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TradeTheNews.com EU Market Update: Quiet start to week ahead of key economic releases
TradeTheNews.com EU Market Update: Quiet start to week ahead of key economic releases
Mon, 22 Jul 2013 5:34 AM EST
- Japan PM Abe ruling coalition (LDP, Komeito parties) won an absolute majority in the upper-house and could make it; could make it easier for economic reforms to get passed
- China's interest rate action from Friday impact will be more symbolic than anything else (banks were already allowed to price loans up to 30% below the benchmark level
- Portugal's main political parties failed to reach a "national salvation pact"; President rules out snap elections
- G20 placed on growth over austerity but this has been a theme of the G20
- Taiwan Jun export orders dropped (-3.5% v +0.6%e)
- (JP) Japan Jun Supermarket Sales Y/Y: +2.7% v -1.2% prior
- (CH) SNB Sight Deposits for Week Ended July 19th (CHF): 322.4B v 323.8B prior
- (CH) Swiss Jun M3 Money Supply Y/Y: 11.6% v 9.7% prior
- (EU) ECB €18M borrowed in overnight loan facility vs. €17M prior; €76.4B parked in deposit facility vs. €82.9B prior - Daily Eurosystem Liquidity Conditions
- (NL) Netherlands Jun House Price Index M/M: -0.6% v -1.2% prior; Y/Y: -9.6 v -8.2% prior
- (TW) Taiwan Jun Export Orders Y/Y: -3.5% v +0.6%e
- (HK) Honk Kong Jun CPI Composite Index Y/Y: 4.1% v 4.1%e
- (EU) Eurozone Q1 Govt Debt to GDP Ratio: 92.2% vs. 90.6% q/q
- (DE) Germany sold €2.43B in 12-month BuBills; Avg Yield: 0.0513% v 0.1229% prior; Bid-to-cover: 1.9x v 1.88x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
FTSE 100 +0.10% at 6,638, DAX +0.30% at 8,353, CAC-40 +0.3% at 3,936, IBEX-35 +0.6% at 7,989, FTSE MIB +0.70% at 16,233, SMI +0.3% at 7,951, S&P 500 Futures +0.1% at 1,691
- Equity markets in Europe are broadly higher, led by Portugal's PSI, as the country's President rejected calls for snap elections. Gains have been seen across the European banking sector, led by Portuguese financials. Shares of UBS and Julius Baer have also outperformed on better than expected financial results. Resource related firms are mostly higher on analyst commentary and the gains in commodity prices. In terms of European corporate earnings, notable companies which have reported on today' session include UBS, Julius Baer and Philips. US companies due to report later today include Halliburton and McDonalds.
- UK Movers [Polymetal +4.5% (broker commentary), Fresnillo +3.5% (broker commentary), Randgold +3% (broker commentary), Mothercare +3% (speculation related to Royal baby), African Barrick Gold +2.5% (broker commentary), Essar Energy +2% (broker commentary); Hibu -20% (speculation related to debt restructuring)]
- Germany movers [IVG +25% (update on talks with lenders), Air Berlin +2% (labor agreement), RWE +1.5% (speculation related to additional cost cuts), Aixtron +1.5% (Q2 results from Philips); Prosieben -3% (broker commentary), Hochtief -2% (tracked declines in Leighton Holdings), SAP -1% (to revise CEO structure)]
- Switzerland movers [Julius Baer +5% (H1 results rose y/y), UBS +3% (guided Q2 results higher y/y)
- Italy movers [Risanamento +8% (offer for certain assets), Saipem +2.6% (broker commentary)]
- The Netherlands movers [Philips +3% (Q2 results above ests)]
- Belgium movers [Mobistar -30% (cut FY outlook, suspended dividend)]
- Italy's Regional Relations Min Del Rio said the gov't was close to canceling the property tax, but the timing has yet to be decided. One of the main sticking points is whether the cancel the IMU payments due in Dec or only in 2014.
- ZEW economic research institute Survey: 1.2000 floor likely to be scrapped within two years
- SNB President Jordan: No intention to change or scrap the EUR/CHF floor at 1.20000; Would maintain policy for as long as necessary
- Japan PM Abe commented after the LDP election victory in the upper house that it must speed up policymaking even further and could not return to old LDP ways or otherwise lose trust. He reiterates to seek on concentrating on getting Japan out of deflation. He also stress to realize bold tax measures to spur CAPEX in Autumn Parliament session
- S&P commented on Japan: Coalition victory in upper house elections has no direct impact on sovereign ratings
- China Vice premier Zhang reiterated view to maintain prudent monetary policy and fine tune measure when necessary. China was committed to economic restructuring and quality of growth. Must ensure to complete economic development tasks in 2013
- China FX regulator SAFE commented that it was not seen any signs of capital flight. It noted that the market believed yuan currency rate was currently balanced. H2 capital flows will be in balance, weaker yuan rise expectations to hurt inflows.
