Reports » Europe

European stock market, economy and companies update (March 13, 2013)

Contributed by Trade The News

***Notes/Observations***
- (CY) Cyprus and Troika said to be negotiating smaller bailout package at around €10B vs €17B previously
- Japan govt to upgrade economic assessment for 3rd consecutive month (**in line with BOJ's view)
- Australia march consumer confidence rose to 110.5; home loan approvals fell for a third month by 1.5% m/m
- PBoC Gov Zhou hints that the next rate move is higher
- ECB Weidmann warns against negative interest rates
- Italy auction not as solid as hoped


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

***Equities***
Indices: FTSE 100 -0.80% at 6,458, DAX -0.20% at 7,952, CAC-40 -0.40% at 3,823, IBEX-35 -0.60% at 8,484, FTSE MIB -1% at 15,871, SMI -0.50% at 7,766, S&P 500 Futures -0.10% at 1,545

- European equity markets are mostly lower, as dealers assess the bond auction results out of Italy. Additionally, markets have tracked the declines seen in Asia. Banks are broadly lower led by shares of Commerzbank and Standard Chartered. Resource related firms are mostly lower, tracking the declines in copper prices.

- UK movers [Thomas Cook +13% (cost cutting measures), Ferrexpo +3.5% (special dividend), Prudential +1.5% (FY results above ests, raised dividend); Balfour Beatty -2.5% (broker commentary), Direct Line -2% (share placement)]
- France movers [Inter Parfums +2.5% (special dividend); Biomerieux -4% (FY profits declined y/y)]
- Germany movers [Infineon -2% (broker commentary), Commerzbank -6% (renewed capital raise speculation)]
- Switzerland movers [Cytos +7.5% (data presenstation); Adecco -4% (Q4 results below ests, cautious outlook)]
- Spain movers [Inditex -4% (FY profits below ests)]
- Italy movers [Enel -4% (impairment charge, profits down y/y)

Speakers:
- ECB's Weidmann: Adjusting the voting structure of the European Central Bank is not the answer to addressing the redistributed risk to taxpayers in the euro area; He reiterated view that there was no end to EMU crisis in sight at this time and that Central Banks had become 'political actors'
- India Fin Min Chidambaram: Reiterates that high food prices driving CPI; cannot remain unaffected by global economic troubles
- China PBoC Statement reiterated it would continue prudent monetary policy and increase policy flexibility. It would ensure stable and appropriate growth in both money and credit supply and promote differentiated housing credit policy. The PBoC to promote bi-lateral currency-swap arrangements and maintain its policy to diversified investments in FX Reserve Management
- (PBoC) Gov Zhou Xiaochuan press conference noted that China needed to be on high alert against inflation and hoped to stabilize inflationary expectations. He saw carryover effect in CPI and noted that PBoC's overall monetary policy focused on CPI. He added that monetary policy was no longer loose and the prudent monetary policy meant exit from its relaxed stance (**Note PBoC cuts its key 1-year rates on two occasions in 2012 which were the first cuts since Dec 2008). The lower M2 target signaled emphasis on price stability; M2 target of 13% is tighter than actual 2012. High M2 level was not necessarily the cause of inflation as high savings rates drove high M2 levels. He did not know if he would stay on as PBoC Gov (*8Note there has been rumors he would be replaced under the new govt). Lastly he noted that needed to pay attention to local govt vehicle debt and did not underestimate or over-react to its risk.
- China PBoC Vice Gov Yi Gang commented that China did care about monetary easing in reserve currency countries and the effect it has on capital flows . He hoped nations would stand by G20 commitment on currencies and that countries avoid competitive devaluations. The PBoC should focus on domestic economic conditions for its monetary policy but would take into account other countries monetary policies
- Spain PM Rajoy: Will persevere with economic policy - comments in Parliament
- Spain Deputy PM de Guindos: Spain Jan exports seen growing strongly
- Italy's Five Star Movement leader Grillo commented in the German press that Italy was 'already de facto' outside the euro area
- Sweden Central Bank member Wickman-Parak: SEK currency (Krona) strength was not large enough to affect inflation yet and the cntral bank had no Krona target
- Sweden Central Bank (Riksbank) member Ekholm: Keeping macro-prudential policy separate from monetary policy was important. He reiterated that the cost of using repo rate to influence house prices was too high and inflation below target was a problem
- Turkey Central Bank Gov Basci commented that it would continue to support balanced economic growth prospects for the country and that financial stability was important for balanced growth
- Poland Central Bank member Chonja-Duch (dove) commented that the recent 50bps rate cut should increase GDP growth. The next rate move depended on GDP and CPI and added that another Base Rate cut was possible this year. Central bank forecast showed sustained fall in CPI and could see 1.3-1.4% in April
- Morgan Stanley lowered its 2013 Euro area GDP forecast to -0.7% from -0.5% prev
- Philippines Planning Sec Balisacan commented that the Govt was closely watching PHP currency FX rate and the Govt might review FX rate assumptions
- IEA Monthly Oil Report trimmed its 2013 global demand increase by 20K bpd to 820K bpd and noted that sluggish economy continued to weigh on oil demand growth. IEA commented that it should not underestimate oil supply risks ahead - especially on Venezuela and warned of risks to OPEC supply from Libya, Nigeria due to militant activity. Saudi output was steady at 9.25M bpd in Feb but saw the kingdom ramping up output slowly

