European Midday/US Morning Report (by Sigma Squawk)
The emerging tit-for-tat approach has spooked investors with basic resources stocks leading European cash equity markets lower (FTSE -0.2%, DAX -0.5%, CAC -0.5%). Core EU bonds have edged higher while Treasuries sit flat in a low volume morning as investors wait on the sidelines ahead of the US jobs report this afternoon.
Moves in currency space have also been relatively muted although we have seen minor underperformance in the Canadian Dollar and New Zealand Dollar. On the data front, German industrial production fell short of expectations while both Euro Zone retail PMI and German construction PMI fell from the prior month.
We also heard from the ECB’s Coeure who said the Governing Council agree that a high level of accommodation is still needed. He noted the recent uptick in inflation but said wage pressures were slow to translate into prices.
Elsewhere, oil prices are in the red but off their worst levels as Russian Energy Minister Novak said he does not see no proposals for a global oil deal extension to H1 2019. Looking ahead, futures are pointing to a lower open on Wall Street where all eyes will be on the US jobs report due at 13:30 BST (08:30 ET). Canadian jobs data is also due alongside IVEY PMI and possible comments from BoE Governor Carney.
* European Corporate News:
– Suez (+1.7%): Upgraded to outperform at Raymond James
– Telecom Italia (+3.0%): State lender CDP buys 5% stake
– Rio Tinto (-1.5%): Cut to neutral from outperform at BNP Paribas
– Danone (-1.4%): Cut to neutral from outperform at BNP Paribas
– Marks & Spencer (-2.7%) | Next (-2.8%): Downgraded at Citi
* German Industrial Production Data (Feb):
– Industrial Production M/M -1.6% versus +0.2% expected, previous -0.1%
– Industrial Production Y/Y +2.6% versus +4.4% expected, previous +5.5%
* French Trade Balance (Feb) -€5.186 Bln versus -€5.313 Bln expected, previous -€5.560 Bln revised to -€5.423 Bln
– Current Account -€2.0 Bln, previous -€1.6 Bln revised to -€2.0 Bln
* Spanish Industrial Production M/M (Feb) +1.5% versus +1.6% expected, previous -2.6% revised to -2.9%
– Industrial Output Y/Y +3.1% versus +3.0% expected, previous +1.2% revised to +0.7%
* German Construction PMI (Mar) 47.0, previous 52.7
* Euro Zone Retail PMI (Mar) 50.1, previous 52.3
* ECB’s Coeure said ECB simulations shows US tariffs would have a significant adverse effect on the global economy.
* Coeure later said the Governing Council agree that a high level of accommodation is still needed. He noted the recent uptick in inflation but said wage pressures were slow to translate into prices.
* Norges Bank Governor Olsen repeated that rates will rise after the Summer.
* UK Unit Labor Costs Y/Y (Q4) +2.1%, previous +1.3% revised to +1.4%
* Russian Energy Minister Novak said cooperation between Russian and OPEC could last indefinitely and they could use output cuts again in the future to curb imbalances. He did add he sees no proposals for global oil deal extension to H1 2019.
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