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European Closing Report 12 Apr 2018

European cash equity markets are mostly higher at the closing bell (FTSE -0.1%, DAX +1.0%, CAC +0.6%).

European Closing Report (by Sigma Squawk)

Investors have welcomed the less inflammatory remarks from US President Trump related to Syria – he tweeted this afternoon that an attack could happen “very soon or not so soon at all”. 

US Defence Secretary Mattis later added that they are committed to ending the Syrian civil war through the Geneva process. Wall Street has also opened in the green as earnings season gets underway; Blackrock and Delta Air Lines are both trading higher after their respective corporate reports. 

In fixed, core EU bonds are in the red with Gilts nursing heavier losses than their UK counterparts while Treasuries are also trading lower. Macro releases may have provided some support with weaker than expected readings for Euro Zone industrial production and US import prices. 

Turning to currencies, the Dollar Index is higher as yesterday’s slightly hawkish FOMC minutes continue to provide support. Perceived safe-haven currencies (Japanese Yen and Swiss Franc) are at the bottom of the G10 pile while Sterling is the outperformer although analysts have struggled to identify a catalyst. 

BoE’s Broadbent did say earlier on that further rate increases are likely to be required while noting that wage growth appears to be picking up. Elsewhere, oil prices have retreated from their recent run higher with US crude futures losing over one-percent at the lows. 

Gold is also down around one-percent. Still to come today, a $13.0 Bln US 30-year bond auction plus possible comments from the ECB’s Weidmann, BoE Governor Carney and Minneapolis Fed President Kashkari.

Key Headlines/Data:

* Bank of England MPC member Broadbent said further rate increases are likely to be required although they still believe that are likely to be limited and gradual. He noted that wage growth appears to be picking up

* French CPI Data (Mar F):
– CPI M/M +1.0% versus +1.0% expected, previous +1.0%
– CPI Y/Y +1.6% versus +1.5% expected, previous +1.5% revised to +1.2%
– CPI EU Harmonized M/M +1.1% versus +1.1% expected, previous +1.1%
– CPI EU Harmonized Y/Y +1.7% versus +1.7% expected, previous +1.7% revised to +1.3%

* Swedish CPI Data (Mar):
– CPI M/M +0.3% versus +0.3% expected, previous +0.7%
– CPI Y/Y +1.9% versus +2.0% expected, previous +1.6%

* Norges Bank Governor Olsen said the first rate increase is drawing close, and repeated this view that rates will rise after the summer.

* German Economy Minister said the economic upswing continues but at a slightly weaker pace. He did warn that trade disputes pose a significant risk.

* UK Brexit Minister Davis said the UK will not pay their Brexit bill until a trade deal is clear.

* Bank of England Bank Liabilities Survey – 2018 Q1:
– UK banks and building societies reported that their retail deposit funding volumes had decreased significantly in the three months to mid-March 2018
– Lenders reported that the supply of deposits from households fell significantly

* European Union has extended the sanctions on Iran by 12-months.

* Greek Unemployment Rate (Jan) 20.6%, previous 20.8%

* Euro Zone Industrial Production (Feb):
– Industrial Production M/M -0.8% versus +0.1% expected, previous -1.0% revised to -0.6%
– Industrial Production Y/Y +2.9% versus +3.5% expected, previous +2.7% revised to +3.7%

* OPEC Monthly Oil Report:
– World oil demand growth for 2017 was adjusted higher by around 30 tb/d to 1.65 mb/d, mainly to account for up-to-date data in both OECD and non-OECD regions. Total world oil demand is now pegged at 97.07 mb/d for the year.
– Similarly, world oil demand growth in 2018 was revised higher by 30 tb/d, compared to last month’s report, to now stand at 1.63 mb/d.
– Non-OPEC supply for 2017 was revised up by 0.03 mb/d, mainly due to updated Canadian production data,to now show growth of 0.9 mb/d for the year.
– For 2018, non-OPEC supply was also revised up by 0.08 mb/d from the previous month’s assessment, to now show growth of 1.71 mb/d year-on-year.

* @realDonaldTrump – Never said when an attack on Syria would take place. Could be very soon or not so soon at all! In any event, the United States, under my Administration, has done a great job of ridding the region of ISIS. Where is our “Thank you America?”

* US President Trump said Chinese President Xi signalled in his recent speech they would take down a lot of trade barriers, maybe even all of them. He added that there is no timeline for NAFTA but negotiations are going great and they are pretty close to a deal. He also said a meeting with North Korea leader Kim is bein set up now.

* ECB Minutes:
– Overall, while the increased confidence called for a gradual adjustment in the Governing Council’s communication, prudence, patience and persistence with regard to monetary policy remained warranted
– The broadly agreed conclusion was that the evidence for a sustained rise in inflation towards levels consistent with the Governing Council’s inflation aim was still not sufficient.
– It was highlighted that, although the past appreciation of the euro had so far not had a significant negative impact on euro area external demand, developments in foreign exchange markets continued to be a significant source of uncertainty and a risk that needed monitoring.

* ECB’s Coeure said ample monetary policy accommodation remains necessary for inflation to reach levels close to 2% sustainably. He added that larger than expected slack does not mean monetary policy cannot be recalibrated.

* US Initial Jobless Claims (Apr 7) 233K versus 231K expected, previous 242K

* US Import Price Index (Mar):
– Import Price Index M/M 0.0% versus +0.2% expected, previous +0.4% revised to +0.3%
– Import Price Index Y/Y +3.6% versus +3.8% expected, previous +3.5%

* Canadian Teranet/National Bank House Price Data (Mar):
– House Price Index M/M 0.0%, previous -0.1%
– House Price Index Y/Y +6.6%, previous +7.5%

* US Senator Cornyn said they have hear encouraging words on NAFTA, adding that Trump told lawmakers a deal was close.

* US Defence Secretary Mattis said they are committed to ending the Syrian civil war through the Geneva process. He also said they would notify Congress before any attack in Syria.

 
 
 
 
 
 
 







 


 






 
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