Reports » Europe

European stock market, economy and companies update (January 23, 2013)

Contributed by Trade The News

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

***Equities***
- Indices: FTSE 100 +0.20% at 6,188, DAX +0.20% at 7,712, CAC-40 -0.10% at 3,736, IBEX-35 -0.30% at 8,606, FTSE MIB -0.30% at 17,667, SMI +0.90% at 7,359, S&P 500 Futures -0.10% at 1,488

- European equity markets opened the session slightly higher, led by the tech sector following earnings out of IBM and Google. Apple is due to report its quarterly figures following Wednesday's US close. Currently indices are mixed, amid weakness in the banking sector. Underperformers among the European financials include Banca Monte Paschi, French banks and Commerzbank.

- UK movers [Intertek +1.5% (broker commentary),BHP +1% (Q2 production update),BT +0.50% (broker commentary); Severfield-Rowen -37% (concerns related to banking covenant), Tui Travel -4.5% (ended talks with TUI AG), Flybe Group -4% (Q3 sales, turnaround plan),Big Yellow Group -1.7% (capital raise),Sage Group -0.5% (interim management statement),Homebuilders broadly lower (sector downgrade)]
- Germany movers [Aixtron +7% (quarterly earnings from Cree),Draegerwerk +5.5% (FY12 sales outlook), SAP +2.5% (Q4 results, guidance), Gerry Weber +2.5% (FY12 results, outlook)Infineon +1.5% (US tech earnings); TUI AG -4.5% (ended talks with Tui Travel), Siemens -1% (Q1 earnings, outlook)]
- France moves [Alcatel Lucent +5% (broker commentary),BNP -1% (broker commentary)]
- Switzerland movers [Nobel Biocare +4.5% (broker commentary),Novartis +3% (results, management change),Logitech +1% (Sector strength)]
- Italy moves [Banca Monte Paschi -4.5% (ongoing concerns about derivatives transactions)]
- Dutch movers [Unilever +2.5% (Q4 results);SNS Reaal -10% (concerns related to banking unit)]

Speakers:
- PM Cameron gave his speech on UK relationship with Europe which started that he was not a British isolationist and wanted the UK to remain in EU as a committed and active member. He noted that going forward with more of the same is not an option; need fundamental change. PM Cameron confirmed that he was in favor of a simple in or out referendum on EU membership to be held in the first half of the next Parliament
- German Foreign Min Westerwelle stated that he wanted UK to remain in the EU and called for ambitious reform of Euro area with more integration
- Spain Fin Min de Guindos reiterated that economic growth to return late in 2013. The finance industry was seen stronger and healthier and layoffs seen flattening out in private sector
- Bank of England (BOE) Minutes noted that developments on month had been modestly positive for growth with increases MPC confidence in Nov economic forecasts. US fiscal deal and signs of global growth were positive, but hard to get sense of underlying domestic growth. Past month development strengthened some MPC members' case that no more QE was required Early signs FLS encouraging and reiterated growth remained subdued and economy faces various headwinds. Factors contributing to inflation likely to persist. The BOE would consider further scope for QE to lower long-term yields.
- BOE dissenter Miles noted that more QE was seen discouraging more sterling appreciation
- Sweden Central Bank Dep Gov Ekholm: Reiterates view that Sweden has room for more interest rate cuts to prevent further SEK currency gains from triggering a deflationary trap
- Bank of Japan (BoJ) Gov Shirakawa stated that recent JPY currency weakness was due to its decreasing demand for safe-haven flows, increasing US yields, and an increasing Japanese trade deficit
- Japan opposition (DPJ) chief stated that he could not support ex-BOJ Dep Gov Muto if nominated to head the central bank and was not in Japan's interest to have Asian Development Bank (ADB) chief Kuroda to step down from position to head BOJ. The DPJ wanted three members appointed to BOJ board who support reinflationary policies and resubmit bill to amend BOJ law make mandate be comprised of jobs, growth and inflation
- India Central Bank Central (RBI) Gov Subbarao reiterated that control of inflation was a priority and will always be so

Currencies:
- The initial focus in the session was on the GBP currency. The pound was weaker early in the session after dealers took note of comments from BoE King who left the door open for more stimulus measures. UK PM Cameron gave his long awaited speech on UK relationship with Europe and confirmed that a referendum would be held in the first half of a new Parliament if conservatives won election. The GBP/USD tested 4-month lows just above the 1.5800 level before slightly rebounding. The BOE minutes noted that the past month development strengthened some MPC members cases that no more QE was required
- The JPY continued its firm tone in the aftermath of the BOJ rate decision from Tuesday. The Nikkei225 was off over 2% as USD/JPY approached the lower portion of the 88 handle.
- AUD made back its Asian session losses after the benign CPI data underpinned RBA rate cut expectations.