Currencies:
- The macro picture still painted limited upside for European currencies as the USD had benefited recently on better US fundamentals. US retail sales data will be in focus and give a snapshot of spending habits into the US automatic spending cuts, which kicked in from the start of the month and the effects from the payroll tax increase
- The JPY moved off multi-year lows ahead of uncertainty some uncertainty ahead of the BOJ nominee votes later this week. Dealers continue to believe there was enough momentum to see Kuroda installed as governor and Iwata and Nakaso to the deputy governor roles

Political/In the Papers:
-(BE) Belgium govt has found €338M for the budget reducing the budget shortfall to €2.46B - De Tijd
-(EU) ECB's Liikanen (Finland): OMT program will not have ex-ante limits, OMT targets can better transmit monetary policy
- IMF's Lipton: Global financial market conditions improved; Economic conditions still subdued
-(IT) Italy PD party chief Bersani: Some of the proposals put forth by the Five Star Movement are unacceptable
- (PT) S&P: Portugal's economy will contract more than previously expected, continue to hamper bank performance
- (ES) Spain Debt Agency (Tesoro) to hold special auction for Thurs, Mar 14th to sell 2029, 2040, and 2041 Bono bonds; Only primary dealers may participate; No issuance target to be announced before the auction
-(UK) PM Cameron said to have ended plan for minimum alcohol price of 45p/unit following pressure from the Treasury - financial press
- (JP) Japan LDP official Sata: Confirms lower house vote on BoJ nominations to occur on Mar 14th - financial press

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- IMF Lipton in Washington
- (CH) Basel Committee meeting on capital rules for banks
- (RU) Russia to sell RUB4.21B in 5-year OFZ bond; Yield guidance seen between 6.21-6.26%
- 06:30 (IS) Bank of Israel Gov Fischer speaks in Herzliya
- 06:30 (DE) Germany to sell Add'l €5.0B in 0.25% 2015 Schatz
- 06:30 (UK) DMO to sell £1.5B in 3.75% 2052 Gilt
- 07:00 (ZA) South Africa Jan Retail Sales M/M: 0.6%e v 1.0% prior; Y/Y: 3.6%e v 2.3% prior
- 07:00 (US) MBA Mortgage Applications: No est v 14.8% prior
- 07:00 (EU) OECD G20 Q4 GDP Q/Q: No est v 0.6% prior
- 07:30 (CL) Chile Central Bank Traders' Survey
- 07:30 (US) Daily Libor Fixing
- 08:00 (UK) Prime Minister's question time in House of Commons
- 08:30 (US) Feb Import Price Index M/M: 0.6%e v 0.6% prior; Y/Y: -0.6%e v -1.3% prior
- 08:30 (US) Feb Advance Retail Sales: 0.5%e v 0.1% prior; Retail Sales Less Autos: 0.5%e v 0.2% prior; Retail Sales Ex Auto & Gas: 0.2%e v 0.2% prior
- 09:00 (HU) Hungary Central Bank Minutes
- 10:00 (US) Jan Business Inventories: 0.5%e v 0.1% prior
- 10:30 (US) Weekly DOE U.S. Crude Oil Inventories
- 10:45 (UK) BOE to buy £1.1B in 7-year to 15-year Gilts
- 11:00 (PT) Portugal PM Coelho in Parliament
- 11:00 (US) Fed to purchase $1.25-1.75B in Notes
- 12:00 (CA) Canada to sell 30 Year Bonds
- 13:00 (US) Treasury to sell $21B in 10-Year Notes Reopening
- 14:00 (US) Feb Monthly Budget Statement: -$205.0Be v -231.7B prior
- 15:00 (AR) Argentina Feb Consumer Price Index M/M: 0.7%e v 1.1% prior; Y/Y: 11.1%e v 11.1% prior
- 15:00 (AR) Argentina Feb Wholesale Price Index M/M: No est v 1.0% prior; Y/Y: No est v 13.2% prior
- 16:00 (NZ) RBNZ Monetary Policy Statement
- 16:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to leave the Official Cash Rate unchanged at 2.50%
- 19:00 (NL) Netherlands Central Bank releases annual report
- 20:30 (AU) Australia Feb Employment Change: +10.0K v +10.4K prior; Unemployment Rate: 5.5%e v 5.4% prior


