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Reports Europe

European stock market, economy and companies update (February 18, 2014)

February 18, 2014, Tuesday, 10:47 GMT | 05:47 EST | 15:17 IST | 17:47 SGT
Contributed by Trade The News


***Notes/Observations***
-BoJ maintains both interest rates and monetary base unchanged in unanimous vote (as expected) but also doubled the size and lengthened two special lending programs; Nikkei225 Index ends session +3.1%
- RBA Minutes reiterated that a lower AUD currency could support the economy; saw period of stability in rates likely the most prudent path
- -Eurogroup's Dijsselbloem: Troika will return to Greece later this week but will probably wait until 2H before discussing more Greek aid
- Dealers noting that an asset allocation theme accounting for today's price action in Europe (out of stocks into bonds)
- UK CPI YoY reading falls below the BOE 2.0% target for first time since Nov 2009
- German ZEW Survey comes in mixed with Expectations falling MoM


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities**
Indices [Stoxx50 -0.6%, FTSE 100 -0.1% at 6,726, DAX -0.3% at 9,631, CAC-40 -0.6% at 4,309, IBEX-35 -1.1% at 10,005, FTSE MIB -0.7% at 20,319, SMI -0.3% at 8,388, S&P 500 Futures -0.1% at 1,832]

- Market Focal Points: Equity markets open mostly higher following positive leads from Japan but markets later decline, Spain's IBEX-35 underperforms, German ZEW data mixed

- By Sector
- Consumer Discretionary [InterContinental Hotels IHG.UK -2% (cautious broker commentary following FY results); Probability PBTY.UK +50% (takeover offer), Casino CO.FR +3% (raised dividend), Pandora PNDORA.DK +2% (FY profits above ests)]
- Healthcare [Nobel Biocare NOBN.CH -5% (Q4 profits below ests)]
- Industrials [Alstom ALO.FR -3% (Capital raise speculation), Holcim HOLN.CH -1% (broker commentary), Air Liquide AI.FR -0.5% (FY results in line); Hochtief HOT.DE +3% (broker commentary), TNT Express TNTE.NL +1% (Q4 results above ests)]
- Utilities [Centrica CNA.UK -3% (broker commentary)]
- Technology [Aixtron AIXA.DE +4% (broker commentary)]
- Stoxx50 sectors [Consumer Cyclical -1.3%, Basic Materials -0.6%, Financials -0.3%, Consumer Non-Cyclical -0.3%, Energy -0.3%, Technology -0.2%, Industrials -0.2%; Telecom +0.2%, Utilities +0.1%]

Speakers:
- Portugal PM Coelho commented that Portugal was now being perceived in a more positive light now and he reiterated that it was too soon to present exit strategy of its bailout program and situation to be evaluated in Apri. Portugal had all financing needs covered for 2014 and he reiterated it would achieve the budget deficit target of 4% of GDP this year
- EU's Barroso stated that European economy was doing better than forecast but needed to look for more sources for growth
- ZEW Economists commented that a cautious Feb numbers was likely caused by some new uncertainties. Weak unemployment figures and damped leading indicators have caused concern in US that the current economic upswing could lose momentum
- German Official commented on the upcoming G-20 and stated that nations would discuss
US monetary policy and how to prepare emerging markets for adjustment. Govt should not interfere with monetary policy or oppose judgments by central banks
- South Africa Fin Min Gordhan commented that the global economy recovery remained bumpy and uneven
- Turkey President Gul said to ready to approve controversial bills
- Ukraine Opposition Leader Klitschko: Reiterates call for snap elections for both President and Parliament
- BOJ Kuroda post rate decision press conference stated that Japan economy was on track bit the central bank would not hesitate to adjust policy if necessary; BOJ monthly purchase of JGB to be in range of ¥6-8T. The loan program expansion was aimed to boost QE transmission mechanism.
Japan Finance Ministry Official Yamasaki: Open to currency swap with South Korea if asked
- Thailand Department of Special Investigation (DSI) says over 140 people arrested in protest crackdown
- Philippine Central Bank Gov Tetangco: M3 money supply growth to normalize in 2014

Currencies/Fixed Income:
- The EUR/USD remained just above the 1.37 handle with the greenback consolidating last week's losses but near 6-week lows. ECB officials continue to play down deflationary risks. The key resistance continues to be the 5-year downtrend line that comes in around 1.3890 level.
- The Swedish Krona fell to 1-month low against the Euro following softer-than-expected Swedish CPI data for Jan. The EUR/SEK moved from 8.85 towards 8.90 in the aftermath of the data
- The JPY currency was off its worst levels as analysts voiced their opinions on the latest BOJ policy moves. Morgan Stanley analyst on BOJ stated that the extension of the loan duration for the growth-supporting funding facility was less JPY-bearish and asset-positive than suggested.

