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Reports » Europe

European stock market, economy and companies update (July 15, 2014)

July 15, 2014, Tuesday, 10:35 GMT | 05:35 EST | 15:05 IST | 17:35 SGT
Contributed by Trade The News


***Notes/Observations***
- BoJ kept policy unchanged; no surprises on outlook of hitting CPI target
- RBA minutes reiterated that most prudent course was likely to be a period of stability in interest rates and AUD currency was high by historical standards
- Several bits of Chinese data (M2 money supply, New Yuan loans, FDI) beat expectations ahead of Wed's release of its Q2 GDP data
- Fed chair Yellen addresses US lawmakers
- UK inflation data surprises to the upside adding to BOE rate hike expectations (CPI YoY reading 1.9% vs. 1.6%e)
- German July ZEW Survey comes in below expectations


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities***
Indices [Stoxx50 -0.5%, FTSE 100 flat at 6,744, DAX -0.3% at 9,757, CAC-40 -0.3% at 4,335, IBEX-35 -1.4% at 10,460, FTSE MIB -1.3% at 20,413, SMI +0.4% at 8,602, S&P 500 Futures flat at 1,970]

- Market Focal Points/Key Themes: European markets open lower following Monday's gains and ahead of comments from Fed's Yellen, Peripheral indices lag, Banco Espirito Santo's shares decline amid concerns related to commercial paper maturities (weighs on other European banks), Germany ZEW below estimates, Profit warnings out of German companies (Software AG, Draegerwerk), US morning earnings (JPMorgan, Goldman Sachs, JNJ), European Corporate high yield issuance remains quiet amid events in Portugal

By Sector
- Industrials [Draegerwerk DRW8.DE -11% (profit warning)]
- Consumer Discretionary [Indra Systems IDR.ES -2% (share placement); Peugeot UG.FR +3% (positive broker commentary), Marine Harvest MHG.NO +2% (record Q2 profits)]
- Consumer Staples [Danone BN.FR +2% (broker commentary)]
- Technology [Software AG SOW.DE -14% (profit warning)]
- Financials [Banco Espirito Santo BES.PT -10% (concerns related to RioForte's commercial paper); Gjensidige Forsikring +1.5% (Q2 profits above estimates)]
- Stoxx50 Sectors [Financials -0.4%, Technology -0.3%, Energy -0.3%, Consumer Cyclical -0.2%, Industrials -0.1%, Telecom -0.1% ; Utilities +0.6%, Consumer Non-Cyclical +0.4%]

Speakers:
- EU's Juncker spoke to Parliament ahead of his possible confirmation as EU Commission chief. He noted that EU needed sustainable growth over the coming decades. He would not seek to change EU strict budget rules as Commission President
- (UK) BOE Gov Carney with MPC members Kohn, Taylor, Bailey questioned by Lawmakers on FPC
- BOJ Gov Kuroda post rate decision press conference reiterates its recent stance that pullback in demand following the April sales tax hike had been in line with expectations. Some Branch managers noted that the sales tax impact was easing but it would continue to watch effects. GDP and CPI expected to move broadly in line with prior forecasts made back in April. Reiterated view that CPI to hit 2% target in middle of forecast 2014-2016 period
- RBA's Edwards stated that AUD's decline might be delayed until Fed starts to raise rates as rate differentials have been driving strength in the currency.
-Israel said to have accepted an Egyptian cease-fire agreement for Gaza situation but reports that Hamas would reject the proposal. Other reports noted that Hamas Leader Abu Marzuk would consider the proposal

Currencies/Fixed Income:
- The EUR/USD continued to consolidate in the broader range of 1.35-1.37 for the last 6 weeks despite ECB Draghi's reiteration that an appreciating Euro would be a risk to recovery. Dealers have noted that the recent ECB measures have not curb the currency appreciation. A weaker German ZEW survey did push the pair back below the 1.36 handle but it remained well contained within recent ranges
- The GBP currency soared after June UK inflation data surprised to the upside. The GBP/USD bounced from 1.7070 towards 1.7150 after CPI YoY reading came in at 1.9% vs. 1.6%e. The data provided another notch towards earlier-than-expected BOE rate hike expectations
- The Portuguese banking sector remained on the front burner on concerns related to Espirito Santo unit's commercial paper maturities. The session did see some safe-haven flows into core countries.

