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Reports Europe

European stock market, economy and companies update (January 28, 2014)

January 28, 2014, Tuesday, 10:39 GMT | 05:39 EST | 15:09 IST | 17:39 SGT
Contributed by Trade The News


***Notes/Observations***
- India surprises with rate hike to cope with Fed taper
- Emerging market currencies encounter modest strengthening; focus on Turkey and its emergency MPC meeting later today
- France Consumer Confidence registers its first uptick since October
- UK Q4 Advance GDP comes in line with expectations (QoQ: 0.7% v 0.7%e) and at best annual pace in over 5 years
 
 
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities**
Indices [Stoxx50 +0.8%, FTSE 100 +0.3% at 6,575, DAX +0.7% at 9,409, CAC-40 +0.7% at 4,174, IBEX-35 +1.3% at 9,886, FTSE MIB +0.9% at 19,444, SMI +0.9% at 8,209, S&P 500 Futures +0.5% at 1,784]
 
- Market Focal Points: Equity markets in Europe open higher amid some stability in emerging currencies, Spain's IBEX-35 Outperforms, Large banks rebound, Siemens rises as it reaffirmed outlook amid currency headwinds, Apple's outlook weighs on suppliers , Swedbank reports weaker than expected earnings , RWE announces €3.3B impairment charge, UK Q4 GDP in line
 
By Sector
- Financials [Intesa ISP.IT +3% (broker commentary), F&C Asset Management FCAM.UK +4% (recommended takeover offer from BMO); Swedbank SWEDA.SE -2% (Q4 profits below ests)]
- Consumer Discretionary [JC Decaux DEC.FR +3% (Q4 Rev +4.5%)]
- Technology [Software AG SOW.DE +6% (Q4 results in line), Philips PHIA.NL flat (Q4 results above ests, cautious outlook)]
- Industrials [Brenntag BNR.DE +3% (broker commentary), Siemens SIE.DE +1% (reaffirmed outlook); Jenoptik JEN.DE -4.5% (FY profits declined y/y)]
- Basic Materials/Resources [Fresnillo FRES.UK -2.5% (Q4 production declined)]
- Energy [Afren AFR.UK +4% (FY production at upper end of forecasted range); Capital Drilling CAPD.UK -9% (reported H2 loss)]
- Stoxx50 sectors [Industrials +1.3%, Financials +1%, Consumer Cyclical +0.7%, Energy +0.5%, Basic Materials +0.4%, Consumer Non-Cyclical +0.2%, Utilities +0.2%; Technology -0.7% Telecom -0.1%]
 
Speakers:
- UK Chancellor Osborne commented after the Q4 GDP data that its work was not complete and the biggest risk to recovery was abandoning the plan. Domestic growth was broadly based - Spain Budget Min Montoro stated that the govt had no plan to increase VAT but to design a new income tax as part of reform. He reiterated government deficit was under control. Cutting the structural deficit was most important
- Turkey Central Bank gov Basci commented ahead of an extra-ordinary MPC meeting that its inflation report assumed a tighter monetary policy. Holding extraordinary policy meeting late on Tuesday (today) was to let MPC members return to Turkey from the US trip. He forecasted 2014 inflation at 6.6% compared to 5.3% in its previous inflation report; food inflation assumed at 8%; food prices, taxes and weaker lira currency were behind the inflation upward revision. He saw inflation stabilizing at 5.0% in the medium term. He stressed it was NOT discussing capital controls nor discussing any revision of the 5% inflation target
- IMF's Lagarde reiterated that fragile EMU recovery needed more monetary support. Could say that the EMU crisis was over until job loss was reversed
- Bank of International Settlements (BIS) Caruana stated that Euro Zone was not facing deflation and reiterated its long-standing view that global central banks should normalize policy to avoid risks to financial stability
- Norway Fin Min Jensen commented that domestic economy was doing well from a global perspective but growth was seen slower compared to prior years. Although unemployment will rise, it was still low vs. peers in Europe
- Poland Central Bank's Hausner reiterated his view that a potential Base Rate increase was possible in H2 and it could signal a change of bias in March
- Czech Central Bank Gov Singer: Positive effect of currency moves will been seen in H2
- Ukraine Premier Azarov resigned at Ukrainian extraordinary Parliamentary session in order to open the path to political compromise
- India Central Bank (RBI) commented after its surprise rate hike that further near term policy tightening was not anticipated but it would address inflation risks resolutely even as GDP slowed. It warned that FY14 GDP would miss the 5.0% growth target. Growth issues could be viewed only after inflation had cooled. Narrowing of the Trade deficit was a silver lining for the country.
- Philippines Central Bank (BSP) Gov Tetangco stated that it still had policy room to respond to domestic price pressures and global developments
- Japan PM Abe: To decide by the end of 2014 whether to raise sales tax to 10%
- Thailand anti-corruption Agency to begin impeachment probe into PM Yingluck
- Thailand PM Yingluck said to have again rejected calls to delay the planned Feb 2nd election
 
