Reports » Europe

European stock market, economy and companies update (September 25, 2012)

Contributed by Trade The News

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- EUR/USD trades near the low for the week, equities are mixed as traders await additional clarity related to Spain
- Spain continues to seek details on the ECB's OMT bond buying program. Spain's Deputy PM said the government needs to know how much the ECB would spend on buying sovereign debt.
- Spain sells 3 and 6-month bills at higher yields and lower bid to covers.
- Italian bonds underperform ahead of supply due later in the week. On Wed, Italy is due to sell 6-months BOT, while Tesoro is due to sell 5 and 10-year bonds on Thursday.
- Germany's Debt Agency Chief suggests that Bund yields may begin to rise.
- German automakers underperform the DAX, amid speculation that Daimler might lower production

***Equities***
- Indices: FTSE 100 -0.10% at 5,834, DAX -0.40% at 7,381, CAC-40 -0.50% at 3,480, IBEX-35 -0.10% at 8,134, FTES MIB -0.60% at 15,778, SMI -0.20% at 6,584, S&P 500 Futures flat at 1,451

- Following the mixed open, European equity indices are mostly lower, led by the declines in the French CAC-40 and Italian FTSE MIB. Banks are broadly lower, led by declines in Credit Agricole and Commerzbank. Additionally, resource related companies are declining, tracking the weakness seen in the Chinese equity market.

- Shares of Continental [CON.DE] are lower by more than 3%, as Schaeffler placed 20.8M shares in the company. Daimler [DAI.DE] has declined by more than 1%, amid speculation that the firm may lower production. Lotto24 [L024.DE] has moved higher by over 10%, after disclosing that it received a license to run Web-based state lotteries. Shares of Suedzucker [SZU.DE] have risen by approx. 2%, as the company raised its FY forecast. In France, Areva [AREVA.FR] is higher by over 2%, as the company entered into a long-term uranium contract with EDF. In the UK, Horny [HRN.UK] is lower by more than 30%, after the company issued a profit warning. Hornby is a manufacturer of model railways and NASCAR racing sets. Shares of Standard Chartered [STAN.UK] have underperformed the FTSE 100 on reports that Temasek could be seeking to sell its £6B stake in the company. Daily Mail [DMGT.UK] has traded higher by over 1%, after releasing its trading update. Shares of Telecom Austria [TKA.AT] are lower by more than 4%, after the company lowered its 2012 dividend. In Belgium, small cap pharmaceutical company TiGenix [TIG.BE] has gained over 15%, after receiving EU approval to begin commercial production of its ChondroCelect product. Shares of Valora [VALN.CH] are higher by more than 5%, as the company agreed to acquire the Bitsch/Brekzelkoenig Group.

- FTSE 100 movers (Weir Group +2%, Petrofac +1.7%, Diageo +1.5%, Tate & Lyle +1.3%, Associated British Foods +1.2%; Evraz -3.6%, Standarded Chartered -2.9%, International Consolidated Airlines -1.7%, GKN -1.7%, RBS -1.4%)
- CAC-40 movers (Safran +0.90%, Cap Gemini +0.80%, Technip +0.60%, Pernod Ricard +0.60%, Legrand +0.50%; GDF -5.7%, Credit Agricole -2.7%, Renault -2.2%, Michelin -1.6%, Bouygues -1.6%)
- DAX movers (Adidas +0.90%, Fresenius SE +0.80%, Henkel +0.80%, SAP +0.80%, Bayer +0.60%; Continental -4.2%, Daimler -2.5%, BMW -2.2%, Volkswagen -1.8%, Deutsche Bank -1.6%)
- IBEX-35 movers (Acciona +2%, Tecnicas +1.7%, Inditex +1.4%, Endesa +1.3%, Bankinter +1.2%; Fomento -1.8%, Acerinox -1.5%, Bankia -1.2%, Enagas -1%, Banco Sabadell -0.70%)
- FTSE MIB movers (Tenaris +2.2%, Finmeccanica +0.80%; Fiat -2.8%, Fiat Industrial -1.8%, Mediaset -1.6%, Pirelli -1.6%, Mediobanca -1%)
- SMI movers (Julius Baer .80%, Syngenta +0.40%; Adecco -1.2%, UBS -1.1%, Holcim -1%, Credit Suisse -0.80%)