Political/In the Papers:
- (EU) ECB's Nowotny: ECB will not cut Deposit Rate without cutting the Main Refi Rate as well; Concerned banks would curb lending under negative interest rates.
- (DE) German Bundesbank's Dombret: Sees no signs of risk yet from appreciation in domestic house prices; Low rates kept for too long can be the beginning of mispricing - financial press
- (FR) (FR) France President Hollande said to be ready to replace PM Ayrault
- (GR) EU Officials agree that troika will return to Greece this week to resume stalled talks; debt relief off the table until after Greece is able to sell bonds (expected this summer) - Greek press
- (IT) Fitch: Sovereign rating stance remains focused on Italy's fiscal stance and structural reform
- (CN) PBoC to drain CNY48B in 14-day repos (first drain through repos since June)
- (CN) China Ministry of Industry and Information Technology (MIIT): sees China 2014 industrial production 9.5% v 9.7% for 2013
- (JP) BOJ: Extends fixed 0.1% rate loans scheme by one year and doubles ceiling of loans to ¥7T

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (EU) EU-28 Finance Ministers (Ecofin) meeting in Brussels
- (IR) Iran, World Powers (P5+1) hold Nuclear talks in Vienna
- (ZA) South African debate on State of the Nation over the next two days
- (GR) Economist Greek-EU Presidency Summit through Wed
- (US) U.S.'s Froman, EU's De Gucht discuss Trade Talks in Washington thru Wed
- (EU) ECB's Constancio with SSM Nouy at Ecofin
- (IT) Italy Lower House to vote on Election law
- (IT) PD chief Renzi begins talks on forming govt with parties
- (DE) German Chancellor Merkel meets with SPD opposition (part of grand coalition)
- (CH) Switzerland to sell 6-month Bills;
- (IS) Israel Feb CPI Forecast: No est v 1.7% prior
- (IS) Israel Jan M1 Money Supply Y/Y: No est v 15.9% prior
- (IS) Israel Jan Leading 'S' Indicator M/M: No est v 0.2% prior
- (UR) Ukraine Jan Industrial Production M/M: -12.0%e v +0.1% prior; Y/Y: -1.4%e v -0.5% prior
- (BR) Brazil Feb CNI Industrial Confidence: No est v 53.1 prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Months Bills
- 06:00 (TR) Turkey to sell Zero 2015 Bonds
- 06:00 (ES) ECB's Linde (Spain) speaks in Madrid
- 06:00 (IL) Israel Dec Manufacturing Production M/M: No est v -0.1% prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave key rates unchanged; Expected to leave Benchmark Repurchase Rate unchanged at 10.00%; Expected to leave Overnight Lending Rate unchanged at 12.00%; Expected to leave Overnight Borrowing Rate unchanged at 8.00%
- 07:00 (EU) ECB allotment in 7-day Term deposit Tender to offset govt bond purchases under SMP program; to drain €175.5B
- 07:50 (BR) Brazil Central Bank daily currency swap auction Results
- 08:00 (HU) Hungary Central Bank (NBH) Interest Rate Decision: Expected to cut the Base rate by 10bps to 2.75%
- 08:00 (PL) Poland Jan Average Gross Wages M/M: -10.0%e v 8.3% prior; Y/Y: 3.2%e v 2.7% prior
- 08:00 (PL) Poland Jan Employment M/M: +0.7%e v -0.2% prior; Y/Y: 0.5%e v 0.3% prior
- 08:30 (US) Feb Empire Manufacturing: 9.00e v 12.51 prior
- 08:30 (CA) Canada Dec Int'l Securities Transactions: No est v C$8.7B prior
- 08:30 (US) Revisions of Consumer Price Index
- 09:00 (US) Dec Net Long-term TIC Flows: +$30.0Be v -$29.3B prior; Total Net TIC Flows: No est v -$16.6B prior
- 10:00 (US) Feb NAHB Housing Market Index: 56e v 56 prior
- 10:00 (MX) Mexico Weekly International Reserves
- 10:00 (ES) Spain PM Rajoy in Parliament
- 10:00 (HU) Hungary Central Bank Gov Matolcsy post rate decision statement
- 10:30 (EU) ECB's Liikanen (Finland) speaks in Helsinki
- 11:00 (UR) Ukraine to sell 3-Month, 4-month, 9-Month Bills
- 11:00 (UR) Ukraine to sell 5-Year and 7-Year Bonds
- 11:00 (US) Fed to purchase $3.75-4.50B in Notes
- 11:30 (US) Treasury to sell $84B in 3-Month and 6-Month Bills
- 16:00 (CO) Colombia Dec Trade Balance: 193.8M v $128.1M prior; Total Imports CIF: No est v $5.0B prior
- 16:00 (CL) Chile Central Bank Interest Rate Decision: Expected to cut Overnight Rate Target by 25bps to 4.25%


