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Reports Europe

European stock market, economy and companies update (January 14, 2014)

January 14, 2014, Tuesday, 12:54 GMT | 07:54 EST | 17:24 IST | 19:54 SGT
Contributed by Trade The News

- Japan Nov Current Account Balance registered its third consecutive deficit and largest current account deficit on record for the month of Nov
- USD softens on Goldman Chief Economist view that Fed rate hike seen only after 2016
- European Dec inflation data backs ECB views of no threat of deflation
- UK CPI moves back to BOE target for first time since Nov 2009
- Euro Zone Nov Industrial Production comes in at strongest reading since May 2010 (Y/Y: 3.0% v 1.8%e)
Indices [Stoxx50 -0.7%, FTSE 100 -0.5% at 6,725, DAX -0.7% at 9,443, CAC-40 -0.5% at 4242, IBEX-35 -0.6% at 10,299, FTSE MIB -0.3% at 19,643, SMI -0.6% at 8,366, S&P 500 Futures flat at 1,816]
- Market Focal Points: Equity markets open lower amid caution ahead of US earnings season, Broker downgrades weigh on DAX, Banks decline following sharp gains on Monday, UK property companies continue to not benefit from earnings reports (Barratt Developments and Countrywide), Brokers become more cautious on certain peripheral European banks, Celesio declines sharply following collapse of merger, Stoxx50 volatility index rises over 5%, Upcoming US bank earnings (JPMorgan, Wells Fargo), Upcoming US Retail Sales
By Sector
- Technology [Blinkx BLNX.UK -3% (broker commentary), Infineon IFX.DE -2% (broker commentary), ASML ASML.NL -2% (broker commentary)]
- Financials [Ashmore Group ASHM.UK -9% (quarterly AUM declined), Banco Popular Espanol POP.ES -3% (broker commentary)]
- Consumer Discretionary [Celesio CLS1.DE -6% (collapse of merger agreement), Fraport FRA.DE -3% (broker commentary), Michael Page MPI.UK -3% (slowing growth in Q3), Volkswagen VOW3.DE -2% (broker commentary), Hugo Boss BOS.DE -1.5% (broker commentary); Mecom Group MEC.UK +13% (raised outlook)]
- Health Care [Astrazeneca AZN.UK +2% (issued long-term targets)]
Stoxx50 Sectors [Technology -1%, Industrials -0.9%, Basic Materials -0.7%, Consumer Non-Cyclical -0.7%, Consumer Cyclical -0.5%, Energy -0.5%, Telecom -0.2%, Financials -0.2% ;Utilities +0.3%]
- ECB's Nowotny (Austria) commented during a Keynote address at an Euromoney CEE Conference that the European economic outlook was much better than a year ago and that regional growth would be heterogeneous. Could see European growth of greater than 1%, (some countries like German could see 2% growth). He added that repayment of LTRO loans by banks was a positive sign. He also reiterated that ECB was committed to forward guidance (Interest rates to remain low or lower for an extended period and that inflation risks were seen as balanced (in line with Draghi monthly press conference)
- Greece Fin Min Stournaras commented that he did not see any further debt write-downs on Greece debt as they as prohibited by national constitution. He sought to delay troika talks until final Dec economic numbers were out and added it would be hard to reach agreement at Feb 27th Eurogroup meeting
- Spain Budget Ministry stated that over 100 municipalities applied for central govt aid (**Note: no amount specified)
- EU's Barroso: Recession in region is over but must avoid complacency
- UK ONS on CPI data: Decline in CPI driven by less food inflation, in addition to recreation and culture prices; partially offset by upward pressure from fuel prices.
- S&P chief European analyst Jean-Michel Six: France is lagging the EMU recovery and its 2014 GDP growth forecast is not enough to reduce unemployment. He added that he did not believe deflation was a threat in Europe
Currencies/Fixed Income:
- USD softened in the session after Goldman Chief Economist stated that any potential Fed rate hike was seen only after 2016 period but off its worst levels ahead of the NY morning
- The USD/JPY pair rebounded from its Asian session low of 102.85 as the Nikkei225 Index finally got a chance to react to last Friday's US payroll data. The pair was higher by 0.5% ahead of the NY morning at 103.58
- The GBP/USD moved off session highs after Dec CPI data came in a touch below expectations. The YoY of 2.0% reading was the lowest since Nov 2009
Political/In the Papers:
- (EU) ECB's Draghi: Reiterates deflation is not broad based in the EMU, deflation in some countries is due to necessary adjustments
- (EU) ECB's Mersch (Luxembourg): EMU recovery remains fragile though rebalancing is structural and sustainable
- (EU) ECB nominee Lautenschlaeger: Low interest rates may be fueling asset prices
- (EU) EU Parliament Economic Committee endorses Lautenschlaeger for ECB - financial press
- (EU) ECB internal documents show some concern that bad debt rules could threaten the credibility of bank asset quality review (AQR) - financial press
- (ES) Spain Econ Min: expect Q4 2013 GDP at +0.3%, property prices in some areas have bottomed
- (US) Fed's Lockhart (moderate, FOMC alternate): supports a similar level of tapering as seen in December through the remainder of 2014 if the economic picture stays positive; The December jobs report was surprisingly soft.
