(EU) European Market Update: European financials pare some of Friday's losses, while peripheral spreads continue to widen (Trade the News)
Monday, May 17, 2010
(EU) European Market Update: European financials pare some of Friday's losses, while peripheral spreads continue to widen
***Economic Data*** - (SI) Singapore Apr Electronic Exports Y/Y: 19.3% v 28.9%e; Non-Oil Domestic Exports M/M: 2.1% V 0.0%e; Y/Y: 29.4%v 25.2%e - (EU) Eurozone April EU-25 New Car Registration -7.4% v 10.8% prior - (FI) Finland April PPI M/M: 0.5% v 0.3% prior; Y/Y: 3.6% v 2.9% prior - (CZ) Czech Republic April Industrial PPI M/M: 0.7% v 0.2%e; Y/Y: 0.4% V -0.2%e - (TU) Turkey February Unemployment Rate: 14.4% v 14.9%e - (TU) Turkey April Consumer Confidence: 85.8 v 84.7 prior - (SW) Sweden March Industrial Production M/M: 4.1% v 4.0% prior; Y/Y: 6.7% v 6.7% prior - (NE) Netherlands March Trade Balance: â‚¬4.6B v â‚¬3.9B prior - (DE) Denmark April Wholesale Prices M/M: 1.3% v 1.4% prior; Y/Y: 5.1% v 4.1% prior - (CZ) Czech Republic March Current Account: -CZK12.6B v CZK10.4Be
- Equities: European equities opened the session lower, following the sharp losses seen on Friday's session. However, as the session has progressed, equities have recovered driven by a rebound in banks. Additionally, gains in shares of BP have supported the FTSE 100. However, equities in Greece on the ASE are continuing to trade in negative territory on the widening in the country's credit default swaps and losses in banks. As of , the FTSE 100 is higher by 1%, DAX +1.2%, CAC-40 +0.50%, IBEX +1.6% and FTSE MIB +1.3%.
- In Individual Stocks:Hochtief [HOT.GE] Reported Net income at â‚¬34.1M, slightly above estimates of â‚¬32M, whereas revenues, at â‚¬4.4B came in below estimates of â‚¬4.6B. Group reiterated 2010 outlook of net profit 'exceeding slightly' the FY09 figure and of a flat revenue y/y. Guided FY10 new orders and order backlog down slightly y/y || Mitie Group [MTO.UK] Reported FY09 Net profit and revenues of Â£66M and Â£1.72B respectively both above a year-ago amounts of Â£54.9M and Â£1.52B respectively. Group expects to deliver sustainable profitable growth || GLG Partners [GLG] was acquired by UK's Man Group [EMG.UK] for $1.6B. The acquisition is seen as accretive to Man's earnings in FY12. || Prudential [PRU.UK]: issued 11 for 2 rights priced at 104p/shr to fund Asia insurer buyout (39.3% discount). The rights offering was for 13.9B shares. The rights offering was expected to be launched on May 17th. Furthermore, group expected Asian momentum to continue and conditions in the UK and US to stabilize.
- Speakers: In his address to the country Italy PM Berlusconi requested that citizens accept public spending cuts. PM called for responsibility if cut to public wages or severance pay were announced. Separate report from Public Administration Minister Brunetta said Italy would cut public spending and pass measures to postpone retirements to address fiscal crisis concerns in Europe. *** Swiss Fin Min Merz stated that the US DOJ would reopen tax evasion lawsuit against UBS if Parliament declined a treaty with US authorities. ***Austria's Fin Min Proell said that the EU finance minister meeting would focus on fiscal state of Spain and Portugal and called for both nations to consolidate their budgets. *** EU Energy Commissioner Oettinger said that the worst of the threat to the Euro is in the past but that EU nations still needed to demonstrate ability to cut their debt *** Greece PM Papandreou called for structural changes in Europe and for more market transparency and trading regulations. Stated that Greece was a good investment *** (UK) Chancellor Osborne reiterated that deficit reduction was most urgent for Britain and that scale of government debt posed a threat to UK economic recovery. Stated that public and markets have completely lost confidence in UK Govt economic forecasts. Warned that the Labour Party had planned some taxes which the new govt might not be able to avoid. *** ECB's Tumpel-Gugerell said that wider deficits were needed in several cases, though needs to be brought down. Said tha in future can count on EMU price stability and that Euro will weather fiscal storm. *** ECB's Nowotny remains unconcerned over euro levels and is more interested in quarterly forex developments. Stated that bond purchases would not have net monetary effects.
