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Reports Europe

European stock market, economy and companies update (February 25, 2014)

February 25, 2014, Tuesday, 10:53 GMT | 05:53 EST | 15:23 IST | 17:53 SGT
Contributed by Trade The News


***Notes/Observations***
-Chinese yuan has largest 1-day decline since late 2008 amid speculation that officials are seeking to make the currency less of a one-way bet
-Shanghai Composite declined almost 4% in 2 sessions amid property market concerns; PBoC continues to drain liquidity
-Turkish assets decline on political concerns
- Portuguese bonds outperform following buyback announcement
-UK Jan mortgage approvals hit highest level since Sept 2007


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities**
Indices [Stoxx50 -0.3%, FTSE 100 -0.6% at 6,826, CAC-40 -0.4% at 4,399, IBEX-35 +0.1% 10,209, FTSE MIB -0.3% at 20,407, SMI -0.2% at 8,472, S&P 500 Futures -0.2% at 1,842]

Market Focal Points: Equities markets open mostly lower following negative leads from China and mixed earnings, BASF reports in line results, Moncler declines despite rise in profits and sales, Vivendi lower on weaker than expected sales

By Sector
Consumer Discretionary [Straumann [STMN.CH +2% (FY results above ests), Beiersdorf BEI.DE +2% (broker commentary)]
Telecom [Vivendi VIV.FR -2% (FY sales below ests, evaluating dividend)]
Industrials [Duerr DUE.DE -5% (FY sales below ests), GKN GKN.UK -3% (FY profits declined), BASF BAS.DE -0.5% (Q4 results in line); Oerlikon OERL.CH +2% (raised dividend), CRH CRH.UK +2% (positive comments regarding 2014)]
Healthcare [Fresenius Medical Care FME.DE -6% (cautious outlook)]
Technology [XING O1BC.DE +5% (declared special dividend); Aixtron AIXA.DE -4% (Q4 results below ests)]
Financials [St. James Place STJ.UK +2.5% (raised dividend); Ashmore Group ASHM.UK -7% (H1 AUM declined amid outflows)]
Stoxx50 sectors [Telecom -1.8%, Technology -0.9%, Basic Materials -0.9%, Consumer Cyclical -0.4% Financials -0.2%,Energy -0.1%; Industrials +0.3%, Consumer Non-Cyclical flat]

Speakers:
Bank of Korea official: Emerging markets more resilient to external shocks; Expects for South Korea to have a higher inflation path in 2014.
France Ind Min Montebourg: ECB not respecting inflation target, reiterates EUR strength is absurd
Russia Foreign Min Lavrov: No plans to intervene in Ukraine; Wants West to adopt non-intervention approach in Ukraine
UK DMO chief Stheeman: New bank capital and derivative rules on liquidity markets have not yet hurt cash Gilt market
BOEs McCafferty: Would be concerned if GBP rises further, BOE would then need to consider its strength when setting future monetary policy; Current Sterling level not a major problem for UK exports

Currencies/Fixed Income:
- EUR/USD remained quiet as Q4 German GDP data was confirmed, private consumption data was mixed but was no worrisome enough to move the euro off its 15 pip range, right near the middle of that range 1.3738 is where it keeps bouncing and could prove to be a pivot from the range of the last 5 days . Later in the US session there are several key economic indicators that could push the pair through next support/resistance.

- GBP/USD crept higher in the day testing 1.6684 ahead of economic indicator BBA loans for house purchases. After BBA, saw the pair rise to fresh session highs around 1.6688. Like the euro the Sterling is staying in a smaller range, bottom at 1.6646. Head and shoulders look to be forming, with the bottom of the shoulder starting on Feb 24th on the hourly chart, if the pattern continues we should see some weakness to form the second half of the head and final shoulder.

- Russia made the 50th adjustment to its floating Ruble corridor by 5 kopecks to 35.05-42.05 in dollar/euro basket. Ukraine's hryvnia lost an additional 3% from Monday session to 9.45.

- Early in the Swissie gained 0.3% early in the session in approx. a 30 pip range bottoming out at 0.8864.