Political/ In the Papers:
- (EU) ECB's Draghi: There is no evidence to substantiate fears about price stability; ECB remains independent and focused on price stability; Eurozone begins 2013 on a more confident note; The darkest clouds over the eurozone have vanished.
- (EU) ECB's Assmusen: Does not like the term "currency wars," does not believe FX rates should be politicized; In regards to Japan, there is reason for concern when public pressure is applied to a central bank to "do more," especially if the problems are structural; Reaffirms that the ECB has not FX policy target.
- (EU) EU's Van Rompuy: Summit scheduled for Feb 7-8 will address an accord on the 7 year EU budget
-(PT) Portugal said to have hired advisors for €2B of a Oct 2017 bond at 4.35%; Transaction to be completed on Wed Jan 23rd - financial press; This will be the first time Portugal has tapped the capital markets since issuing 1-year debt in Oct 2011
- (NL) The Netherlands cabinet may announce certain measures in the coming days - Dutch Press; The government working on a rescue plan for SNS that might cost billions of euros and may nationalize the company units for a period of time
-(UK) BOE's King: Prepared to provide more QE stimulus if needed; must maintain commitment to framework of inflation target; Cannot rule out policy guidance similar to that of the US Federal Reserve; Q4 GDP will come in significantly below Q3.
-(US) White House Spokesman Carney: A long-term increase in the debt ceiling is needed, however Republican proposals for a short-term increase are positive
-(US) Senator Majority Leader Reid (D-NV): Happy to see the clean debt ceiling legislation in the House, its a big step in the right direction

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (CH) World Economic Forum Holds Annual Meeting in Davos
- (RU) Russia to sell RUB15B in 2028 OFZ
- (MX) Mexico Dec ANTAD Same-Store Sales Y/Y: No est v 7.1% prior
- (PT) Portugal releases Year-to-Date Budget Report
- 06:00 (BR) Brazil Jan IBGE CPI IPCA-15 M/M: 0.8%e v 0.7% prior
- 06:00 (CZ) Czech Republic to sell 2016 and 2022 Bonds
- 06:30 (US) Daily Libor fixing
- 06:30 (CL) Chile Central Bank's Traders Survey
- 07:00 (UK) Prime Minister's Question Time in House of Commons
- 07:00 (DE) German Chancellor Merkel press conference on Algeria
- 07:00 (US) MBA Mortgage Applications w/e Jan 18th: No est v 15.2% prior
- 07:30 (BR) Brazil Dec Current Account: -$6.3Be v -$6.3B prior; Foreign Direct Investment (FDI): $4.1Be v $4.6B prior
- 07:45 (US) Weekly ICSC Chain Store Sales
- 08:30 (EU) OECD's Padoan, EU's Buti Speak at Brussels Think Tank
- 08:55 (US) Weekly Redbook Retail Sales
- 09:00 (US) House Republicans meet on debt limit
- 09:00 (US) Nov House Price Index M/M: 0.7%e v 0.5% prior
- 09:00 (CA) Canada Dec Teranet/National Bank HPI M/M: -0.3%e v -0.4% prior; Y/Y: 3.1%e v 3.4% prior; House Price Index: No est v 154.02 prior
- 09:00 (MX) Mexico Nov Retail Sales: 3.6%e v 3.5% prior
- 10:00 (CA) Bank of Canada Interest Rate Decision: Expected to leave Interest Rates unchanged at 1.00%
- 10:00 (EU) Euro Zone Jan Advanced Consumer Confidence: -26.0e v -26.5 prior
- 10:00 (US) IMF updates its World Economic Outlook
- 11:00 (US) Fed to purchase $1.25-1.75B in Notes
- 11:15 (CA) Bank of Canada Gov Carney press conference
- 11:30 (US) Treasury to sell 4-Week Bills
- 12:30 (BR) Brazil Dec Tax Collections (BRL): 103.0Be v 83.7Be
- 14:00 (AR) Argentina Dec Trade Balance: $451Me v $634M prior
- 16:30 (US) Weekly API U.S. Crude Oil Inventories
- 18:30 (JP) Japan Dec Total Merchandise Trade Balance: -522.8Be v -953.4B prior; Adj Merchandise Trade Balance: -760.9Be v -868.5B prior
- 20:45 (CN) China Jan HSBC Flash Manufacturing PMI: No est v 51.5 prior

