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European Market Update: Data Sets Up Increased Expectations Of ECB Rate

By Trade The NewsMarket OverviewApr 23, 2013 07:56AM ET
European Market Update: Data Sets Up Increased Expectations Of ECB Rate
By Trade The News   |  Apr 23, 2013 07:56AM ET
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Disappointing German PMI data sets up increased expectations of an ECB rate cut


China Apr HSBC Flash PMI Manufacturing come in below expectations at 50.5 v 51.5e; points to tepid second-quarter recovery.

S&P: Japan's credit quality hinges on bold growth strategy; still sees over 1/3 chance of a sovereign downgrade due to uncertainty on govt's plans for growth

EU Commission ready to give Spain extra 2 years to meet deficit targets to 2016.

Major European PMI data mixed; France better than expectations while Germany disappoints; data sets up increased expectations of an ECB rate cut; stocks supported on view.

Spain bill auction results solid, sells €3.02B vs. €2.0-3.0B target at lower borrowing costs.

Risk aversion sentiment pushes German 10-year Bund Yield below 1.20% for fresh 2013 low.

Italy 10-year Govt Yield dips below 4.00% for first time since Nov 2010.

Italy President Napolitano to begin consultations on forming government today.

Economic Data

(SG) Singapore Mar CPI M/M: -0.5% v -0.3%e; Y/Y: 3.5% v 3.6%e

(JP) Japan Apr Small Business Confidence: 49.4 v v 49.7 prior

(CH) Swiss Mar Trade Balance (CHF): 1.9BB v 1.8Be; Real Exports real M/M: +5.1% v -0.7% prior; Real Imports M/M: +2.0% v -5.0% prior

(FI) Finland Mar Unemployment Rate: 9.0% v 8.8%e

(TH) Thailand Mar Customs Trade Balance: -$0.9B v -$2.0Be; Customs Exports Y/Y: 4.6% v 2.3%e; Customs Imports Y/Y: -11.5% v -8.7%e

(FR) France Apr Business Confidence: 88 v 89e; Production Outlook Indicator: -49 v -43e; Own-Company Production Outlook: -3 v -4e v 0 (flat); Business Survey Overall Demand: -22 v -18 prior

(FR) France Apr Preliminary PMI Manufacturing: 44.4 v 44.1e; PMI Services: 44.1 v 42.0e

(ZA) South Africa Feb Leading Indicator: 133.3 v 132.2 prior

(EU) ECB: €0.0 borrowed in overnight loan facility vs. €51.0M prior; €108.2B parked in deposit facility vs. €105.6B prior

(DE) Germany Apr Advanced PMI Manufacturing: 47.9 v 49.0e; PMI Services: 49.2 v 51.0e (first contraction since Nov in Services)

(NL) Netherlands Feb Consumer Spending Y/Y: -2.2% v -2.3% prior

(SE) Sweden Mar Unemployment Rate: 8.8% v 8.5%e; Unemployment Rate Seasonally Adj: 8.4% v 8.2%e

(IT) Italy Q1 Industrial Production -0.2% q/q

(EU) Euro Zone Apr Advanced PMI Manufacturing: 46.5 v 46.7e; PMI Services: 46.6 v 46.5e; PMI Composite: 46.5 v 46.5e

(TW) Taiwan Mar Industrial Production Y/Y: -3.3% v +1.8%e; Commercial Sales Y/Y: % v +1.0%e

(IT) Italy Mar Consumer Confidence: 86.3 v 85.0e

(PL) Poland Mar Retail Sales M/M: 16.8% v 17.0%e; Y/Y: 0.1% v 0.3%e

(PL) Poland Mar Unemployment Rate: 14.3% v 14.4%e

(ES) Bank of Spain (BOS) monthly Bulletin: Forecasts Q1 GDP -0.5% q/q

(UK) Mar Public Finances (PSNCR): £31.3B v £18.0Be; PSNB ex Interventions: £15.1B v £15.5Be; Public Sector Net Borrowing: £16.7B v £13.8Be

(ES) Spain Q1 House Price Index Q/Q: -0.8 v -2.2% prior; Y/Y: -7.7% v -9.8% prior

(IT) Italy Mar Non-EU Trade Balance: €2.6B v €0.7B prior

(IC) Iceland Mar Wage Index M/M: 1.3% v 2.3% prior; Y/Y: 5.5% v 5.2% prior

Fixed Income

(UK) DMO increases 2013-13 Gilt Sales to £155.7B from £151.0B prior.

