Reports » Europe

European stock market, economy and companies update (March 14, 2013)

Contributed by Trade The News

***Notes/Observations***
- New Zealand central bank leaves Cash Rate unchanged (as expected) but cuts GDP outlook; says strong Kiwi currency is a significant concern
- South Korea Central Bank (BOK) leaves 7-Day Repo Rate unchanged at 2.75% (as expected but was not unanimous); Analysts see rate cut ahead as economy stagnates
- Australia Feb Employment data registers highest monthly increase in a decade; CPI hits 5-month high; Markets respond by re-pricing expectations of another RBA easing, sending Australian equities down by 1%.
- Japan lower house lawmakers endorse Kuroda as next BoJ Gov; Also approve Nakaso and Iwata as BoJ Dep Govs, as expected; Upper House vote on Friday
- China formally elects Xi as president. 3000 delegates and only 1 no vote.
- EU Summit Draft: EU to endorse plans for a structural assessment of member budgets (ie may allow some countries extra time on deficits)
- SNB leaves both Interest Rates and EUR/CHF Cross levels unchanged, as expected
- Norway Central Bank lowers outlook for its Deposit Rate Path and sees the next hike out further than previously anticipated
- Spain sells bonds in special auction at lower yields and strong bid-to-cover; but overall amount below analysts' soft target between €1-2B


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

***Equities***
FTSE 100 +0.20% at 6,496, DAX +0.70% at 8,028, CAC-40 +0.60% at 3,858, IBEX-35 +0.90% at 8,573, FTSE MIB +1% at 15,903, SMI +0.50% at 7,821, S&P 500 Futures +0.20% at 1,552

- European equity markets are mostly higher, tracking the gains in Asian and US markets. Today's gains have been led by the Italian FTSE MIB, as the index underperformed on Wednesday's session. Earlier during the session, the DAX index hit a fresh multi-year high near 8045. European banks are trading mixed. Outperformers include BNP and Santander, while shares of UK banks and Commerzbank have lagged. Resource related firms are mostly lower, despite the gains in oil and copper prices.

- UK movers [Home Retail +15% (SSS above ests), Ocado +12% (talks related to agreement with WM Morrison), Aggreoko +2.5% (supply agreement), William Morrison +1.5% (raised dividend)]
- Germany movers [Lufthansa +3% (guided FY13 op profit higher y/y), K+S +3% (Outlook above ests, short-covering), HeidelbergCement +2% (FY results above ests), Leg Immobilien +1% (broker commentary); SGL Carbon -3% (FY results below ests), Volkswagen -2.5% (reaffirmed FY13 guidance), Wacker Chemie -2% (guided FY13 profits lower y/y)]
- France movers [Altran +2.5% (swung to profit in FY12)]
- Italy movers [Generali +5% (guided FY13 op profit higher y/y), Eni +1.5% (asset sale)]
- Switzerland movers [Bucher +2% (FY results above sts), Holcim +1% (joint venture agreement); Oerlikon -2% (CEO resigned)]

Speakers:
- SNB statement following its rate decision reiterated its view to enforce EUR/CHF floor of 1.2000 with utmost determination and would be ready to take further measures if necessary. CHF currency appreciation would have serious impact on economy and would compromise price stability. It added that it saw no risk to inflation in foreseeable future but downside risks for domestic economy remained considerable
- Norway Central Bank commented in its rate decision that the Key Rate would be kept low longer than previously anticipated with the first hike now seen in spring 2014. Inflation remained low and prospects that it would take longer for inflation to move up to the target level. Economic growth remained solid. NOK currency (krone) in line with Oct forecast
- ECB's Nowotny (Austria) commented that he expected momentum in EMU growth to improve over the course of 2013. He added that changes in monetary policy iwa not appropriate at this stage and would have been inappropriate to cut rates at the March policy meeting. Euro-Zone members' structural problems were improving
- ECB's Demetriades commented that Cyprus was a systemic risk and a bailout agreement needed to be in place by end of March. He added that inflation mid-point of 1.3% in ECB Staff Projections was not too low to require action
- ECB official commented that the Troika had noted that Greece made significant progress in reforms and the Troika would take a short break and return to Athens in early April to continue work as a few issues remained
- ECB Publishes Monthly Report mirrored the ECB press conference.
- Bank of Italy: Tells banks which have recorded a loss in 2012 or have Core Tier 1 Capital below the Central bank target not to pay a dividend
- German Institute IWH raised its 2013 GDP growth forecast to 1.3% from 0.7% prior
- Poland Central Banker Zielinska-Glebocka commented that the Central Bank should act if CPI was not as forecasted
- Greece Fin Min Stournaras commented in the press that it would not alter deadline and terms for banks to meet recapitalization requirements, it was all within the existing legal framework
- RBA's Kent commented that low interest rates were supportive to housing market and expected gradual increase in home building to help support economy over the next few years
- Japan PM Abe: Hyperinflation was not possible under current conditions
- Japan Vice Fin Min Yamaguchi stated that MOF would have to draft a stopgap budget to cover a period of 50 days

