Reports » Europe

European stock market, economy and companies update (January 21, 2013)

Contributed by Trade The News

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

***Equities***
- Indices: FTSE 100 +0.32% at 6,165, DAX +0.3% at 7,726, CAC-40 +0.2% at 3,748, IBEX-35 +0.0.4% at 8,638, FTSE MIB +0.2% at 17,594, SMI -0.6% at 7,329, S&P 500 Futures +0.1% at 1,479.0

- European markets were slightly positive in the session taking its cue from a positive close on Wall Street Friday. Overall volumes were lighter than usual during the session as US markets were slated to be closed for Martin Luther King day with price action fairly calm

- UK Movers: education and media group Pearson [PSON.UK] dropped after the company cut its earnings forecasts for 2012,citing UK government changes to apprenticeship program requirements that were forcing it to close a business unit. Admiral Group [ADM.UK] was the biggest gainer, +5.6%
after Goldman Sachs upgraded the stock to buy and adds it to its conviction
list
- Swiss movers: shares in Compagnie Financiere de Richemont [CFR.CH] maker of
high-end watches, fell as its third-quarter revenue came in short of
expectations.

Speakers:
- Japan Chief Cabinet Sec Suga stated that Japanese Govt and BOJ to release statement following Tuesday's rate decision
- Japan Trade Min Motegi commented that a weak JPY currency has brightened the outlook somewhat for Japan. He reiterated govt stance that beating deflation, strong yen currency were top priority.
- Second day of BOJ Monetary policy meeting to begin at 8:00 JST (23:00 GMT) on Tuesday Jan 22nd, earlier than usual
- Sweden Fin MIn Borg: Sees very weak economic growth in 2013 and 2014 period and noted that it was significantly likely that the EMU crisis could flare up again. He also reiterated the view that it would be an advantage if the SEK currency (Krona) weakened somewhat
- Portugal Govt said to expect more flexible aid financing conditions from Euro Area Finance Ministers. Announcement of flexible financing conditions might be delayed until Feb after European Leader Summit and new meeting of Euro Area Finance Minister meeting
- Germany Econ Min and FDP party leader Roesler said to call for early FDP party conference and offered to step aside as FDP leader. He is said to want Bruederle as the next head of FDP
- Poland Central Bank member Glapinski said to favor another Base Rate cut at the Feb monetary policy meeting and that the current easing should end after Feb
- Poland Fin Min Rostowski noted that Poland 2013 economy was in better shape compared to 2009 period
- ECB reported the number of Euro-area money-market funds was declining by approx by 34% over the past two years with the decrease partly due to new definition of them in a guideline that was more closely in line with that to be used for supervision
- India Economic Panel Advisor chief Ahluwalia: More fiscal room at this time for rate cuts
- China outgoing Premier Wen: Reiterates view of still pushing for market determined rates and expanding Yuan in use of cross-border trade

Currencies:
- The focus remained on the BOJ rate decision. The market is also widely expecting the BoJ to replace its 1% inflation target with a 2% target, and announce another round of asset purchases of around ¥10T. Dealers noted that given recent 8 big figure move in the USD/JPY since December there was a risk of disappointment should they fail to deliver. Addeing to the JPY correction were fresh comments from PM Abe's Economic Adviser Hamada: BOJ will need to slow monetary easing if effects on prices/yen go too far
- The Eurogroup meets later today and would likely talk about recap and principle legacy assets. It will also confirm that Netherlands Fin Min Dijsselbloem will succeed Juncker as the head of the group. The EUR/USD was in a tight 30-pip range and testing session lows at 1.3300 ahead of the NY morning.
- Trade-weighted GBP currency hit a 9 1/2 month low at 81.50. The GBP/USD pair tested below 1.5840 before regaining some composure.

Political/ In the Papers:
- Caterpillar plans to take a $580M charge in Q4 due to accounting misconduct at Siwei in Zhengzhou, China. Caterpillar's investigation determined several Siwei senior managers engaged in deliberate misconduct beginning several years prior to Caterpillar's acquisition of Siwei. Caterpillar removed several senior managers at Siwei who were responsible for the misconduct and a new leadership team has been put in place
- The Japan Ministry of Transport will launch a joint investigation with FAA into Boeing 787 battery maker. Boeing has suspended deliveries of new 787 Dreamliner jet until a battery problem is resolved saying that the Dreamliner units may remain grounded for longer than expected. Boeing plans to fully cooperate with all investigations.
- (CY) IMF said to have doubts on Cyprus debt sustainability and believed that debt level of 100% would be sustainable vs. projections of 140% for Cyprus
- (CY) German Fin Min Schaeuble: Germany not yet prepared to decide on Cyprus aid and was not certain if the problems were a threat to the euro region.
- (GR) Greece creditors, the Troika, have agreed to a 6-month moratorium on any additional austerity measures. The time to be used to implement already agreed upon measures and make Greece less of a pre-election issue for Germany, who is holding Federal elections in Sept.

