Reports » Europe

European stock market, economy and companies update (March 06, 2013)

Contributed by Trade The News

***Notes/Observations***
- Venezuela: President Chavez died; VP Maduro assumes temporary control; Army chief pledges support to Maduro; elections expected in 30 days
-Australia: Q4 GDP inline q/q at 0.6%; y/y at 3.1% vs 3.0%e
- PBOC advisor Qian Yingyi: Cannot rule 2013 rate increase but depends on Q1 data
- IMF: Spain must retain reform momentum, risks to Spain economy and financial sector remain elevated
- White House: Obama wants to set up a meeting with both parties on the budget; working on a budget date
- Spain 10-year Govt yield dips below 5% for first time since late Feb
- Key central bank rate decision over the next 24 hours including BOJ, BOE and ECB
- German borrowing costs fall at 5-year BOBL auction


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

***Equities***
Indices: FTSE 100 +0.40% at 6,455, DAX +1.1% at 7,956, CAC-40 +0.40% at 3.800, IBEX-35 +0.30% at 8,453, FTSE MIB +0.20% at 15,998, SMI +0.30% at 7,741, S&P 500 Futures +0.40% at 1,542

- European equity markets are broadly higher, after US stocks hit record highs on Tuesday's session. The Germany DAX has led today's gains, as the index is at multi-year highs. Despite the gains, European banks are trading mixed and underperformers in the sector include Barclays, Standard Chartered and SocGen. Resource related companies are mostly lower, tracking the weakness in oil and copper prices. Currently markets are focusing on Thursday's central bank meetings (ECB and BoE) and Friday's US payrolls report.

- UK movers [Bowleven +9.5% (oil find), Admiral Group +5% (raised dividend by 20%), Debenhams +1% (broker commentary),CPP -7% (speculation related to debt-equity swap)]
- Germany movers [Lanxess +3% (broker commentary), Deutsche Boerse +1% (renewed takeover speculation); Axel Springer -4% (guided FY13 EBITDA lower)]
- France movers [Bourbon +7% (sharp y/y rise in FY profits)]
- Spain movers [Sacyr -1.5% (share placement)]
- Italy movers [Banco Popolare -0.50% (reported FY loss)]
- Switzerland movers [Evolva +13% (investment agreement with Cargill)]

Speakers:
- Italy Bersani faced his party on his post-election plan. He stated that he was not courting 5 star's Grillo but was ready to open discussions with others. He reiterated ruling out of alliance with Berlusconi's Party and Monti did not have enough votes to contribute to the govt. He was ready to propose a govt to Parliament but party not able to give certainty for stable govt. He added that the Italian election result was part of a trend in Europe
- Spain Fin Min de Guindos commented that he saw the country's risk premium falling to 200bps in H2 2013 (**Note: Currently around 360bps) but conceded that H1 would be difficult. He also believed that Spain should have raised VAT earlier rather than in Sept
- Germany said to have reached agreement with IG Metall union on wages for steel sector
- Spain Budget Min Montoro commented that the country would not raise taxes again. He added that any revision of 6.7% deficit figure would be downwards
- Cyprus Fin Min Sarris commented that the country had no plans to merge banks and added that any depositor losses would be catastrophic. He also stated that the banking sector had agreed upon money laundering audit
- Norway Fin Min Johnsen: Domestic economy justifies higher capital rules
- Various European debt agency officials made comments at the Euromoney conference
- DMO chief Steeman: Markets had priced in UK sovereign downgrade; liquidity key to issuance
- Italy Debt Agency (Tesoro) chief Cannata noted that markets were confident that good solution would be found from election results and would maintain funding plans after election. Markets were pricing good solution to election
- Spain Debt Agency (Tesoro) Official stated that the country had seen about €38B of inflows in past 6 months as markets acknowledged Spain's reform efforts.
- German BDI Industrial Assoc President Grillo saw potential return to crisis due to developments in Italy and France. He noted that the Italian elections and deindustrialization in France highlighted the danger
- Moody's: Spanish covered bonds' credit risks have not improved despite tighter spreads in early 2013
- Former BoJ official Mizuno: BOJ bond buying plan risks market bubble; Kuroda to hit wall of reality. BOJ likely to return to current policy framework
- Former PBoC Official Wu Xiaoling stated that he expected stable monetary policy in 2013 and would not see loosening in year like what was seen in 2009. He also noted that 2013 inflation target of 3.5% was objective
- PBOC advisor Qian Yingyi: Cannot rule 2013 rate increase

Currencies:
- Despite the risk-on sentiment the USD was relatively steady against the major pairs in the session. The Dow Jones did close at record highs and gains were also registered in both Asia and Europe. Dealer noted that upcoming key central bank policy decisions from the BoJ, ECB and BoE likely had placed a limit on FX price action
- In EUR/USD dealers noted that someone seemed to be trying to keep Euro above 1.30 level into Thursday ECB rate decision but the upside appeared to be limited for now. The pair was at session lows heading into the NY morning at 1.3030.