Speakers:
- EU's Juncker said that the EU needs to make a strategic partnership with Russia. The EU is facing a test of strength.
-BoE's Fisher commented he has confidence that FLS lending scheme will help supply of credit BoE to publish data on the first draw down of the FLS in Dec.
-Australia Shadow Treasurer Joe Hockey said he is in favor longer dated debt, like 30-yr A$ bonds.
-PBoC said price conditions in China are mostly stable. They will keep with prudent monetary policy. They have to closely watch latest stimulus overseas.
-German Chancellor Merkel commented that the German budget deficit is likely to be 0.9% of GDP for 2012, aims for balanced budget by 2016 at the latest. Germany can't decouple from slowing global economy. She would have liked a European court of justice to monitor fiscal pact. The Govt doesn't want to raise taxes, or to add any special wealth tax.
-Poland Central Bank Official Zielinska commented that the Central bank will consider a rate cut at next week's meeting, and a cut would be warranted if the GDP and CPI forecasts are correct.
-Singapore Fin Min Shanmugaratnam said Europe is a wealthy and sophisticated consumer and a very large market.
-German Ind Assoc commented that growth is to slow somewhat in 2013, but don't expect an economic slump.
-Bank of Italy gov Visco said that the EU is facing important changes in banking governance. Italian banks lower leverage has reduced risk.
-Spain Deputy PM Saenz commented that Catalonia is adding a new crisis for Spain. Spain rules out giving Catalonia control of tax revenue. Spain will activate regional liquidity fund this weekend. PM needs to know how much ECB would spend on debt.
-China Vice Foreign Min tells Japan counterpart that China has no tolerance of any violations of Chinese sovereignty. Both China and Japan agree to continue talks on island dispute. He wants Japan to amend errors through concrete action.
Currencies:
- EUR/USD was weaker in the session with some chatter that China was selling near the $1.2950 area, session lows are around $1.2890 as the markets continue to worry about slowing global growth, Spanish debt, Greece and the legality of bond buying. Late in the EU morning there was a second day of reports of a Middle Eastern buyer in the single currency. Support seen back around the 1.28/1.2750 level on the daily. USD/CHF got a little boost during SNB Jordan's comments, nearing resistance of 1.2420. Jordan said that the peg has been effective but the franc is still overvalued. He noted that EUR/CHF at CHF1.20 or 1.21 is still too low. Swissie stayed in a 40 pip range, CHF0.9385-0.9342. EUR/CHF was even less traded in a 10 pip range to CHF1.2103, EUR/GBP was weighed down in the session just off session lows at GBP0.7945, GBP/USD was little changed at $1.6230. There was some talk that the upcoming HSBC dividend was keeping the sterling slightly higher as well as the upcoming UK €3.5B farm subsidy expected to be paid out from the EU.

Political/ In the Papers:
- (EU) ECB, Bundesbank seeking lawyers to check legality of ECB new bond buying program - Bild press; There is a chance the issue could soon be referred to the European Court of Justice.
- (DE) Banks in Germany are believed to have the most exposure to Spain at around $140B - US financial press; Cites data from the BIS. -
(DE) Drugmakers in Germany said to have taken losses on bond holdings related to Greece - German Press
- (GR) IMF's Lagarde: Delays in implementing Greek bailout are expanding the financing shortfall; May downgrade global growth again - financial press
- (GR) There are concerns that Greece will need additional aid in order to finance its budget from 2015 - German Press
- (GR) Greece's Parliamentary Speaker Evangelos Meimarakis has resigned amid probe - FT
- (PT) Portugal govt needs to reach a political agreement, acceptable to the Troika by the Eurogroup meeting on Oct 8th - Economico
- (PT) Additional austerity measures could represent a threat to Portugal's government - Telegraph's Ambrose Evans-Pritchard

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- 06:00 (TR) Turkey to sell Zero Coupon 2013 Bonds and Fixed Rate 2014 Bonds
- 06:30 (US) Daily LIBOR Fixings
- 07:00 (EU) ECB Announces Allotment in 7-Day Term Deposits
- 07:00 (BR) Brazil Sept FGV Construction Costs M/M: 0.4%e v 0.3% prior
- 07:45 (US) Weekly ICSC Chain Store Sales
- 08:00 (HU) Hungary Central Bank Interest Rate Decision: Expected to leave the Base Rate unchanged at 6.75%
- 08:30 (CA) Canada July Retail Sales M/M: No est v -0.4% prior; Retail Sales Less Autos M/M: No est v -0.4% prior
- 08:55 (US) Weekly Redbook Retail Sales
- 09:00 (US) July S&P/ CaseShiller 20 City M/M: No est v +0.94% prior; Y/Y: No est v +0.50% prior; Home Price Index: No est v 142.21 prior
- 09:00 (MX) Mexico July Global Economic Indicator: No est v 3.8% prior
- 09:00 (EU) Weekly ECB Forex Reserves data
- 09:30 (BR) Brazil Aug Current Account: No est v -$3.8B prior; Foreign Direct Investment (FDI): No est v $8.4B prior
- 09:30 (EU) ECB calls for Bids in 3-Month Tender
- 09:45 (UK) BOE to buy £1.0B in 2019-2025 Gilts in reverse Auction
- 10:00 (MX) Weekly Mexico International Reserves:
- 10:00 (US) Sept Richmond Fed Manufacturing: No est v -9 prior
- 10:00 (US) July House Price Index M/M: No est v 0.7% prior
- 11:00 (BR) Brazil to sell I/L 2016, 2018 and 2022 Bonds
- 11:00 (US) Fed to purchase $4.50-5.50N in Notes
- 11:30 (US) Treasury to sell 4-Week Bills
- 12:00 (US) Fed's Plosser speaks on Economic Outlook in Philadelphia
- 13:00 Treasury to sell 2-Year Notes
- 14:00 (CA) Bank of Canada Dep Govr Lane speaks in Calgary
- 15:00 (AR) Argentina Aug Shop Center Sales Y/Y: No est v 7.2% prior; Supermarket Sales Y/Y: No est v 14.5% prior
- 16:30 (US) Weekly API Crude Oil Inventories