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (ES) Spain Nov Trade Balance: No est v -€1.5B prior
- 06:00 (EU) German Bundesbank publishes its monthly report
- 06:00 (RO) Romania to sell T-Bills
- 06:00 (IS) Israel to sell 2016 and 2023 bonds
- 06:00 (IS) Israel to sell I/L 2017, 2022 and 2041 bonds
- 06:30 (US) Daily Libor fixing
- 07:15 (IE) Irish EU Ambassador Speaks at CEPS Think Tank
- 08:30 (CA) Canada Nov Wholesale Sales M/M: 0.5%e v 0.9% prior
- 09:00 (IT) Italy's Finance Minister Grilli Speaks Before EU Parliament
- 09:00 (MX) Mexico Dec Unemployment Rate: 5.0%e v 5.1% prior
- 09:00 (FR) France Debt Agency (AFT) to sell €6.4-7.6B in 3-month, 6-month and 12-month Bills
- 09:30 (EU) ECB call for bids in 7-day Main Refi Tender
- 09:30 (EU) ECB announces weekly settlements in former govt bond program (SMP)
- 10:20 (GR) Bank of Greece Releases 2012 Annual Accounts
- 11:00 (EU) Euro-Area Finance Ministers Meet in Brussels
- 13:00 (DE) German Bundesbank's Weidmann speaks in Eschborn
- (JP) Bank of Japan (BOJ) Interest Rate Decision
- (PT) EU's Almunia with Portugal Fin Min Gaspar
- (US) US Presidential Inauguration

***Notes/Observations***
- President Obama inaugurated for second term
- German Chancellor Merkel party loses lower Saxony election.
- Markets anticipate aggressive policy action by BOJ and now await its decision on Tuesday
- Japan PM Abe's Economic Adviser Hamada: BOJ will need to slow monetary easing if effects on prices/yen go too far
- UK Rightmove house prices up 0.2%m/m in January after decline of 3.3% m/m in December
- Dealers taking notice of technicals on silver with potential upside breakout in price action
- US: Markets closed for holiday; House is expected to vote on a short-term increase to the debt ceiling during the week

***Economic Data***
- (DE) Germany Dec Producer Prices M/M: -0.3% v 0.0%e; Y/Y: 1.5% v 1.7%e
- (TW) Taiwan Dec Export Orders Y/Y: 8.5% v 10.0%e
- (CH) Swiss Dec M3 Money Supply Y/Y: 9.8% v 9.3% prior
- (EU) ECB: €1.032B borrowed in overnight loan facility vs. €900.0M prior; €196.4B parked in deposit facility vs. €179.1 prior
- (CH) Swiss Q3 Industrial Production Y/Y: 2.2 v 4.7% prior
- (IS) Israel Jan Inflation Forecast: 2.0% v 1.9% prior
- (IS) Israel Jan Dec Money Supply Y/Y: 9.8 v 8.8% prior
- (NL) Netherlands Jan Consumer Confidence: -35 v -36e
- (NL) Netherlands Dec House Price Index M/M: -0.4% v +0.3% prior; Y/Y: -6.3% v -6.8% prior
- (HK) Hong Kong Dec CPI Composite Index Y/Y: 3.7% v 3.8%e
- (UK) Dec Gross Mortgage Lending: £11.7B v £12.7B prior - CML

Fixed Income:
- (NL) Netherlands Debt Agency (DSTA) sold approx ?3.4B vs. €3.0-5.0B indicated range in 3-month and 6-month Bills
- Sold €2.31B vs. €2.0-3.0B indicated in 3-month bills; Yield: -0.011% v -0.014% prior; Bid-to-cover: 2.1x v 1.53x prior
- Sold €1.08B vs. €2.0B indicated in 6-month Bills; Avg Yield: -0.007% v -0.040% prior; Bid-to-cover: 3.6x v 2.40x prior- 05:30 (BR) Brazil Central Bank Weekly Economists Survey