy Debt Agency (Tesoro) sold €8.0B vs. €8.0B indicated in 12-months Bills; Avg Yield: 0.676% (record low) v 0.735% prior; Bid-to-cover: 1.63x v 1.45x prior