(IN) India sold total INR100B vs. INR100B indicated in 3-month and 6-month Bills.

(DE) Denmark sold total DKK4.09B in 2016 and 2023 Bonds.

(ES) Spain Debt Agency (Tesoro) sold total €3.02B vs. €2.0-3.0B indicated range in 3-Month and 9-Month Bills.

Sold €855M in 3-month Bills; Avg Yield: 0.120% v 0.285% prior; Bid-to-cover: 3.76x v 3.3x prior; Max Yield: 0.150% v 0.340% prior.

Sold €2.156B in 9-month Bills; Avg Yield: 0.787% v 1.007% prior; Bid-to-cover: 2.37x v 2.4x prior; Max Yield: 0.825% v 1.060% prior.

(CH) Switzerland sold CHF754M in 3-Month Bills; Avg Yield: -0.111% v -0.111% prior.

(EU) ECB allotted €110.4B in 8-Day Main Refinancing Tender at fixed 0.75% vs €116Be

(HU) Hungary Debt Agency (AKK) sold HUF50B vs. HUF50B indicated in 3-Months Bills; Avg Yield: 4.26% v 4.34% prior; Bid-to-cover: 1.71x v 1.99x prior.



Indices: FTSE 100 +0.90% at 6,334, DAX +0.50% at 7,513, CAC-40 +1.5% at 3,706, IBEX-35 +1.4% at 8,142, FTSE MIB +1% at 16,178, SMI +1.3% at 7,712, S&P 500 Futures -0.10% at 1,555.

Following the release of better than expected PMI data from France, European equity markets moved to session highs. However, markets have since pared gains on weaker than expected PMI data out of Germany. Disappointing Chinese PMI has also weighed on markets. In terms of European earnings, Arm Holdings, Safran and TomTom have risen after reporting quarterly results above expectations. KPN has moved lower on weaker than expected results. European banks are broadly higher, led by shares of BNP and Santander. Resource related firms are mixed, as copper prices have traded at more than 1-year lows. Companies seen reporting results during the U.S .morning include Dupont and Xerox. Apple is due to report its results after the U.S. equity close.

UK movers [ARM Holdings +7.5% (Q1 results above ests), Premier Foods +2% (reaffirmed forecast), Associated British Foods +1.5% (H1 sales above ests)]

Germany movers [Aixtron +5% (tracking gains in Vecco); Telefonica Deutschland -3% (broker commentary), Freenet -3% (broker commentary), Continental -0.50% (tracking declines in Michelin)]

France [STMicroelectronics +5% (Q1 margins rose), Safran +2.5% (Q1 sales above ests, raised FY guidance), Schneider Electric +2%(reaffirmed forecast), EADS +1% (broker commentary); Biomerieux -3.5% (Q1 sales declined y/y), Michelin -2% (Q1 sales declined y/y)]

Switzerland movers [Richemont +5% (FY13 outlook), Swatch +1.5% (tracking gains in Richemont)]

Italy movers [Fiat +1.7% (broker commentary); Brunello Cucinelli -1.7% (share placement)]

Spain movers [Santander +1.8% (broker commentary)]

The Netherlands movers [TomTom +4% (Q1 sales above ests); Imtech -6.5%(additional write downs), KPN -1.5% (Q1 results below ests)]
European Market Update: Data Sets Up Increased Expectations Of ECB Rate

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European Market Update: Data Sets Up Increased Expectations Of ECB Rate

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