***Economic Data***
- (JP) Japan Jan Final Machine Tool Orders Y/Y: 40.3% v 39.6% prelim
- (EU) EU27 Jan New Car Registrations Y/Y: 5.5% v 13.3% prior; 5th straight monthly gain
- (TW) Taiwan Q4 Final GDP Y/Y: 3.0% v 2.9%e
- (EU) ECB €130M borrowed in overnight loan facility vs. €135.0M prior; €33.6B parked in deposit facility vs. €29.9B prior - Daily Eurosystem Liquidity Conditions
- (SE) Sweden Jan CPI M/M: -1.2% v -0.9%e; Y/Y: -0.2% v +0.1%e; CPI Level: 311.39 v 312.14e
- (SE) Sweden Jan CPI CPIF M/M: -1.2% v -0.9%e; Y/Y: 0.4% v 0.7%e
- (HK) Hong Kong Jan Unemployment Rate: 3.1% v 3.2%e
- (NO) Norway Jan Trade Balance (NOK): 48.8B (record surplus) v 33.4B prior
- (IT) Italy Dec Total Trade Balance: €3.6B v €3.0Be; Trade Balance EU: €205 v €708M prior
- (EU) Euro Zone Dec Current Account Seasonally Adj: €21.3B v €23.3B prior; Current Account NSA (unadj): €33.2B v €27.2B prior
- (ES) Bank of Spain (BOS) Dec bad loan ratio: 13.6% (record high) v 13.1% prior
- (UK) Jan CPI M/M: -0.6% v -0.5%e; Y/Y: 1.9% v 2.0%e; CPI Core Y/Y: 1.6% v 1.9%e
- (UK) Jan RPI M/M: -0.3% v -0.4%e; Y/Y: 2.8% v 2.7%e; RPI-X Y/Y: 2.8% v 2.7%e; Retail Price Index: 252.6 v 252.5e
- (UK) Jan PPI Input M/M: -0.9% v -0.4%e; Y/Y: -3.1% v -2.9%e
- (UK) Jan PPI Output M/M: 0.3% v 0.0%e; Y/Y: 0.9% v 0.7%e
- (UK) Jan PPI Output Core M/M: 0.5% v 0.1%e; Y/Y: 1.2% v 0.7%e
- (UK) Dec ONS House Price Y/Y: 5.5% v 6.0%e
- (DE) Germany Feb ZEW Survey Current Situation: 50.0 v 44.0e (highest since late 2006); Expectations Survey: 55.7 v 61.5e
- (EU) Euro Zone Feb ZEW Expectations Survey: 68.5 v 73.3 prior

Fixed Income:
- (IN) India sold total INR130B vs. INR130B indicated in 3-month and 12-month Bills
- (ZA) South Africa sold total ZAR2.35B vs. ZAR2.35B indicated in 2023, 2030 and 2036 bonds
- (NL) Netherlands Debt Agency (DSTA) opened its book to sell new 2.75% Jan 2047 DSL bond via syndicate; guidance seen between +20-21bps with order book over €4.0B
- (DK) Denmark sold total DKK5.64B in 2016 and 2023 Bonds
- (ES) Spain Debt Agency (Tesoro) sold total €4.5B vs. €3.5-4.5B indicated range in 6-Month and 12-Month Bills
- Sold €930M in 6-month bills; Avg Yield: 0.382% v 0.510% prior; Bid-to-cover: 5.95x v 5.07x prior
- Sold €3.59B in 12-month bills; Avg Yield: 0.618% v 0.726% prior; Bid-to-cover: 2.51x v 2.41x prior
- (EU) ECB allotted €92.9B in 7-Day Main Refinancing Tender at fixed 0.25% vs. 95.0Be