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Reports Europe

European stock market, economy and companies update (February 17, 2014)

February 17, 2014, Monday, 12:10 GMT | 07:10 EST | 16:40 IST | 19:10 SGT
Contributed by Trade The News


***Notes/Observations***
- Moody's raises outlook on Italy to stable from negative; affirms Baa2 sovereign rating, says Letta resignation did not alter expectations
- Japan Q4 preliminary GDP comes in weaker-than-expected with QoQ: reading of +0.3% a 12-month low vs.s 0.7%e
- (CN) China Jan New Yuan Loans hit a 4-year high (CNY1.3T vs. CNY1.1Te)
- Italy PD party chief meeting with President Napolitano on mandate to form new govt
- Trading volumes light with US markets closed for President Dat holiday


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities**
Indices [Stoxx50 +0.6%, FTSE 100 +0.8% at 6,714, DAX +0.1% at 9,665, CAC-40 +0.0% at 4,340, IBEX-35 +0.1% at 10,137, FTSE MIB +0.1% at 20,453, SMI +0.2% at 8430, S&P 500 Futures +0.1 at 1,838]

- Market Focal Points: European markets opened broadly higher extending last week's gains (the best of the year) fueled by better than expected data out of China. Stocks have since given back most of their gains as traders lock in profits in very light trading ahead of a US holiday. Miners were up as gold continues to outperform nearing the $1325/oz level. The FTSE is outperforming to the upside with trouble insurer RSA leading the way after announcing a possible asset sale.

By Sector
- Consumer Discretionary [DCC DCC.UK +2.1% (lowers FY14 guidance), H&M HMB.SE +0.7% (Jan total sales +15%)]
- Basic Materials/Resources [ThyssenKrupp TKA.DE -1.4% (broker downgrade), Kazakhmys KAZ.UK +1.4% (to increase salaries), SGL Carbon SGL.DE +12% (to increase production)]
- Industrials [Bouygues EN.FR -0.6% (to take €1.4B writedown) Fiat F.IT -0.3% (Reaffirms Fy14)]
- Telecom [QSC QSC.DE -5% (won't meet 2016 targets)]
- Financials [RSA RSA.UK +3.1% (Looking to sell Canada biz), Hammerson HMSO.UK +1.9% (reports FY13 rise in earnings)]

Speakers:
- Germany Fin Min Schaeuble said to see tough negotiations on ESM aid to banks and did not expect rapid resolution to disagreement over ESM providing direct aid to banks. No resolution seen at today's finance minister meeting in Brussels. Unclear how must would have to be contributed by owners and investors before ESM could provide direct aid
- ESM's Regling stated that he saw crisis countries' banking sector in good shape and expected stress test to yield no big surprises in Greece, Ireland, Spain, Portugal or Cyprus. ESM preparing in case banks need additional capital after stress tests and can't get it from owners, investors, govts
- Sweden PM Reinfeldt: No tax cuts seen in next 2014-18 mandate period
- Sweden Fin Min Borg stated that the country would return to normal economic growth with 2.5-3.0% growth seen in coming years
- Poland Central Bank's Bratkowski commented that record low Base Rate was seen for most of 2014 and was in no rush to raise rates and believed that a dovish position would dominate the rate setters
- Turkey Deputy PM Babacan: There is room to maneuver in budget; overshoot would not be the end of the world
- OECD chief Gurria: EU growth remains weak buy region showing signs of receovery
- Russia considering buying few hundred thousands of barrels of oil per day from Iran
- India Fin Min Chidambaram interim budget speech lowered its FY14 Budget Deficit to GDP Ratio to 4.6% vs. 4.8% target. It also trimmed its outlook on FY14 GDP growth to 4.9% from .50%. It set FY15 Fiscal Deficit to GDP Target at 4.1%. To provide INR112B capital infusion into State-run (PSU) banks in FY14/15 and set FY15 gross market borrowing INR5.97T with Net borrowings at INR4.57T.