***Notes/Observations***
- Soft Australia CPI prompts speculation of more RBA rate cuts
- UK PM Cameron proposes referendum on UK remaining in EU by 2017
- Japan Govt and BOJ both upgrade economic assessment (1st time in 8 months)
- GOOG and IBM beat expectations; AAPL in focus after the bell today.
- US debt limit extension likely until May; White House would not oppose a short-term debt limit hike
- UK Dec jobless data comes in better than expectations
- BOE minutes less dovish; Past month development strengthened some MPC members case that no more QE is required

***Economic Data***
- (FR) France Jan Business Confidence: 86 v 90e; Production Outlook: -36 v -35e; Own-Company Production Outlook: -15 v -9 prior
- (DK) Denmark Jan Consumer Confidence: -2.7 v -1.5e
- (ZA) South Africa Dec CPI (all items) M/M: 0.2% v 0.3%e; Y/Y: 5.7% v 5.7%e
- (TW) Taiwan Dec Industrial Production Y/Y: 2.4% v 6.8%e; Commercial Sales Y/Y: 1.7% v 1.4%e
- (TH) Thailand Dec Customs Trade Balance: -$2.4B v -$1.6Be; Customs Exports Y/Y: 13.5% v 21.5%e; Customs Imports Y/Y: 4.7% v 7.5%e
- (EU) ECB: €530M borrowed in overnight loan facility vs. €1.0B prior; €203.6B parked in deposit facility vs. €207.1B prior
- (ES) Bank of Spain (BOS) Jan Monthly Report: Q4 GDP -0.6% q/q and -1.7% y/y
- (MA) Malaysia Dec CPI Y/Y: 1.2% v 1.4%e
- (IC) Iceland Dec Wage Index M/M: 0.0% v 0.2% prior; Y/Y: 4.7% v 5.0% prior
- (IT) Italy Dec Non-EU Foreign Trade Balance: €3.2B v €1.9B prior
- (UK) Bank of England (BOE) Minutes: voted 9-0 (unanimous) to leave interest rates unchanged in January
- (UK) Bank of England (BOE) Minutes: voted 8 to 1 to maintain Asset Purchase Target (APT) at £375B in January
- (UK) Dec Jobless Claims Change:-12.1 K v +0.5Ke; Claimant Count Rate: 4.8% v 4.8%e; Employment Change 3M/3M: +90K v +28Ke
- (UK) Nov Average Weekly Earnings 3M/Y: 1.5% v 1.6%e; Weekly Earnings exBonus 3M/Y: 1.4% v 1.5%e
- (UK) Nov ILO Unemployment Rate: 7.7% v 7.8%e
- (IT) Italy Nov Current Account: +€683M v -€245M prior
- (CH) Swiss Jan Credit Suisse ZEW Expectations Survey: -6.9 v -15.5 prior

Fixed Income:
- (IN) India sold total INR100B vs. INR100B indicated in 3-month and 12-month Bills
- (EU) ECB allotted $20M in 7-Day USD Liquidity Tender at fixed 0.64% vs. $60M prior
- (SE) Sweden sold SEK3.5B in 1.5% 2023 bonds; Avg Yield: 1.9089 v 1.8165% prior; Bid-to-cover: 2.86x v 1.72x prior
- (PL) Poland sold total PLN11.8B vs. PLN6.0-9.0B indicated range in 2015 and 2018 bonds
- (RU) Russia sold RUB35B v RUB35B indicated in 2019 OFZ; Yield: 6.5% vs. guidance of 6.47-6.52% range