- (US) US Pres Obama nominates former Bank of Israel gov Fischer for Vice Chairman of Fed, as expected
- (US) Fitch exec: Feb 7th is obviously a key date with regard to the US sovereign rating - press interview: Note: The US borrowing authority runs out on Feb 7th
-(US) US Senate negotiators said to have reached an agreement on $1T US spending bill to keep govt operating through Sep 30th
- (CN) PBoC did not conduct open market operations (OMO) in today's session (6th consecutive session of halted operations)
-(CN) Several provinces in China release GDP expectations; Sees slower GDP growth rate in 2014 v 2013
**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (FR) French President Hollande holds Press Conference on His Agenda
- (MX) Mexico Dec ANTAD Same-Store Sales Y/Y: 1.0%e v 3.4% prior
- (GR) Greece Debt Agency (PDMA) to sell €1.25B indicated in 13-week Bills
- 05:30 (BE) Belgium Debt Agency to sell 3-month and 12-month Bills
- 05:30 (DE) Germany to sell €1.0B in 0.1% I/L 2023 Bunds
- 06:00 (NO) Norway to sell NOK4.0B in 2% 2023 Bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (EU) ECB to drain €179.0B in 7-day Term Deposit Tender to offset govt bond purchases under SMP program
- 07:00 (IS) Iceland Dec Unemployment Rate: No est v 4.1% prior
- 07:30 (US) Dec NFIB Small Business Optimism: 93.2e v 92.5 prior
- 07:45 (US) Weekly ICSC Chain Store Sales
- 08:00 (PL) Poland Dec M3 Money Supply M/M: +2.3%e v -0.2% prior; Y/Y: 5.8%e v 5.7% prior
- 08:30 (US) Dec Advance Retail Sales M/M: 0.1%e v 0.7% prior; Retail Sales Ex Auto M/M: 0.4%e v 0.4% prior; Ex Auto and Gas: 0.3%e v 0.6% prior; Control Group: 0.3%e v 0.5% prior
- 08:30 (US) Dec Import Price Index M/M: +0.4%e v -0.6% prior; Y/Y: -0.6%e v -1.5% prior
- 08:55 (US) Weekly Redbook Retail Sales
- 09:00 (EU) Former ECB chief Trichet speaks at EU Parliament Panel on Troika's Performance
- 09:00 (CA) Canada Dec Teranet/National Bank HPI M/M: No est v -0.1% prior; Y/Y: No est v 3.45 prior; House Price Index: No est v 159.21 prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 10:00 (US) Nov Business Inventories: 0.3%e v 0.7% prior
- 10:00 (MX) Mexico weekly International Reserves
- 10:30 (CA) Canada to sell CAD2.4B in 12-month Bills
- 10:30 (UK) DMO announces size of 3.25% 2044 Gilt for Jan 23rd auction
- 11:00 (IS) Iceland Dec International Reserves (ISK): No est v 497B prior
- 11:00 (UK) PM Cameron questioned by Commons on Lawmakers on Energy
- 11:00 (BR) Brazil to sell 2019, 2023, 2030, 2040 and 2050 I/L Bonds
- 11:00 (US) Fed to purchase $1.00-1.50B in Notes
- 11:00 (UR) Ukraine to sell 9-Months Bills and 5-year bonds
- 11:30 (US) Treasury to sell $15B in 4-Week Bills
- 12:45 (US) Fed's Plosser speaks on the Economic Outlook in Philadelphia
- 13:00 (ES) Spain PM Rajoy addresses the U.S. Chamber of Commerce
- 13:00 (DE) German Bundesbank member Lautenschlaeger
- 13:20 (US) Fed's Fisher speaks on U.S. and Regional Economy in Dallas
- 13:30 (IT) Italy PM Letta in Mexico
- 14:00 (DE) German Chancellor Merkel at Ruhr political forum in Essen
- 16:30 (US) Weekly API Oil Inventories
- 17:30 (US) Former Fed Chairman Greenspan
