Reports » Europe

European stock market, economy and companies update (October 29, 2012)

Contributed by Trade The News

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Hurricane Sandy closes all US equity markets on Monday and possible into Tuesday
- BoE's Dale warned that the UK economy will weaken after the Q3 pop aided by the Olympics
- Chinese State Researcher: China initiative to cut its Reserve Requirement Ratio (RRR) greatly reduced; CNY currency continued appreciation unlikely
- ECB's Draghi said to have endorsed German Fin Min Schaeuble's idea for a "currency commissioner"
- Troika inspectors said to demand that Greece carries out additional 150 reforms as part of a deal to extend its fiscal adjustment by 2 years
- Japan Sept Retail Sales weaker than expectations ahead of BOJ policy decision
- Spain Sept Retail Sales weaker than expected as VAT increase is implemented

***Equities***
- Indices: FTSE 100 -0.5% at 5,780, DAX -0.4% at 7,200, CAC-40 -0.8% at 3,409, IBEX-35 -0.3% at 7,752, FTSE MIB -1.5% at 15,357, SMI -0.2% at 6,588, S&P 500 Futures -0.5% at 1,401

- European bourses were under pressure on Monday with insurers in the limelight as Hurricane Sandy barreled today's towards the US Eastern seaboard. Peripheral Europe was again in focus as Greece appeared no closer to an agreement with its international creditors.

Individual Stocks:
- F&C Asset Management [FCAM.UK] reported Sept AUM £96.8B v £98.2B q/q
- Pearson Plc [PSON.UK] Confirmed press speculation that it would combine Penguin and Random House in JV with Bertelsmann
- Daily Mail&General [DMGT.UK] Confirmed in talks on the future of Northcliffe media
- Aegis Group [AGS.UK] acquired Hablar in Japan; financial terms not disclosed
- Linde AG [LIN.DE] Reports Q3 Net €313M v €290M y/y, EBIT €494M, Rev €3.89B v €3.44B y/y. Affirms FY13 Op profit €4B. To launch new savings program for 2013-16, targets gross cuts of €750-900M
- GEA Group [G1A.DE] Reports Net €89.4M; EBITDA €163M; Rev €1.45B v €1.1B y/y
- Volkswagen [VOW3.DE] Audi unit reaffirmed that it was on track to achieve FY12 targets. The unit reaffirmed to sell 1.4M vehicles in 2012 with Op profit flat y/y while revenues seen higher y/y
- ThyssenKrupp [TKA.DE] Outokumpu bid for Italian steel mill expected to be given approval from EU regulators in coming weeks
- TNT Express [TNTE.NL] reported Q3 Net €9.0M v €26Me, Rev €1.81B v €1.8Be. it noted that the planned takeover by UPS still expected to close early next year
- Assa Abloy [ASSAB.SE] reported Q3 Net SEK1.3B v SEK1.3Be, EBIT SEK1.93B v SEK1.9Be, Rev SEK11.6B v SEK11.7Be. Maintained its organic growth at a 'good rate'
- Assicurazioni Generali SpA [G.IT[ Bank of Italy Saccomanni commented that the central bank had options for sale of its stake due to potential conflict of interest as BOI began oversight of insurers