- Currencies/Fixed income: The bearish sentiment continues to pressure the Euro against the US dollar as various comments throughout the weekend from UBS analysts which saw the Euro declining to $1.10 in 2011 and Barclay's analysts see currency falling at $1.20 in a mere 3 months. Meanwhile different statements came from EU chiefs that appeased the risk for Euro appetite from currency traders. Van Rompuy and Rehn stated that the Eurozone took credible and strong measures to avoid contagion and called for markets to understand the seriousness of these measures and the determination to protect Europe. Meanwhile Stark said that bond buying is merely buying time and Trichet emphasized the seriousness of the situation, reminding investors of austerity measures weighing upon the EU countries. Investors will continue to look in the actions and word changes of EU policy makers. EUR/CHF traded ahead of the 1.4000 level after briefly trading below last week at 1.3990 as the SNB tries to absorb the weight of euro supply currently dominating the market action. SNB's Hildebrand will make comments later today. His statements will probably reiterate the Bank's policy which tries to limit the strength of CHF versus Euro. GBP rebounded after a clearer UK and good sovereign account buying interest. Cable traded at 1.4253 in Asia and 1.4340 at the opening of the EU session. However market risk appetite remains meek in Europe among the sovereign concerns and UK's own deficit problems. EUR/CHF traded ahead of the 1.4000 level after briefly trading below last week at 1.3990 as the SNB tried to absorb the weight of euro supply currently dominating the market action. SNB's Hildebrand will make comments later today. His statements will probably reiterate the Bank's policy which tries to limit the strength of CHF versus Euro. GBP rebounded after a clearer UK and good sovereign account buying interest. Cable traded at 1.4253 in Asia and 1.4340 at the opening of the EU session. However market risk appetite remains meek in Europe among the sovereign concerns and UK's own deficit problems. EUR/USD steadied after the Asian rout at 1.2237, its softest levels since April 2006. JPY gave back a portion of overnight gains as profit taking picked up across EUR, GBP and the higher yielding currencies. USD/JPY was boosted to early European highs of 92.24 after it based at 91.77 in Asia. Meanwhile EUR/JPY was choppy after the low Asian close at 112.47 and reached a high of 113.55 but continued swinging between 112.80 and 113.40 during the session.
- Geopolitical: European airports reported status updates due to more volvanic ash activity. Eurocontrol expected flights today across Europe at 28,000, which is estimated at 1,000 fewer flights than normal. UK's busiest airports, Heathrow and Gatwick, resumed flights with restricstions. The volcanic ash drifted as far as Amsterdam cloasing Schipol, Rotterday and Groningen airports. Note the ash clouds are affeceting British Airways, who's union discussions are to take place tomorrow to avoid strikes, though resolution could occur as earlier as today. *** Labour plans to appoint new leader by summer. According to an article in the New York Times, former Foreign Secretay Miliband is seen as an early favourite. ***Both Foreign Minister Hague and US Secretay of State Clinton acknowledged the strong ties between the two on various topics including sanctions agains Iran during the minister's visit to the US. ***Chancellor Osbornes to look into various cut backs prior to the emergency budget Tuesday, 22nd of June with Â£6B cuts in public spending to be released next Monday the 24th of May. The newly established Office of Budget and Responsibility to review every spending decisions from the start of the year. In a news conference today, Chancellor Osborne commented that deficit reduction was most urgent for Britain. ***France Labour Ministry announced pension reform tax on high earnings. It reiterated no plans to raise income and social security taxes.
***Looking ahead*** - 8:00 (PD) Poland March Current Account: -â‚¬600Me v â‚¬106M prior; Trade Balance: â‚¬457Me v â‚¬248M prior; Imports â‚¬11.0Be v â‚¬9.4B prior; Exports â‚¬10.6Be v â‚¬9.1B prior - 8:30 (CL) Chile Arpil Copper Exports: No est v $3.3B prior - 8:30 (US) May Empire Manufacturing: 30.0e v 31.86 prior - 9:00 (US) March Net Long-term TIC Flows: $50Be v $47.1B prior; Total Net TIC flows: No est v $9.0B -9:00 (PD) Poland April Budget Level: No est v -5.9B prior; Budget Level YDT: No est v -22.7B prior; Budget Performance YTD: No est v 43.5% prior - (AR) Argentina Consumer Confidence: No est v 43.45 prior - (PE) Peru March GDP Y/Y: 6.8%e v 5.9% prior - (PE) Peru April Unemployment: 9.0%e v 9.2% prior 5:30: EU's Barnier speaks on financial regulatory reform - 9:00 Germany's Econ Min Bruederle speaks on Investment Guarantees - 11:00 EU Finance Ministers meet in Brussels - 12:00 (SZ) SNB's Hildebrand speaks in Zurich - 13:00 (SP) Bank of Spain's Deputy Governor speaks in Barcelona
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