- Australia Treasurer Bowen: there are some headwinds in global economy. To release economic statement before election and include PNG costing in it.
- India drops plans to issue soveriegn bonds abroad; To raise offshore debt via select companies
- Syria govt and opposition are said to be ready to hold peace talks
Quiet start to the week in FX.
- The EUR/USD was slightly firmer but dealers noted that upside could be limited upon political uncertainty in Portugal after the government was unable to reach an agreement on the salvation deal but the coalition was still expected to remain intact and continue with its bailout reforms. The 1.3200 area remained key technical resistance for the time being
- The USD/JPY hovered around the parity level as-expected LDP Upper House election victory
The Portugal 10-year gov't yield lower in session by almost 25bps to 6.57% after Portugal President Cavaco Silva stated on Sunday that Govt had parliamentary majority and should remain in office despite the failure to sign any national salvation agreement
Political/In the Papers:
-(EU) ECB's Weidmann (Germany): not yet time for Europe to exit from its expansive monetary policy; global central banks will probably exit easy monetary policy at different times; Germany's economic growth will be strong in Q2, a little more moderate in Q3.
- (EU) ECB's Constancio: Comfortable with market behavior with regard to ECB guidance; not expecting the US Fed exit from stimulus to create problems; Communication would be adjusted before increase in rates
-(EU) ECB's Noyer: Market reaction seen following the discussions of the US QE 'taper' were unjustified; ECB guidance will be in conjunction with forecast, forecast is for low rates for a certain period
- (G20) Communiqu: nations agree to focus on strengthening growth and creating jobs
-(EU) Euro zone residential property prices decline to 7-yr lows - FT; Ireland house prices at lowest level since 2011, Spain since 2003.
-(PT) Portugal opposition Socialist party leader Seguro: Social democrats party blocked the salvation agreement; socialists are fighting to preserve pensions; Talks will not continue with the coalition at this time; major obstacles included the €4.7B in planned spending cuts.
- (PT) Portugal President Cavaco Silva: Rejecting calls for snap elections.
-(UK) Economists expect that Q2 GDP grew by about 0.6% v 0.3% prior - London Telegraph
- (UK) According to Ernst & Young, Q2 profit warnings by UK firms declined - London Telegraph
- (US) According to US financial press poll, economists have lowered their view for Q2 annualized GDP growth to about 1.5% from 1.9% prior
-(CN) China PBOC advisor Song: central bank unlikely to make dramatic policy changes, will focus on fine tuning; removing lending rate floor this week was a "very cautious" policy step toward loosening; Removing the lending rate floor is a "reflection that policy makers are a bit concerned about growth."
-(CN) China Fin Min Lou Jiwei: Clarifies he still expects China 2013 GDP at 7.5% - financial press
-(CN) China banks end-June net forex purchase position at CNY27.4T, -CNY41.2B m/m - financial press; June net forex sales CNY41.2B (First net sale since Nov); The net fx sales could indicate that China had capital outflows in June, as fx purchases are sometimes used to sterilize inflows.
-(CN) PBoC reform on lending rate may have great impact on city banks; may drive bank margin down; banks could have to raise up to $100B in the next 2 years - Chinascope
-(CN) China is expected to issue program to curb environment pollution by last July or early August - Chinese press
- (CN) Some analysts believe the trend which China's GDP deflator could suggest the economy is moving towards deflation - Telegraph's Ambrose Evan's Pritchard
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (AR) Argentina July Consumer Confidence Index: No est v 44.49 prior
- (MX) Mexico Banamex Survey of Economists
- (BR) Brazil Govt to announce budget cuts
- 06:00 (IL) Israel to sell Bonds
- 06:30 (US) Daily Libor Fixing
- 07:30 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (RO) Romania to sell RON300M in Bonds
- 08:30 (US) Jun Chicago Fed Nat Activity Index: 0.0e v -0.3 prior
- 08:50 (FR) France Debt Agency to sell combined €7.7B in 3-month, 6-month and 12-month Bills
- 09:00 (DE) German Chancellor Merkel holds Election Rally in Baltic Town of Zingst
- 09:00 (MX) Mexico May Retail Sales: 1.0%e v 2.5% prior
- 09:30 (BR) Brazil Jun Tax Collections (BRL): 86.1Be v 87.9B prior
- 09:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 09:30 (EU) ECB announces prior settlements in SMP program to offset bond purchases
- 10:00 (US) Jun Existing Home Sale: 5.25Me v 5.18M prior
- 11:00 (DE) German Chancellor Merkel holds Election Rally on Baltic Island of Usedom
- 11:00 (EU) EU meets Foreign Ministers from 6 Eastern Countries
- 11:00 (US) Fed to purchase $1.25-1.75B in Notes
- 11:30 (US) Treasury to sell combined $55B in 3-Month and 6-Month Bills
- 13:00 (DE) German Chancellor holds Election Rally on Baltic Island of Ruegen
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