Reports » Europe

European stock market, economy and companies update (March 22, 2013)

Contributed by Trade The News

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

***Equities***
Indices FTSE 100 +0.20% at at 6,385, DAX -0.30% at 7,909, CAC-40 -0.50% at 3,756, IBEX-35 -0.60% at 8,298, FTSE MIB +0.10% at 15,956, SMI -0.40% at 7,730, S&P 500 Futures flat at 1,539

- European equity markets are mixed, amid continued uncertainty related to Cyprus and weaker than expected IFO data out of Germany. European banks are mostly lower, although shares of Deutsche Bank have outperformed. Resource related firms are trading mixed. Shares of BP have gained over 2% on the firm's buyback announcement, while metals firms are mostly lower.

- UK movers [Phoenix Group +5% (FY12 profits rose y/y, raised dividend), BP +2% (buyback); Mulberry -15% (profit warning), Homeserve -8% (profit warning), Burberry -3.5% (tracking declines in shares of Mulberry)]
- Germany movers [Gagfah +4% (new CEO), E.ON +0.50% (broker commentary);MAN SE -4% (Volkswagen squeeze out proposal), Hochtief -3% (tracks weakness in shares of Leighton Holdings]

Speakers:
- Russia Fin Min Siluanov confirmed he had ended talks with Cyprus counterpart and now was awaiting Troika report on Cyprus before deciding its participation. Russia was not interested in Cyprus proposal to invest in gas reserves and did not discuss providing new loan to Cyprus
- Troika said to reject Cyprus wealth fund plan as being 'too vague'; insists that bank deposit levy is one of only viable option
- German Fin Min Schaeuble commented that he did not know if a Eurogroup meeting on Cyprus would occur this weekend and did not know in advance if Cyprus can deliver results
Cyprus lawmaker Mavrides: Parliament must pass bills on banks and capital controls to save the country from economic collapse. He saw bank deposit losses are a last option for accounts over €100K. He added that debates on bank and solidarity fund were 'tense'
- Cyprus Central Bank official: Parliament to decide today whether country should stay in or out or Euro
- German Chancellor Merkel reiterated to her Parliament that debt sustainability and bank restructuring must by key elements of Cyprus deal. Reports circulated that she was annoyed Cyprus hasn't contacted Troika for days
- German CDU lawmaker Kauder commented that he was not convinced of Cyprus 'plan B' as the country had no solution for debt sustainability. Cyprus was playing with fire and must present a workable proposal. Germany could not accept Cyprus using pension funds to fill financing gap
- ECB's Kranjec: Slovenia can still avoid bailout, very sure they will not get into situation like Cyprus
- German IFO Economists commented that the German economy remained on track in a challenging environment after the release of weaker IFO Survey for March
- S&P Sovereign analyst Kraemer commented that the UK was pursuing 'pretty good' policy mix and that the UK economy was hurt more by external demand than by cuts. The recent presentation of the UK budget contained few surprises. On Europe he noted that there was a risk of complacency in the Euro zone but Spain has stayed the course
- Luxembourg Fin Min Frieden commented that EU still insisted on original Cyprus sum and the country's proposals lacked details. He added that was important that Russia made a contribution to Cyprus.
- OECD report on China: Raises both GDP and inflation forecasts for 2013 and 2014

Currencies:
- The FX price action in Europe was in a pause mode as the situation in Cyprus continued to unfold. The EUR/USD continued to hold above its 200-day mvg avg of 1.2877 despite a softer German IFO reading for March.
The JPY continued to encounter more profit-taking after weeks of speculation what actions the new BOJ Governor Kuroda would take. The USD/JPY dipped to 94.20 while EUR/JPY cross slumped to 121.50 area following Kuroda's introductory press conference on Thursday in which the content wasn't already expected by market participants.