***Economic Data***
- (FR) France Q4 Final Non-Farm Payrolls Q/Q: -0.3% v -0.2%e
- (FR) France Feb Consumer Price Index M/M: 0.3% v 0.5%e; Y/Y: 1.0% v 1.2%e; CPI Ex Tobacco Index: 124.72 v 124.92e
- (FR) France Feb CPI EU Harmonized M/M: 0.3% v 0.4%e; Y/Y: 1.3%e
- (ES) Spain Feb Consumer Price Index M/M: 0.2% v 0.1%e; Y/Y: 2.7%e
- (ES) Spain Feb CPI EU Harmonized M/M: 0.0%e; Y/Y: 2.8%e
- (ES) Spain Feb CPI Core M/M: 0.0% v -1.6% prior; Y/Y: 2.3% v 2.1%e
- (EU) ECB: €16M borrowed in overnight loan facility vs. €24M prior; €149.6B parked in deposit facility vs. €131.6B prior
- (EU) Euro Zone Jan Industrial Production M/M: -0.4% v -0.1%e; Y/Y: -1.3% v -2.0%e

Fixed Income:
- (IN) India sold total INR120B vs. INR120B indicated in 3-month and 6-month Bills
- (IE) Ireland Debt Agency (NTMA) opened book to sell Mar 2023 bonds; guidance seen +245bps over mid-swaps which would yield 4.20%; Order book approx €7B
- (RU) Russia sold RUB1.89B vs. RUB8.4B indicated in 10-year OFZ bond; Yield: 6.87% v guidance of 6.82-6.87%
- (EU) ECB allotted $0.0M in 7-Day USD Liquidity Tender at fixed 0.66% vs. $25M prior
- (SE) Sweden sold SEK5B in 3-month bills; Yield 0.9589%
- (CH) Switzerland sold total CHF431M in 2022 and 2042 bonds
- (IT) Italy Debt Agency (Tesoro) sold total €5.32B vs. €4.0-5.5B indicated range in 2015 and 2028 BTP bonds
- Sold €3.32B vs. €2.5-3.5B indicated range in 2.75% Dec 2015 BTP; Avg Yield 2.48% v 2.30% prior; Bid-to-cover: 1.28x v 1.37x prior
- Sold €2.0B vs. €1.5-2.0B indicated range in Sept 2028 BTP; Avg Yield 4.90% v 4.805% prior; Bid-to-cover: 1.28x
- (IT) Italy Debt Agency (Tesoro) sold €1.67B vs. €1.0-1.75 indicated in 2017 and 2018 CCUeu (Floaters)
- Sold €1.03B in Floating 2017 CCUeu; avg yield 2.95% v 2.55% prior, bid to cover: 1.5x v 1.39x prior
- Sold €642M in Floating 2018 CCUeu; avg yield 3.03%, bid to cover: 1.84x