European Midday/US Morning Report 03 Apr 2018

European cash equity markets returned from the Easter break on the defensive with bourses firmly in the red ahead of the midway stage (FTSE -0.5%, DAX -1.1%, CAC -0.6%).


There is an element of ‘catch up’ at play with investors reacting to the trade war concerns that dogged Wall Street yesterday. 

Technology stocks are the worst performers meanwhile, with notable declines in chip-makers amid reports that Apple are considering making their own chips for use in the Mac computer. 

In fixed, core EU bonds have seen some minor divergence with German 10-year bonds slightly lower and the 10-year Gilt slightly higher; Treasuries are in the red. Data releases failed to prompt much reaction as Euro Zone manufacturing PMI was unrevised from the flash reading of 56.6. UK manufacturing PMI did beat however at 55.1 (f/c. 54.8) which has nudged Sterling higher in current space. 

Elsewhere in FX, the Dollar Index is nursing a minor decline while the New Zealand Dollar and Norwegian Krone are the best performers among the G10’s. The Japanese Yen is the laggard meanwhile after some conflicting remarks from BoJ Governor Kuroda who suggested that discussions had taken place about unwinding stimulus.

 Oil prices are ahead, albeit slightly, with gains of around 0.5% while gold has nudged lower. Looking ahead, futures are pointing to a higher open on Wall Street amid a quiet data slate. Minneapolis Fed President Kashkari is expected to speak at 14:30 BST while US auto sales are also due.

Key Headlines/Data:

* European Corporate News:
– Sky (+1.4%): 21st Century Fox have offered to sell Sky News to Disney to overcome regulatory concerns of its proposed takeover of Sky.
– Barclays (-0.5%): Completed the separation of its investment and retail banks | Agreed to pay $2.0 Bln to the DoJ over the sale of MBS.
– Dialog Semiconductor (-3.4%) | STMicroelectronics (-3.4%) | Infineon (-2.8%): Apple plans to replace Intel chips in Macs with its own
– Air France (-5.2%): Expects to run 75% of its flights during strike.
– Sodexo (-5.1%): Lowered outlook for 2018

* Finland Central Bank Governor Erkki Liikanen is deemed as a fit successor to President Mario Draghi and has emerged as a compromise candidate, according to the FT.

* German Retail Sales (Feb):
– Retail Sales M/M +0.7% versus +0.7% expected, previous -1.0%
– Retail Sales Y/Y +2.4%, previous +2.3%

* Bank of Japan Governor Kuroda said they are discussing their options for how to exit the stimulus program but it is still too soon to communicate any details.

* Swedish Manufacturing PMI (Mar) 55.9 versus 57.0 expected, previous 59.9

* Norway Manufacturing PMI (Mar) 55.0 versus 56.2 expected, previous 57.5 revised to 57.0

* Spanish Unemployment Change (Mar) -47.7K versus -47.5K expected, previous -6.3K

* Swiss Retail Sales Y/Y (Feb) -0.2%, previous -1.4% revised to -0.4%

* Spanish Manufacturing PMI (Mar) 54.8 versus 54.7 expected, previous 56.0

* Swiss Manufacturing PMI (Mar) 60.3 versus 64.3 expected, previous 65.5

* Italian Manufacturing PMI (Mar) 55.1 versus 55.6 expected, previous 55.8

* French Manufacturing PMI (Mar F) 53.7 versus 53.6 flash/expected, previous 55.9

* German Manufacturing PMI (Mar F) 58.2 versus 58.4 flash/expected, previous 60.6

* Euro Zone Manufacturing PMI (Mar F) 56.6 versus 56.6 flash/expected, previous 58.6

* UK Manufacturing PMI (Mar) 55.1 versus 54.8 expected, previous 55.2 revised to 55.0

* Greek PM Tsipras said Greece are to hold election in the Autumn of 2019.

* Russian Energy Minister Novak said he has discussed with his Saudi counterpart al-Falih their long-term cooperation past the current OPEC deal

European Midday/US Morning Report (by Sigma Squawk)





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