Political/In the Papers:
Cyprus:
-(CY) EMU official indicates that Cyprus would have to wind down their largest banks and wipe out all depositors if it does not reach an agreement on a bank levy in short order - financial press; Sees possible resolution involving a 30-40% haircut on uninsured deposits, possibly levy a 12-13% charge on large deposits and the nationalization of pension funds.
-(CY) Cyprus Parliament may discuss new proposals Friday; Parliament may hold a vote on the new proposal Friday at 08:00GMT (04:00ET)
-(CY) Germany CSU's Michelbach: Plan B in Cyprus raises many questions, appears to be short by €1B; Notes the plan for Cyprus solidarity fund would only add to its debt
-(CY) Cyprus Central Bank chief confirms the bank restructuring legislation under review in parliament; Bank bill would allow for banks to reopen on Tuesday and review continued funding assistance from the ECB (ELA); alternatives to bill would be the closure of the Cyprus banks
-(CY) Troika said to have approved the latest Cyprus banking legislation proposals which ultimately includes controls on capital outflows - financial press
-Cyprus Popular Bank [CPB.CY]: Puts limitations on ATM withdrawals, restricts withdrawals to €260/day - press
-(CY) ECB is said to be calling for some form of deposit levy as part of the bailout, fast overhaul of the Cyprus banks is necessary - financial press
-(CY) Turkey will challenge Cyprus claims on natural gas reserves if they are pledged in bailout- financial press
-(EU) Slovenia could be the next country in the Eurozone to experience a crisis- ABC; Nomura: Slovenia will need a banking recap of around €4B

Europe:
-(FR) INSEE (French Stats Agency): Forecasts Q1 GDP at 0.0% (flat) with Q2 growth of +0.1% q/q; Says Q3 GDP has to accelerate to 0.2% and Q4 to 0.3% to achieve 0.1% 2013 GDP estimated by OECD.
-(ES) Spain Budget Min Montoro: Spanish regions have gained credibility - financial press; It would be helpful for regions to reduce deficits if Europe softens Spain's deficit path.
-(ES) Spain budget Min Montoro: Spain deposit tax to raise less than €3B- Expansion
-(UK) UK DMO's Stheeman: Requesting feedback on possible super long GILT issuance; Sees supply of index linked GILTs for FY13-14 as lower y/y
-(UK) UK Institute for Fiscal Studies think tank (IFS): UK will borrow £70B more in 2014/15 than hoped

US:
-(US) Senate passes its version of continuing resolution providing stop gap funding for US govt through the end of the fiscal year on Sept 30
-(US) House approves continuing resolution stop gap spending bill (as expected)

Far East:
-(JP) Japan PM Abe: To consider latest employment data on plans for consumption tax increase. (note: tax to rise to 8% from 5% in Apr 2014)
- JGB: (JP) Some analysts believe that debt monetization concerns could rise if the BoJ starts to buy longer dated JGBs - Telegraphs Ambrose Evans-Pritchard