Political/In the Papers:
- (EU) ECB chief Draghi reiterated July Council statement that inflation was at very low levels and region entering a moderate recovery. an appreciating Euro would be a risk to recovery and that QE was within ECB mandate
- (UK) Foreign Min Hague to step down as part of wider than expected Cabinet reshuffle
- (CN) PBoC dep head of statistics department Xu Nuojin: China should cut both interest rates and reserve ratios "in the near future"
- (RU) White House states that Russia was increasing the risks of incurring sanctions with troop movements near Ukraine border
- (IR) Iran showing some flexibility in its nuclear enrichment quota for first time in negotiations

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (DE) German Chancellor Merkel attends meeting of Ex-Yugoslav Leaders in Dubrovnik
- BRICS Summit begins 2-day meeting in Fortaleza , Brazil (6th summit)
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month Bills
- 05:30 (BE) Belgium to sell combined €2.3B in 3-Month and 12-Month Bills
- 06:00 (TR) Turkey to sell 2016 and 2024 bonds- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia announces OFZ auction for Wed
- 08:00 (IS) Iceland Jun Unemployment Rate: No est v 3.6% prior
- 08:00 (PL) Poland Jun CPI M/M: -0.1%e v -0.1% prior; Y/Y: 0.2%e v 0.2% prior
- 08:15 (US) Baltic Dry Bulk Index
- 08:30 (US) Jun Advance Retail Sales M/M: 0.6%e v 0.3% prior; Retail Sales Ex Auto M/M: 0.5%e v 0.1% prior; Retail Sales Ex Auto and Gas: 0.5%e v 0.0% prior; Retail Sales Control Group: 0.4%e v 0.0% prior
- 08:30 (US) July Empire Manufacturing: 17.00e v 19.28 prior
- 08:30 (US) Jun Import Price Index M/M: 0.4%e v 0.1% prior; Y/Y: 1.1%e v 0.4% prior
- 08:55 (US) Weekly Redbook Retail Sales
- 08:55 (FR) France Debt Agency (AFT) to sell combined €6.5-7.7B in 3-month, 6-month and 12-month Bills; results expected before 9:00 ET (13:00 GMT)
- 09:00 (PL) Poland Jun YTD Budget Balance Level (PLN): No est v -22.5B prior; Budget Balance Performance: No est v 47.3% prior
- 09:00 (BE) Belgium May Trade Balance: No est v €63.5M prior
- 09:00 (CA) Canada Jun Existing Home Sales M/M: No est v 5.9% prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 10:00 (US) May Business Inventories: 0.6%e v 0.6% prior
- 10:00 (MX) Mexico weekly International Reserves
- 10:00 (US) Fed Chair Yellen semi-annual testimony to Senate
- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month Bills
- 11:15 (BR) Brazil to sell I/L 2019, 2023, 2030 and 2040 Bonds
- 11:30 (US) Treasury to sell 4-Week Bills
- 11:30 (IL) Israel Jun CPI M/M: 0.2%e v 0.1% prior; Y/Y: 0.5%e v 1.0% prior
- 11:35 (US) President Obama talks on the economy
- 15:00 (AR) Argentina Jun Wholesale Price Index M/M: No est v 1.8% prior; Y/Y: No est v 27.4% prior
- 16:30 (US) Weekly API Oil Inventories
-18:00 (CL) Chile Central Bank Interest Rate Decision: Expected to cut Overnight Rate Target by 25bps to 3.75%
- 19:00 (KR) South Korea Jun Unemployment Rate: No est v 3.7% prior
- 22:00 (CN) China Jun YTD Urban Fixed Assets Y/Y: 17.2%e v 17.2% prior
- 22:00 (CN) China Jun Retail Sales Y/Y: 12.5%e v 12.5% prior; Retail Sales YTD Y/Y: 12.2%e v 12.1% prior
- 22:00 (CN) China Jun Industrial Production Y/Y: 9.0%e v 8.8% prior; Industrial Production YTD Y/Y: 8.8%e v 8.7% prior
- 22:00 (CN) China Q2 GDP Q/Q: 1.8%e v 1.4% prior; Y/Y: 7.4%e v 7.4% prior; GDP YTD Y/Y: 7.4%e v 7.4% prior
- (AR) Argentina Jun National Urban CPI M/M: No est v 1.4% prior; Y/Y: No est v % prior
- (PE) Peru May Economic Activity Y/Y: No est v 2.0% prior
- (PE) Peru Jun Unemployment Rate: No est v 5.8% prior