Speakers:
- Senior directors of Spanish banks said to be preparing to make public statement calling for the Spanish Govt to seek a rescue package
- France Fin Min Moscovici stated that it was not possible to cut labor costs immediately and that cutting the deficit was more important at this time
- Spain Employment Min Banez commented that it planned to limit payments for early retirement in bid to save €10B but conceded that exact initiatives had not been set yet
- BoE Dale added to his earlier comments that it made no sense to increase QE if its was having less impact on the economy
- ECB's Nowotny commented that bursting of Spain's real estate bubble not necessarily bad and viewed as part of a corrective phase
- Eurogroup president spokesperson confirms that EU Ministers will hold conference call on Wed Oct 31st to discuss Greece
- Hungary Chief IMF negotiator Varga commented that EU and IMF were currently assessing the country's budget measures and could decide in Nov about aid discussions. He added that the IMF did take offense to Hungary's anti IMF ad campaign (**Reminder: On Oct 26th Hungary Govt official Origo commented that IMF had no plans to re-start aid talks with Hungary
- (ES) Fitch cuts Spain's Basque Country regional rating to BBB+ from A (one notch cut)
- Greece bank said to will have to meet 9% core Tier 1 capital adequacy requirement in planned recap and also meet at least 6% Core Tier 1 ratio via common equity and the rest via Coco's
- India Fin Min Chidambaram commented that the Govt accepted the Kelkar panel recommendations and thus would take up fiscal consolidation plan in action to cut deficit. He added that the Govt was committed to bring economy to high growth track. He forecasted FY14 fiscal deficit to GDP at 4.8% vs. 5.3% achievable in current fiscal year. He did note that the FY13 ratio of 5.1% in FY13 was seen as 'challenging'. He was confident of raising INR300B in FY13 sale of stakes in State-run companies

Currencies:
- European markets opened with a risk-off tone which provided a slightly firm tone for both the USD and JPY currencies against its European counterparts. Dealers were a bit jittery ahead of Eurogroup conference call on Greece this Wednesday. Negotiations on Greek new austerity measures and reforms are set to continue until then. Disappointing numbers from Spain highlighted the extent of the Spanish economic contraction, with rising unemployment adding to pressures on the retail sector. Overall the markets began to set into a holding pattern ahead of Tuesday's BoJ policy decision and wait out the effects from Hurricane Sandy that closed the US equity markets for Monday (and possible Tuesday).
- The EUR/USD tested below 1.2890 before stabilizing. Senior directors of Spanish banks were said to be preparing to make public statement calling for the Govt to seek a rescue package seemed to provide an excuse for profit-taking in Euro shorts.
The market consensus for the BOJ is for it to announce an additional ¥10T in its asset purchase target.

Political/ In the Papers:
- ECB's Draghi backs Schaeuble's "currency commissioner" - Spiegel
- US money market funds return to eurozone - FT. US money market funds have increased their exposure to eurozone banks, in the latest sign of returning confidence in the stability of Europe's monetary union. Exposure to eurozone banks of US prime money market funds at the end of September was 16 per cent higher on a dollar basis than a month earlier
- Former Italy PM Berlusconi's rant reflects Italian rifts - FT. Berlusconi's televised rant against Italy's judiciary, the constitution, "hegemonistic" Germany and, worst of all, his scarcely veiled threat to bring down Mario Monti's technocrat government left his close supporters struggling to calm the waters before financial markets were to open on Monday
- Regulators Seek Libor Settlements With 1 or 2 Banks by Year's End- FT
- Germany rattled as taxpayer losses loom in Greece - Telegraph. The EU-IMF Troika of inspectors in Greece has called on European bodies and official creditors to write off a chunk of their loans, opening the way for first taxpayer losses since the sovereign debt crisis began.