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (EU) EU Foreign Ministers hold Meeting in Ireland
- (FI) Finland PM Katainen hosts European Leaders for Lapland Retreat
- (CN) OECD Economic Survey on China
- (RU) EU's Barroso in Russia
- (PT) Portugal releases Year-to-Date Budget Report
- (CO) Colombia Central Bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 25bps to 3.50%
- (PE) Peru Central Bank Quarterly Inflation Report
- (CY) Cyprus Govt Statement on crisis expected
- 07:00 (EU) European Medicines Agency Releases Drug Approvals
- 07:00 (IC) Iceland to sell Bonds
- 07:00 (EU) ECB announces 3-Year LTRO Repayment
- 07:00 (CL) Chile Feb PPI M/M: No est v 0.8% prior
- 07:10 (UK) DMO to sell combined £4.0B in 1-month, 3-month and 6-month Bills
- 07:30 (IN) India Forex Reserves w/e Mar 15th: No est v $290.4B prior
- 07:30 (US) Daily US Libor Fixing
- 07:45 (US) Fed's Raskin
- 08:00 (BR) Brazil Mar IBGE CPI IPCA-15 M/M: No est v 0.7% prior
- 08:30 (TR) Turkey Mar Industrial Confidence: No est v 107.5 prior; Capacity Utilization: No est v 72.2% prior
- 09:00 (PT) Bank of Portugal releases Monthly Economic Indicators Report
- 09:30 (BR) Brazil Feb Current Account: -$6.0Be v -$11.4B prior; Foreign Direct Investment (FDI): $3.5Be v $3.7B prior
- 09:30 (BR) Brazil Feb Tax Collections (BRL): 80.0Be v 116.1B prior
- 10:00 (BE) Belgium Mar Business Confidence Level: -10.4e v -11.0 prior
- 10:00 (MX) Mexico Feb Unemployment Rate: 5.3%e v 5.4% prior
- 11:00 (MX) Mexico Central Bank Monetary Policy Minutes
- 11:00 (US) Fed to purchase $3.00-3.75B in Notes
- 15:00 (AR) Argentina Jan Economic Activity Index M/M: No est v 0.4% prior; Y/Y: 2.1%e v 1.1% prior
- 15:00 (AR) Argentina Feb Industrial Production M/M: -0.7%e v +0.2% prior; Y/Y: No est v 0.6% prior
- 15:00 (AR) Argentina Q4 Current Account Balance: -$500Me v $1.1B prior
- 17:00 (CO) Colombia Jan Retail Sales Y/Y: 2.8%e v 3.3% prior
- 17:00 (CO) Colombia Jan Industrial Production Y/Y: -0.7%e v -3.0% prior


***Notes/Observations***
- Eurogroup Statement: Eurogroup expects Cyprus to submit new rescue proposal quickly; Troika analysis needed on new proposal; Eurogroup prepared to continue talks after Troika analysis
- Cyprus Fin Min Sarris: Cyprus did not get requested financial support from Russia; plans to return to Cyprus today
- Turkey will challenge Cyprus claims on natural gas reserves if they are pledged in bailout
-S&P downgrade Cyprus 1 notch to CCC from CCC+; Outlook negative
- Italy President Napolitano: Will announce decision on next step in efforts to form a govt on Friday; likely PD's Bersani was until March 26th to try to form govt
- German IFO registers first MoM decline in 5 months as it retraces from 10-month highs

***Economic Data***
- (RU) Russia Narrow Money Supply w/e Mar 18th (RUB): No est v 7.48T prior
- (FR) France Q4 Final Wages Q/Q: 0.2% v 0.2% prelim
- (FR) France Mar Business Confidence Indicator: 90 v 91e; Production Outlook Indicator: -42 v -26e; Own-Company Production Outlook: 0 v 4 prior
- (CZ) Czech Jan Export Price Index Y/Y: -0.5% v -0.7% prior; Import Price Index Y/Y: -1.4% v -0.6% prior
- (EU) ECB: €148M borrowed in overnight loan facility vs. €686M prior; €132.2B parked in deposit facility vs. €130.5B prior
- (NL) Netherlands Jan Consumer Spending Y/Y: -2.3 v -1.0% prior
- (NL) Netherlands Mar Producer Confidence: -4.8 v -3.8e
- (DE) Germany Mar IFO Business Climate: 106.7 v 107.8e; Current Assessment: 109.9 v 110.8e; Expectations Survey: 103.6 v 105.0e
- (NO) Norway Mar Unemployment Rate: 2.7% v 2.6%e
- (PL) Poland Feb Retail Sales M/M: -2.6% v -1.3%e; Y/Y: -0.8% v +0.7%e
- (PL) Poland Feb Unemployment: 14.4% v 14.5%e
- (IC) Iceland Feb Wage Index M/M: 2.3% v 0.3% prior; Y/Y: 5.2% v 5.0% prior

Fixed Income:
- None seen