Currencies/Fixed Income:
- Global markets were relatively steady as focus remained on emerging markets. Emerging market currencies encountered modest strengthening with focus on Turkey and its emergency MPC meeting later today. The Turkish lira continued to move off its record lows from yesterday as analysts believe Turkey would widen its interest rate corridor.
- The GBP witnessed some volatility as Q4 advance GDP came in line with expectations. The GBP/USD pair initially sold off about 50 pips with the data release towards 1.6550 but recovered as the annual pace was seen at the best in over five years.
- The USD saw strength against other pairs in the session. The EUR/USD took out light stops below the 1.3650 area just ahead of the NY morning. The USD/JPY pair regain a foothold above 103
 
Political/In the Papers:
- (EU) Eurogroup's Dijsselbloem: Outlook is becoming more positive for Europe, strength is more robust
-(GR) Greece Fin Min Stournaras: Troika review could be completed by Feb 17 in aims for next aid disbursement at some point in March - financial press
- (ES) Spain Fin Min De Guindos: inflation to be below 1% through 2014
- (JP) Japan Econ Min Amari: There are some concerns fx moves could raise fuel costs - financial press
- (CN) Half of China's 28 provinces said to have cut investment expectations as part of economic targets for 2014 vs 2013; Only 3 have raised forecasts - Shanghai Daily
 
**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (TR) France President Hollande in Turkey
- (CH) Switzerland to sell 3-month Bills
- 06:00 (IE) Ireland Dec Retail Sales Volume M/M: No est v 0.0% prior; Y/Y: No est v 1.7% prior
- 06:00 (TR) Turkey to sell 2015 and 2023 bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (EU) ECB 7-day Term Deposit Tender to offset govt bond purchases under SMP program
- 07:30 (RU) Russia President Putin with EU officials Barroso and Van Rompuy in Brussels
- 07:45 (US) Weekly ICSC Chain Store Sales
- 08:15 (UK) BOE's Carney in Scotland
- 08:30 (US) Dec Durable Goods Orders: 1.8%e v 3.4% prior (revised from 3.5%); Durables Ex Transportation: 0.5%e v 1.2% prior; Capital Goods Orders Non-defense Ex-Aircraft: 0.3%e v 4.1% prior (revised from 4.5%); Capital Goods Shipments Non-defense Ex-Aircraft: 0.1%e v 2.7% prior (revised from 2.8%); Ex-Defense: No est v +3.5% prior
- 08:55 (US) Weekly Redbook Retail Sales
- 09:00 (US) Nov S&P/CaseShiller 20 City M/M: 0.80%e v 1.05% prior; Y/Y: 13.80%e v 13.61% prior; Home Price Index NSA: 165.72e v 165.91 prior
- 09:00 (EU) Weekly ECB Forex Reserves: € v € prior
- 10:00 (US) Jan Consumer Confidence Index: 78.0e v 78.1 prior
- 10:00 (US) Jan Richmond Fed Manufacturing Index: 13e v 13 prior
- 10:00 (MX) Mexico weekly International Reserves
- 10:00 (ES) Spain Fin Min De Guindos in EU Parliament
- 10:30 (UK) DMO to announce size of upcoming 1.0% 2019 Gilt for Feb 4th auction
- 11:00 (US) Fed to purchase U$2.25-3.00N in Notes
- 11:00 (BR) Brazil to sell I/L 2019, 2023, 2030, 2040 and 2050 Bonds
- 11:30 (US) Treasury to sell $12B in 4-Week Bills
- 12:00 (DE) German Fin Min Schaeuble in Berlin
- 13:00 (US) Treasury to $32B in 2-Year Notes
- 16:30 (US) Weekly API Crude Oil Inventories
- 17:00 (TR) Turkey Central Bank (CBRT) emergency meeting
- 20:00 (US) President Obama delivers the State of the Union address
 