Political/In the Papers:
(HK) 2013 Hong Kong GDP was about 3%; Govt to unveil plan for $2.58B in fiscal relief measures for FY14/15
(EU) ECB's Praet: Reiterates sees no risk of deflation
(PT) ESM's Regling: Portugal may not need a precautionary credit line
(UR) Ukraine Parliament delays govt formation until Thu Feb 27th

**Looking Ahead***
6:00EST/11:00GMT UK Feb CBI Reported Sales
6:00EST/11:00GMT Brazil Feb FGV Construction Costs
6:00EST/11:00GMT Norway to sell Bonds 07:00EST/12:00GMT ECB allotment in 7-Day Term Deposit Tender to offset bond purchases in SMP program 09:30EST/14:30GMT ECB calls for bids in 3-Month Refinancing Tender-
7:45EST/12:45GMT ICSC/UBSW Chain Store Sales- 08:30EST/13:30GMT Canada Q4 Corporate Profits
8:55EST/13:55GMT US Redbook Retail Sales
9:00EST/14:00GMT US Dec House Price Index
9:00EST/14:00GMT US Dec S&P/CS 20 City; S&P/CS Composite-20; S&P/CaseShiller Home Price Index; S&P/CaseShiller US HPI
9:00EST/14:00GMT Mexico Dec Retail Sales
10:00EST/15:00GMT US Feb Consumer Confidence Index
10:00EST/15:00GMT Mexico Q4 Current Account Balance
10:00EST/15:00GMT US Feb Richmond Fed Manufacturing Index
10:10EST/13:10GMT Federal Reserve Board Governor Tarullo speaks on "A View From the Fed" before the National Association for Business Economics 30th Annual Economic Policy Conference
10:30EDT/15:30GMT US Dallas Fed Feb Texas Service Sector Outlook Survey
11:30EST/16:30GMT US Treasury's 4 Week Bill Auction
13:00EST/18:00GMT US Treasury's 2 Year Note Auction
14:00EST/19:00GMT US Fed Discount Rate Minutes
15:45EST/20:45GMT Federal Reserve Bank of New York President William Dudley speaks at the 10th Asia-Pacific High Level Meeting on Bank Supervision in Aukland, New Zealand
16:30EST/21:30GMT API Crude Oil/Gasoline/Distillate InventoriesTBD Brazil Jan Federal Debt Total


***Economic Data***
- (UK) JAN BBA LOANS FOR HOUSE PURCHASE: 49.9K V 47.2KE (highest level since Sept 2007)
- (DE) GERMANY Q4 PRIVATE CONSUMPTION Q/Q: -0.1% V -0.1%E; GOVERNMENT SPENDING Q/Q: 0.0% V 0.2%E
- (FR) FRANCE FEB BUSINESS CONFIDENCE: 94 V 95E; MANUFACTURING CONFIDENCE: 100 V 100E
- (DE) GERMANY Q4 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 1.3% V 1.3%E; GDP WDA Y/Y: 1.4% V 1.4%E
- (ES) SPAIN JAN PPI M/M: -1.3% V 1.1% PRIOR; Y/Y: -1.8% V 0.6% PRIOR

Fixed Income:
-(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €3.5B VS. €2.5-3.5B INDICATED RANGE IN CTZ AND I/L BTP BONDS
(ZA) South Africa sells total ZAR2.35B in 2030, 2037 and 2048 Bonds
(ES) SPAIN DEBT AGENCY (TESORO) SELLS TOTAL €3.06B VS. €3.0B INDICATED RANGE IN 3-MONTH AND 9-MONTH BILLS
- Sells €890M in 3-month Bills; Avg Yield 0.170% v 0.343% prior; Bid-to-cover: 3.75x v 5.23x prior; Tail: 1.9bps v 0.7bps prior
- Sells €2.17B in 9-month Bills; Avg Yield 0.457% v 0.655% prior; Bid-to-cover: 2.39x v 2.23x prior; Tail: 1.3bps v 1.5bps prior
(NO) Norway sells NOK4.0B in 2023 bonds; Yield 2.89%
-(EU) ESM to sell €6.0B in 7-yr bonds; final spread midswaps +7bps