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (GR) Euro Working Group (EWG) to meet on Greece
- (DE) Germany Oct CPI Bavaria M/M: No est v -0.2% prior; Y/Y: No est v 2.3% prior
- (DE) Germany Oct CPI Baden Wuerttemberg M/M: No est v 0.2% prior; Y/Y: No est v 1.8% prior
- 06:00 (FR) France President Hollande to meet with heads of World Bank, IMF and WTO on the EU debt crisis
- 06:30 (DE) Germany to sell €3.0B in 12-month BuBills; Avg Yield % v -0.0184% prior; Bid-to-cover: x v 5.1x prior
- 06:30 (BR) Brazil Central Bank Weekly Economists Survey
- 07:00 (ES) Spain PM Rajoy meets Italy PM Monti in Madrid
- 07:00 (BE) Belgium Debt Agency to sell €2.5-3.5B in 2022, 2032 and 2035 OLO Bonds
- 07:30 (US) Daily Libor Fixing
- 08:30 (US) Sept Personal Income: 0.4%e v 0.1% prior; Personal Spending: 0.6%e v 0.5% prior
- 08:30 (US) Sept PCE Deflator M/M: 0.4%e v 0.4% prior; Y/Y: 1.7%e v 1.5% prior
- 08:30 (US) Sept PCE Core M/M: 0.1%e v 0.1% prior; Y/Y: 1.7%e v 1.6% prior
- 09:00 (DE) Germany Oct Preliminary Consumer Price Index M/M: 0.0%e v 0.0% prior; Y/Y: 1.9%e v 2.0% prior
- 09:00 (DE) Germany Oct Preliminary CPI Harmonized M/M: 0.0%e v 0.0% prior; Y/Y: 2.0%e v 2.1% prior
- 09:15 (US) Stock Index electronic close due to weather
- 09:30 (ES) Spain PM Rajoy hosts Italy PM Monti in Madrid
- 10:00 (FR) France Debt Agency (AFT) to sell between €5.6-6.8B in 3-month, 6-month and 12-month bills
- 10:30 (US) Oct Dallas Fed Manufacturing Activity: 0.0e (flat) v -0.9 prior
- 10:30 (EU) ECB calls for bids in 7-Day Main and 3-month Refinancing Tender
- 10:30 (EU) ECB announces weekly settlements in Govt Bond Purchases program
- 10:45 (UK) BOE to buy £1.0B 2015-2019 Gilts in reverse auction
- 11:00 (US) Fed to sell $7.0-8.0B in notes
- 11:30 (IS) Israel Central Bank Interest Rate Decision: Expected to leave the Base Rate unchanged at 2.25%
- 11:30 (US) Treasury to sell combined $60B in 3-month and 6-month Bills
- 12:00 (ES) Bank of Spain (BOS) set to announce Bad bank details
- 13:00 (DE) Former ECB President Trichet speech on Bank's Crisis Policy
- 13:00 (DE) German Chancellor Merkel addresses CDU Rally in Schwerin
- (JP)) Bank of Japan (BOJ) Monetary Policy Meeting: Expected to leave the Target Range unchanged between 0.0-0.1%

***Economic Data***
- (ZA) South Africa Sept Private Sector Credit Y/Y: 9.1% v 8.3%e; M3 Money Supply Y/Y: 7.5% v 8.0%e
- (FI) Finland Oct Business Confidence: -11 v -6e; Consumer Confidence:-1.6 v +3.0e
- (DE) Germany Oct CPI Saxony M/M: 0.1% v 0.2% prior; Y/Y: 2.0% v 2.0% prior
- (ES) Spain Sept Adjusted Real Retail Sales Y/Y; -10.9% v -6.2%e; Real Retail Sales Y/Y: -12.6% v -2.0% prior
- (EU) ECB: €316M borrowed in overnight loan facility €527M prior; €267.0B parked in deposit facility vs. €248.5B prior
- (SE) Sweden Sept Retail Sales M/M: 1.7% v 0.4%e; Y/Y: 4.6% v 2.5%e
- (DE) Germany Oct CPI Brandenburg M/M: 0.1% v 0.2% prior; Y/Y: 1.9% v 1.9% prior
- (UK) Sept Net Consumer Credit: £1.2B v £0.1Be; Net Lending: £ v £0.5Be
- (UK) Sept Mortgage Approvals: 50.0K v 48.7Ke
- (UK) Sept M4 Money Supply M/M: 0.2% v 0.3%e; Y/Y: -3.5 v -4.0% prior; M4 Ex IOFCs 3M Annualized: 7.4% v 5.9%e
- (DE) Germany Oct CPI North Rhine Westphalia M/M: 0.0% v 0.0% prior; Y/Y: 1.9 v 1.9% prior

Fixed Income:
(IT) Italy Debt Agency (Tesoro) sold €8.0B vs. €8.0B indicated in 6-month Bills; Avg Yield 1.347% v 1.503% prior; Bid-to-cover: 1.52x v 1.39x prior