 
***Economic Data***
- (IN) India Central Bank (RBI) raised the Repurchase Rate by 25bps to 8.00% (not expected)
- (DE) Germany Dec Import Price Index M/M: 0.0% v 0.2%e; Y/Y: -2.3% v -2.2%e
- (FI) Finland Dec House Price Index M/M: -1.3% v 0.0% prior; Y/Y: 0.7% v 1.0% prior
- (FR) France Jan Consumer Confidence: 86 v 85e
- (ES) Spain Nov Total Mortgage Lending Y/Y: -26.9% v -15.5% prior; House Mortgage Approvals Y/Y: -27.4% v -23.2% prior
- (TR) Turkey Jan Consumer Confidence Index: 72.4 v 75.0 prior
- (EU) ECB €219M borrowed in overnight loan facility vs. €179M prior; €43.8B parked in deposit facility vs. €44.0B prior - Daily Eurosystem Liquidity Conditions
- (SE) Sweden Jan PPI M/M: 1.2% v 0.4%e; Y/Y: ++0.3% v -0.4%e
- (SE) Sweden Dec Retail Sales M/M: -0.8% v +0.5%e; Y/Y: 1.8% v 3.3%e
- (SE) Sweden Dec Trade Balance (SEK): 1.3B v 4.0B prior
- (NO) Norway Q4 Industrial Confidence: 8 v 3e
- (NO) Norway Q4 Existing Homes Q/Q: -2.6% v -1.8% prior
- (IT) Italy Jan Consumer Confidence Index: 98.0 v 96.7e
- (UK) Q4 Advance GDP Q/Q: 0.7% v 0.7%e; Y/Y: 2.8% v 2.8%e
- (UK) Nov Index of Services M/M: 0.4% v 0.3%e; 3M/3M: 0.8% v 0.7%e
- (IT) Italy Dec Hourly Wages M/M: 0.0% v 0.0% prior; Y/Y: 1.3% v 1.3% prior
- (BR) Brazil Jan FGV Construction Costs M/M: 0.7% v 0.6%e
 
Fixed Income:
- (FI) Finland opened its book to sell Euro-denominated benchmark April 2024 bond, initial pricing guidance at +7bps over mid-swaps and order books over €5B
- (NL) Netherlands Debt Agency (DSTA) sold total €1.34B vs. €1.0-2.0B indicated range in 2016 and 2037 DSL bonds
- Sold €890M in 0.0% 2016 DSL; Avg Yield: 0.325% v 0.275% prior
- Sold €450M in in 4% Jan 2037 DSL Bond; Avg Yield 2.674% v 2.782% prior
- (ES) Spain Debt Agency (Tesoro) sold total €3.10B vs. €2.0-3.0B indicated range in 3-Month and 9-Month Bills
- Sold €973M in 3-month Bills; Avg Yield: 0.343% v 0.631% prior; Bid-to-cover: 5.23x v 2.52x prior
- Sold €2.16B in 9-month Bills; Avg Yield: 0.655% v 0.841% prior; Bid-to-cover: 2.23x v 2.65x prior
- (NO) Norway sold NOK2.0B in 2017 Bonds; Yield: 1.71%
- (IT) Italy Debt Agency (Tesoro) sold €2.5B vs. €2.0-2.5B indicated range in Zero Coupon Jun 2015 CTZ; Avg Yield: 1.031% v 1.346% prior; Bid-to-cover: 1.78x v 1.48x prior
- (IT) Italy Debt Agency (Tesoro) sold €1.25B vs. €0.75-1.25B indicated range in I/L 2018 BTPi bond; Avg Yield: 1.39% v 2.30% prior; Bid-to-cover: 1.88x v 2.3x prior
- (EU) ECB allotted €115.6B in 7-day Main Refi Tender at fixed 0.25% vs. €115Be