Currencies:
- Euro consolidation is move below the 1.30 handle in the session. The ECB monthly report reiterated that ECB policy to remain accommodative
- The JPY currency gradually weakened in the session with USD/JPY edging back to trend lows. All three candidates successfully passed the lower house vote, which will fuel expectations of more BoJ stimulus by early April. The upper house vote will take place on Friday.
- The USD/CHF pair hit a 6-month high when it tested above 0.9550. Analysts noted that SNB deflation concerns to keep CHF currency pressured after the central bank signaled concerns over global growth and deflation becoming more entrenched.
- The SEK currency weakened after the Swedish Feb Unemployment Rate climbed higher. The EUR/SEK cross popped above 8.36 in the session as a result before consolidating its loss

Political/In the Papers:
-(EU) European Commission presents plan to allow airline passengers to claim compensation only after a 5 hours delay (vs. 3 hours now)- El Mundo
-(PT) Portugal will embark upon a European road show over the next week to promote its sovereign debt
-(UK) BoE quarterly bulletin: Treasury likely to gain from Fin Min decision to claim gain from cash transfers
-(UK) BOE's Bailey: have not seen much impact from Moody's rating downgrade of the UK; Have not asked the govt to recapitalize RBS or Lloyds.
- (JP) IMF Deputy Director of Asia/Pacific Jerald Schiff: JPY has declined to long-run avg since middle 2012; Japan requires further easing to reach 2% target; BoJ must purchase longer dated JGBs, equities; Yen could at least temporarily go lower if the government's plan to reflate the economy succeeds.
- (JP) Japan PM Abe's Econ Advisor Hamada: USD/JPY at ¥98-100 is a good level; acceptable for BoJ to purchase 10-yr govt Bonds; JPY not weakening too quickly.

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (EU) Summit of EU heads of state and government in Brussels begins 2-day meeting.
- (CH) Basel Committee meeting on capital rules for banks
- (RO) Romania Jan Current Account: No est v -€5.0B prior
- (SE) Sweden to sell SEK1.0B in 0.25% I/L 2022 Bonds
- 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-Months Bills
- 07:00 (IE) Ireland Feb CPI M/M: No est v -0.5% prior; Y/Y: No est v 1.2% prior
- 07:00 (IE) Ireland Feb CPI EU Harmonized M/M: No est v -0.6% prior; Y/Y: No est v 1.5% prior
- 07:00 (IE) Ireland Jan Trade Balance: First Estimate: No est v €3.0B prior
- 07:00 (IS) Israel Q4 Current Account: No est v $800M prior
- 07:00 (RU) Russia Gold & Forex Reserve w/e Mar 8th (RUB): No est v $523.4B prior
- 07:00 (ZA) South Africa Jan Manufacturing Production M/M: +1.6%e v -2.2% prior; Y/Y: 2.7%e v 2.0% prior
- 07:30 (BR) Brazil Central Bank (COPOM) Monetary Policy Meeting Minutes
- 07:30 (US) Daily Libor Fixing
- 08:00 (BR) Brazil Jan Retail Sales M/M: +0.4%e v -0.5% prior; Y/Y: 5.5%e v 5.0% prior; Broad Retail Sales Y/Y: 8.0%e v 5.0% prior
- 08:30 (US) Q4 Current Account Balance: -$112.5Be v -$107.5B prior
- 08:30 (US) Feb Producer Price Index M/M: 0.7%e v 0.2% prior; Y/Y: 1.8%e v 1.4% prior
- 08:30 (US) Feb PPI Ex Food & Energy M/M: 0.1%e v 0.2% prior; Y/Y: 1.7%e v 1.8% prior
- 08:30 (US) Initial Jobless Claims: 350Ke v 340K prior; Continuing Claims: 3.090Me v 3.094M prior
- 08:30 (US) Weekly Net Export Sales data
- 08:30 (CA) Canada Q4 Capacity Utilization Rate: 80.7%e v 80.9% prior
- 08:30 (CA) Canada Jan New Housing Price Index M/M: 0.1%e v 0.2% prior; Y/Y: 2.3%e v 2.3% prior
- 09:00 (DE) German Fin Min Schaeuble gives keynote speech
- 09:00 (US) Fed's Raskin welcoming remarks in DC
- 09:00 (PL) Poland Jan Current Account: -€1.5Be v -€1.2B prior; Trade Balance: -€423Me v -€1.2B prior; Exports: €11.9Be €10.6B prior; Imports: €12.4Be v €11.9B prior
- 09:00 (PL) Poland Feb M3 Money Supply M/M: +0.5%e v -0.8% prior
- 09:00 (PL) Poland Feb CPI M/M: 0.2%e v 0.1% prior; Y/Y: 1.5%e v 1.7% prior
- 09:45 (US) Weekly Commercial Paper stats
- 10:00 (RO) Romania to sell Up to RON500M in 2014 Bonds
- 10:30 (BR) Brazil to sell 2013, 2015, 2016 and 2018 Bills
- 11:00 (US) Fed to purchase $2.75-3.50B in Notes
- 12:30 (FR) French PM Ayrault speaks at Empire Club
- 13:00 (US) Treasury to sell $13B in 30-Year Bonds Reopening
- 16:30 (US) Fed releases comprehensive capital analysis and review
- 18:00 (CL) Chile Central Bank Interest Rate Decision: expected to leave the Nominal Overnight Rate Target unchanged at 5.00%