Currencies/Fixed Income:
- The USD consolidated its losess from last week in a quiet session.
- The JPY was only slightly weaker as the Japanese equites underperformed following weaker than expected Q4 growth data. USD/JPY at 101.87 in mid- European session trading.
- Italy 10-year govt bond yield below 3.65% lowest level since Feb 2006 as Italy PD party chief meets with President Napolitano on mandate to form new govt

Political/In the Papers:
- (DE) ECB's Weidmann: German Constitutional Court decision shows the court shares the Bundesbank's concerns about the OMT; expansionary monetary policy remains appropriate. Reiterates view that Expansionary monetary policy is justified, but low rates can not become a permanent condition.
- (GR) German Chancellor Merkel opposed the proposal by Fin Min Schaeuble to offer fresh aid to Greece ahead of May 25th European elections
- (JP) BOJ said to consider refraining from making a monetary-base forecast for 2015 to avoid committing to unprecedented easing for a specific period
- (JP) Japan Pension Fund (GPIF) reform panel head Ito: Recommends 50% of pension assets be placed in stocks; should increase annual return goal to 5% from 4.1% currently
- (JP) Japan Q4 preliminary GDP comes in weaker-than-expected with QoQ: reading of +0.3% a 12-month low vs.s 0.7%e
- (CN) 3 fund products in China managed by Beijing Roll-in Investment Management said to have delayed principal and dividend payment of approx CNY870M in early 2014
- 22 provinces in China lower GDP growth target for 2014; Beijing and Shanghai both lower 2014 GDP target to 7.5%, v 2013 GDP of 7.7%

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (AT) ECB's Nowotny speaks in London
- (UR) German Chancellor Merkel to host Ukrainian opposition leaders in Berlin
- (EU) ECB's Draghi to EcoFin in Brussels
- (IT) President Napolitano meeting with PD party chief Renzi to formally ask him to form a new govt
- (DK) Denmark Jan Wholesale Price Index M/M: No est v 0.3% prior; Y/Y: No est v -1.4% prior
- (SK) Slovakia Debt Agency (ARDAL) to sell 2023 Bonds
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 6-month bills
- 05:30 (BE) Belgium Debt Agency to sell €2.5-3.5B in 2019, 2024 and 2041 OLO bonds
- 06:00 (NL) Netherlands Debt Agency (DSTA) to sell combined €4.0B in 3-month and 6-month Bills
- 06:00 (IL) Israel to sell 2016, 2024 and 2041 bonds
- 06:00 (BR) Brazil Feb FGV Inflation IGP-10 M/M: 0.3%e v 0.6% prior
- 06:30 (BR) Brazil Central Bank Weekly Economists Survey
- 06:45 (US) Daily Libor Fixing
- 07:00 (RO) Romania to sell RON500M in Bonds
- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
- 08:50 (FR) France Debt Agency (AFT) to sell combined €8.2B in 3-month, 6-month and 12-month Bills
- 09:00 (PL) Poland Jan YTD Budget Balance Level
- 09:00 (EU) Euro-Area Finance Ministers meet in Brussels
- 09:00 (DE) German Chancellor Merkel with Belgium Royal couple
- 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
- 16:00 (CO) Colombia Dec Retail Sales Y/Y: 5.1%e v 5.3% prior
- 16:00 (CO) Colombia Dec Industrial Production Y/Y: +0.8%e v -0.6% prior
- 19:30 (AU) RBA Minutes of February Meeting
- (JP) Bank of Japan (BOJ) Monetary Policy Statement


***Economic Data***
- (PH) Philippines Dec Overseas Remittances: $2.2B (record high) v $2.1Be, Y/Y: 9.1% v 6.8%e
- (ES) Spain Dec Industrial Orders Y/Y: 4.6%; Industrial Orders WDA Y/Y: 7.8%- 03:00 (CZ) Czech Dec Export Price Index Y/Y: No est v 2.9% prior; Import Price Index Y/Y: No est v 1.0% prior
- (TR) Turkey Nov Unemployment Rate: 9.9% v 9.8%e
- (CZ) Czech Dec Export Price Index Y/Y: 6.0% v 2.9% prior; Import Price Index Y/Y: 3.8% v 1.0% prior
- (EU) ECB €135M borrowed in overnight loan facility vs. €1.1B prior; €29.9B parked in deposit facility vs. €26.1B prior - Daily Eurosystem Liquidity Conditions
- (GR) Greece Jan CPI EU Harmonized Y/Y: -1.4% v -1.6%e
- (IT) Italy Dec Current Account Balance: €1.9B v €2.8B prior

Fixed Income:
- None seen