Political/In the Papers:
- (EU) EU's Rehn: Sees EU Parliament vote in favor of 2-pack next week; Commission to work towards Ireland and Portugal deal in April
(EU) Netherlands Fin Min Dijsselbloem (Eurogroup chief): Most EU countries in favor of bank bonus measures
- (CY) Concerns related haircuts have led to deposit outflows in Cyprus - Telegraph's Ambrose Evans-Pritchard
-(CY) ECB's Demetriades: Proposes a temporary solidarity levy for Cyprus; A special 10% levy on interest income could generate €150M a year; Rejects the idea of a bail-in from depositors to fund a bailout; imposing haircuts would drive capital flight
- (PT) Portugal would like to see their loans extended by 5 to 10 years- Economico
-(ES) Catalan pro-independence parties are orgainizing a front to hold a vote on the enabling law which would allow a referendum on independence to be held- El Pais
-(JP) Japan's Diet expected to approve nominees Kuroda, Iwata, and Nakaso for the BOJ - Kyodo

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to cut the Base Rate by 25bps to 3.50%
- (ES) Spain Dec YTD Budget Balance: No est v -45.9B prior
- 06:00 (BR) Brazil Feb FGV Inflation IGP-DI: 0.4%e v 0.3% prior
- 06:00 (PT) Portugal Jan Industrial Sales M/M: No est v -8.2% prior; Y/Y: No est v -7.2% prior
- 06:00 (CZ) Czech Republic to sell combined CZK10B in 2019 and 2023 bonds
- 06:30 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Mar 1st: No est v -3.8% prior
- 07:00 (UK) Prime Minister's Question Time in House of Commons
- 08:00 (EU) EU President Van Rompuy
- 08:15 (US) Feb ADP Employment Change: +170Ke v +192K prior
- 08:15 (US) Fed's Plosser speaks on Economic Outlook in Lancaster, PA
- 09:00 (BE) Belgium Q4 Final GDP Q/Q: No est v -0.1% prelim; Y/Y: No est v -0.4% prelim
- 09:00 (EU) Former ECB chief Trichet speaks at European Investment Bank in Luxembourg
- 10:00 (PT) Portugal PM Coelho in Parliament
- 10:00 (US) Durable Goods revisions
- 10:00 (US) Jan Factory Orders: -2.2%e v +1.8% prior
- 10:00 (CA) Canada Feb Ivey Purchasing Managers Index Seasonally Adj: 56.0e v 58.9 prior; PMI Unadj: No est v 54.8 prior
- 10:00 (CA) Bank of Canada Interest Rate Decision: Expected to leave Interest Rates unchanged at 1.00%
- 10:30 (BR) Brazil Central Bank weekly Currency Flows
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:00 (US) Fed to buy $1.25-1.75B in bonds
- 12:00 (BR) Brazil Jan Vehicle Production: No est v 279.3K prior; Vehicle Sales: No est v 311.5K prior; Vehicle Exports: No est v 36.2K
- 14:00 (US) Fed's Beige Book
- (BR) Brazil Central Bank (COPOM) Interest Rate Decision: Expected to leave the SELIC Target - Rate unchanged at 7.25%


***Economic Data***
- (UK) YouGov Citi UK Feb 12-month Inflation Expectation: 2.8% v 2.8% prior
- (UK) Feb Halifax House Prices M/M: +0.5% v %+0.2e; 3M/Y: +1.9% v +1.7%e
- (RO) Romania Q4 Preliminary GDP Q/Q: 0.1 v 0.2% prior; Y/Y: 0.3 v 0.3% prior
- (EU) ECB: €3.5B borrowed in overnight loan facility vs. €3.6B prior; €146.7B parked in deposit facility vs. €142.1B prior
- (AT) Austria Feb Wholesale Price Index M/M: 0.6% v 0.3% prior; Y/Y: 1.2% v 1.6% prior
- (UK) Feb New Car Registrations: 7.9% v 11.5% prior
- (EU) Euro Zone GDP Q4 Preliminary GDP Q/Q: -0.6% v -0.6%e; Y/Y: -0.9% v -0.9%e
- (EU) Euro Zone GDP Q4 Preliminary Govt Expenditure Q/Q: -0.1% v -0.2% prior; Gross Fix Capital Q/Q: -1.1 v -0.8% prior; Household Consumption Q/Q: -0.4% v 0.0% prior
- (IC) Iceland Feb Preliminary Trade Balance (ISK): 7.6B v 11.6B prior

Fixed Income:
- (IN) India sold total INR120B vs. INR120B indicated in 3-month and 12-month Bills
- (RU) Russia sold RUB15.3B in 2023 OFZ Bonds; Yield 6.95%
- (SE) Sweden sold SEK3.5B in 10 year bonds; Yield 2.1564% v 2.2102% prior; Bid-to-cover: 1.87x v 1.91x prior
- (DE) Germany sold €3.137B in 0.5% 2018 BOBL Notes; Avg Yield 0.45% v 0.68% prior; Bid-to-cover:1.9 x v 1.9x prior