- (US) House vote on stopgap spending bill
***Economic Data***
- (JP) Japan Dec Eco Watchers Current Survey: 55.7 v 54.0e; Outlook Survey: 54.7 v 54.8 prior
- (SE) Sweden Dec PES Unemployment Rate: 4.6% v 4.6%e
- (DE) Germany Dec Wholesale Prices M/M: +0.4% v -0.2% prior; Y/Y: -1.8% v -2.2% prior
- (FI) Finland Dec CPI M/M: 0.4% v 0.1%e; Y/Y: 1.6% v 1.4%e
- (FR) France Nov Current Account Balance: -€1.9B v -€2.0B prior
- (FR) France De CPI M/M: 0.3% v 0.4%e; Y/Y: 0.7% v 0.8%e; CPI Ex-Tobacco Index: 125.82 v 125.95e
- (FR) France De CPI EU Harmonized M/M: 0.4% v 0.4%e; Y/Y: 0.8% v 0.9%e
- (TR) Turkey Nov Current Account Balance: -$3.9B v -$4.3Be
- (HU) Hungary Nov Final Industrial Production M/M: -0.5% v -0.5% prelim; Y/Y: 5.8% v 5.8% prelim
- (ES) Spain Nov House transactions Y/Y: -15.9% v -10.0% prior
(IT) Italy 10-year gov't yield at % in early European trading
- (EU) ECB €170M borrowed in overnight loan facility vs. €31M prior; €58.3B parked in deposit facility vs. €59.8B prior - Daily Eurosystem Liquidity Conditions
- (SE) Sweden Dec CPI M/M: 0.3% v 0.1%e; Y/Y: +0.1% v -0.1%e; CPI Level: 315.04 v 314.38e
- (SE) Sweden Dec CPI Underlying (CPIF) M/M: 0.3% v 0.1%e; Y/Y: 0.8% v 0.6%e
- (IT) Italy Dec Final CPI M/M: 0.2% v 0.2%e; Y/Y: 0.7% v 0.7%e; CPI Index Ex Tobacco: 107.1 v 106.8 prior
- (IT) Italy Dec Final CPI EU Harmonized M/M: 0.3% v 0.3%e; Y/Y: 0.7% v 0.6%e
- (ES) Spain Banks Dec ECB Net Borrowings: €201.9B v €220.5B prior (16th straight monthly decline)
- (UK) Dec PPI Input M/M: +0.1% v -0.2%e; Y/Y: -1.3% v -1.5%e
- (UK) Dec PPI Output M/M: 0.0% v 0.0%e; Y/Y: 1.0% v 1.0%e
- (UK) Dec PPI Output Core M/M: 0.1% v 0.0%e; Y/Y: 1.0% v 0.9%e
- (UK) Dec CPI M/M: 0.4% v 0.5%e; Y/Y: 2.0% v 2.1%e (lowest reading since Nov 2009); CPI Core Y/Y: 1.7% v 1.8%e
- (UK) Dec RPI M/M: 0.5% v 0.5%e; Y/Y: 2.7% v 2.7%e; RPI-Ex Mortgages (RPIX) Y/Y: 2.8% v 2.8%e; Retail Price Index: 253.4 v v 253.6e
- (UK) Nov ONS House Price Y/Y: 5.4% v 5.9%e
- (IT) Bank of Italy (BOI) Nov Public Finance Supplement: €2.1041T (record level) v €2.0853T prior
- (ZA) South Africa Nov Mining Production M/M: -2.9% v 7.4% prior; Y/Y: 5.1% v 7.1%e; Gold Production Y/Y: 35.5% v 74.4% prior
- (EU) Euro Zone Nov Industrial Production M/M: 1.8% v 1.4%e; Y/Y: 3.0% v 1.8%e; strongest since May 2010
Fixed Income:
- (BE) Belgium Debt Agency opened book to sell new 10-year bond via syndicate; guidance seen low 50s over mid-swaps
- (LV) Latvia opens book to sell 7-year Euro-denominated benchmark bond via syndicate; guidance seen +140bps over mid-swaps
- (NL) Netherlands Debt Agency (DSTA) sold €3.5B vs. €2.5-3.5B indicated range in 0.5% Apr 2017 DSL Bonds; Avg Yield 0.572% v 1.276% prior
- (ZA) South Africa sold combined ZAR2.35B in 2026, 2030 and 2041 bonds
- (NO) Norway sold NOK4.0B vs. NOK4.0B indicatedin 2% 2023 Bonds; Yield: 2.94%; bid-to-cover 2.25x
- (EU) ECB allotted €94.7B in 7-day Main Refi Tender at fixed 0.25% vs. €112.0Be
- (EU) ECB allotted €7.1B in 1-month MRO Tender at fixed 0.25% vs. €10.0Be
- (CH) Switzerland sold CHF655.5M in 3-month Bills; Yield: -0.071% v -0.100% prior