***Economic Data***
- (JP) Japan Feb Final Machine Tool Orders Y/Y: -29.8% v -21.5% v prelim
- (IN) India Feb Monthly Wholesale Prices (WPI): 6.8% v 6.6%e
- (RU) Russia Feb YTD Budget Level (RUB): -259.5B v -81.3B priorto Budget Level to GDP Ratio: -2.7% v -1.8% prior
- (FI) Finland Feb CPI M/M: 0.6% v 0.5%e; Y/Y: 1.7% v 1.6% prior
- (FI) Finland Jan Final Retail Sales Volume Y/Y: +1.5 v -0.3% prelim
- (HU) Hungary Jan Final Industrial Production M/M: 2.9% v 2.9% prelim; Y/Y: -1.4% v -1.4% prelim
- (CZ) Czech Jan Retail Sales Y/Y: -0.5% v -2.2%e
- (ES) Spain Jan Adjusted Real Retail Sales Y/Y: -10.2% v -11.1%e; Real Retail Sales Y/Y: -9.0% v -10.2% prior
- (PH) Philippines Central Bank (BSP) leaves Overnight Borrowing Rate unchanged at 3.50%, as expected; Cuts Special Deposit Account Rate (SDA) by 50bps to 2.50%
- (EU) ECB: €197M borrowed in overnight loan facility vs. €16M prior; €112.9B parked in deposit facility vs. €149.6B prior
- (CH) SNB left the 3-Month Libor Target Rate range unchanged between 0.00-0.25% and maintained the floor in EUR/CHF at 1.2000, both as expected
- (NL) Netherlands Jan Trade Balance: €4.0B v €3.3B prior
- (NL) Netherlands Jan Retail Sales Y/Y: -0.5% v -4.1% prior
- (SE) Sweden Feb Unemployment Rate: 8.5% v 8.4%e; Unemployment Rate Seasonally Adj: 8.2% v 8.1%e
- (HK) Hong Kong Q4 Industrial Production Y/Y: +1.3% v -0.1% prior
- (HK) Hong Kong Q4 Producer Price Y/Y: -1.1% v -1.4% prior
- (NO) Norway Central Bank (Norges) left its Deposit Rate unchanged at 1.50%, as expected but lowered the Rate Path Outlook
- (CZ) Czech Jan Current Account: (CZK): 6.0B v 10.0Be
- (ZA) South Africa Jan Gold Production Y/Y: -8.1% v -21.2% prior; Mining Production Y/Y: +7.3% v -4.2%e
- (EU) Euro Zone Q4 Employment Q/Q: -0.3% v -0.1% prior; Y/Y: -0.8% v -0.6% prior
- (GR) Greece Q4 Unemployment Rate: 26.0% v 24.8% prior

Fixed Income:
- (ES) Spain Debt Agency (Tesoro) sold total €803M of 2029, 2040 and 2041 bonds in special auction
- Sold €134M in 6% Jan 2029 bonds; Avg Yield: 5.224% v 5.787% prior, bid-to-cover 4.1x v 2.02x prior; Maximum Yield 5.258% v 5.822% prior; Tail 3.4bps v 3.5bps prior
- Sold €304M in 4.9% 2040 Bono bond; Avg yield 5.434% v 5.893% prior, bid-to-cover 2.4x v 2.09x prior, Max Yield 5.445% v 5.928% prior; Tail 1.1bps
- Sold €365M in 4.70% July 2041 Bono bond; Avg Yield 5.432% v 5.696% prior; Bid-to-cover: 2.1x v 2.00x prior; Maximum Yield 5.454% v 5.705% prior; Tail 2.2bps v 0.9bps prior