***Economic Data***
- (DE) GERMANY OCT GFK CONSUMER CONFIDENCE SURVEY: 5.9 V 5.9E
- (FR) FRANCE SEPT BUSINESS CONFIDENCE INDICATOR: 90 V 89E; PRODUCTION OUTLOOK INDICATOR: -52 V -44E; OWN-COMPANY PRODUCTION OUTLOOK: -6 V -7 PRIOR
- (IT) ITALY SEPT CONSUMER CONFIDENCE: 86.2 V 86.0E
- (SE) SWEDEN AUG PPI M/M: -0.5% V -0.2%E; Y/Y: -1.9% V -1.3%E
- (ZA) SOUTH AFRICA JULY LEADING INDICATOR: 130.4 V 129.4 PRIOR
- (ES) SPAIN AUG PRODUCER PRICES M/M: 1.1% V 0.8% PRIOR; Y/Y: 4.1% V 2.6% PRIOR
- (FI) FINLAND AUG UNEMPLOYMENT RATE: 7.3% V 6.9% PRIOR
- (CH) SWISS AUG UBS CONSUMPTION INDICATOR: 1.03 V 1.48 PRIOR
- (DE) GERMANY JUL REAL CONSTRUCTION ORDERS Y/Y: -1.4%; YTD Y/Y: +4.4%
- (PL) POLAND SEPT CONSUMER CONFIDENCE: -31.6 V -35.1 PRIOR
- (PL) POLAND AUG RETAIL SALES M/M: 0.1% V 0.1%E; Y/Y: 5.8% V 5.5%E
- (PL) POLAND AUG UNEMPLOYMENT RATE: 12.4% V 12.3%E
- (IT) ITALY AUG HOURLY WAGES M/M: 0.1% V 0.0% PRIOR; Y/Y: 1.6% V 1.5% PRIOR
- (UK) AUG BBA LOANS FOR HOUSE PURCHASE: 30.5K V 28.1KE
- (HK) HONG KONG AUG TRADE BALANCE (HKD): -36.0B V -38.8BE
- (JP) JAPAN SEPT SMALL BUSINESS CONFIDENCE: 45.1 V 44.8 PRIOR
- (TH) THAILAND AUG CUSTOMS TRADE BALANCE: -$1.02B V -$1.8B PRIOR

Fixed Income:
- (CH) SWITZERLAND SELLS CHF747.8M IN 3-MONTH BILLS, AVG YIELD -0.221% V -0.221% PRIOR
- (ES) SPAIN DEBT AGENCY (TESORO) SELLS TOTAL €3.98B VS. €3.0-4.0B INDICATED RANGE IN 3-MONTH AND 6-MONTH BILLS
- (HU) Hungary Debt Agency (AKK) sells HUF45B vs. HUF45B indicated in 3-Month Bills; Avg Yield 6.63% v 6.69%; Bid-to-cover: 1.60x v 1.86x prior
- (IT) ITALY DEBT AGENCY (TESORO) SELLS €3.94B VS. €4.0B INDICATED RANGE IN ZERO COUPON MAY 2014 CTZ; AVG YIELD: 2.532% V 3.064% PRIOR; BID-TO-COVER: 1.65X V 1.95X PRIOR
- (IT) ITALY DEBT AGENCY (TESORO) SELLS €1.5B V €750M-1.5B INDICATED IN SEPT 2016 AND 2021 BTPEI;
- (NL) NETHERLANDS DEBT AGENCY (DSTA) SELLS €1.92B V €1.5-2.5B INDICATED IN 2.5% 2033 DSL BONDS; AVG YIELD 2.497% V 2.342% PRIOR
-(UK) Pricing guidance for DMO's planned 2052 index linked syndicated bond 1.5--2.5bps/Gilts
- (ZA) South Africa sells total ZAR2.1B vs. ZAR2.1B indicated in 2023, 2026 and 2048 Bonds