***Key Economic Data in session***
- (JP) Japan Jun Tokyo Condominium Sales Y/Y: -28.3 v -13.4% prior
- (SG) Singapore May Retail Sales M/M: 5.2% v 0.6%e; Y/Y: -6.0% v -8.2%e; Retail Sales Ex auto Y/Y: +0.1% v -1.0%e
- (FI) Finland May GDP Indicator WD: -0.1% v +1.9% prior
- (FI) Finland May Final Retail Sales Volume Y/Y: -0.5 v -0.9% prelim
- (JP) Japan Jun Final Machine Tool Orders Y/Y: 34.1% v 34.2% prelim
- (TR) Turkey Apr Unemployment Rate: 9.0% v 9.0%e
- (DK) Denmark Jun PPI M/M: -1.0% v +0.8% prior; Y/Y: -0.3% v +1.2% prior
- (EU) ECB €600M borrowed in overnight loan facility vs. €200.0M prior; €23.1B parked in deposit facility vs. €20.2B prior - Daily Eurosystem Liquidity Conditions
- (CH) Swiss Jun Producer & Import Prices M/M: 0.0% v 0.1%e; Y/Y: -0.8% v -0.8%e
- (NL) Netherlands May Trade Balance: €3.3B v €4.5B prior
- (NL) Netherlands May Retail Sales Y/Y: 0.9% v 3.3% prior
- (NO) Norway Q2 Existing Homes Q/Q: 3.8% v 2.3% prior
- (IT) Italy Jun Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 0.3% v 0.3% prelim; CPI Ex Tobacco: 107.4 v 107.3 prelim
- (IT) Italy Jun Final CPI EU Harmonized M/M: 0.2% v 0.2% prelim; Y/Y: 0.2% v 0.2% prelim
- (UK) Jun CPI M/M: +0.2% v -0.1%e; Y/Y: 1.9% v 1.6%e; CPI Core Y/Y: 2.0% v 1.7%e
- (UK) Jun RPI M/M: 0.2% v 0.0%e; Y/Y: 2.6% v 2.5%e; RPIX (Ex-Mortgage Interest Payments) Y/Y: 2.7% v 2.5%e; Retail Price Index: 256.3 v 255.9e
- (UK) Jun PPI Input M/M: -0.8% v +0.1%e; Y/Y: -4.4% v -4.5%e
- (UK) Jun PPI Output M/M: -0.2% v +0.1%e; Y/Y: 0.2% v 0.5%e
- (UK) Jun PPI Output Core M/M: 0.0% v 0.0%e; Y/Y: 1.0% v 1.0%e
- (UK) May ONS House Price Y/Y: 10.5% v 10.1%e
- (DE) Germany July ZEW Current Situation Survey: 61.8 v 67.4e; Expectations Survey: 27.1 v 28.2e
- (EU) Euro Zone July ZEW Current Situation Survey: 48.1 v 58.4 prior

Fixed Income:
- (ES) Spain Debt Agency (Tesoro) sold total €4.47B vs. €3.5-4.5B indicated range in 6-Month and 12-Month Bills
- Sold €967M in 6-month bills; Avg Yield: 0.146% v 0.144% prior; Bid-to-cover: 3.86x v 5.07x prior
- Sold €3.51B in 12-month bills; Avg Yield: 0.294% v 0.384% prior; Bid-to-cover: 2.04x v 1.97x prior
- (GR) Greece Debt Agency (PDMA) sold €1.625B vs. €1.25B indicated in 13-week Bills; Avg Yield: 1.75% v 1.80% prior; Bid-to-cover: 2.35x v 2.99x prior
- (EU) ECB allotted €99.9B in 7-Day Main Refinancing Tender at fixed 0.15% vs. €95.0Be