European cash equity markets are little changed ahead of the midway stage having pulled back from opening highs (FTSE -0.1%, DAX +0.2%, CAC 0.0%, FTSE MIB +0.2%). Media stocks are among the best performers, led higher by French media conglomerate Vivendi who rallied post earnings. Shares in AstraZeneca have fallen sharply meanwhile after disappointing results in their lung cancer drug trial. In the bond markets, the improvement in overall risk has weighed on UK and German paper with little reaction shown to a fairly mundane data slate – Euro Zone CPI was unrevised from the flash prints while Italian industrial orders were on the soft side. We did also hear from ECB President Mario Draghi who noted that they had recently seen a loss in growth momentum and uncertainties surrounding the medium-term outlook have increased. Turning to currencies, Sterling has found some support with Gbp/Usd just about holding above $1.28 as we write as reports continue to suggest the threshold of 48 letters to trigger a confidence vote in PM May has not been reached. May did say this morning that the will appoint a new Brexit Minister in the coming days. Elsewhere in FX, the Japanese Yen has been boosted by safe-haven flows while the Antipodeans have unperformed on US-China trade tensions. In commodity space, we have seen gains in oil prices with US crude futures and Brent adding over two-percent at the highs while spot gold is up +0.2%. Looking ahead, futures are pointing to a lower open on Wall Street with US industrial production and Canadian manufacturing sales due for release. We also expect possible comments from the ECB’s Weidmann and Chicago Fed President Evans.
Key Headlines/Data:
* European Corporate News:
– Vivendi (+4.5%): Q3 sales €3.38 Bln versus €3.32 Bln expected
– AstraZeneca (-2.9%): Lung cancer drug disappointed in trials
– ABN Amro (-3.3%): Increased mid-term financial goals – to increase dividend pay-out from 50%
* Brexit Headlines:
– UK PM May said she has not appointed a new Brexit Minister yet but will do so in the coming days
– @adampayne26 (Business Insider Report) The ERG believes Graham Brady now has 48 letters, an ERG source tells me
– @christopherhope (Chief Political Correspondent and Assistant Editor, The Daily Telegraph) – NEW Brexiteer sources: the threshold of 48 letters of no confidence in Theresa May will be passed today. They are expecting a no confidence vote in the PM on Tuesday . . . But friends of Sir Graham Brady, the 1922 committee, suggest that the threshold has NOT yet been breached yet. One says: “Nobody has told him.” This suggests some Tory MPs are saying they will put in letters – and are not doing so. No surprise of course.
– @bbclaurak (Political Editor, BBC) – Gove is NOT resigning – source close to him says ‘Michael is staying at Defra. He thinks it is important to continue working with Cabinet colleagues to ensure the best outcome for the country’
– @ShippersUnbound (Political Editor, Sunday Times) – Gove, Fox, Grayling, Mordaunt and Leadsom have agreed collectively to stay and will work together “to get this in a better place” says a vg source. “Resigning and joining a rebellion is not going to help anything”.
* EU Vice President Dombrovskis said the Italian draft 2019 budget significantly deviates from their commitment. He also accused the Italian government of openly challenging the rules.
* German Wholesale Price Data (Oct):
– Wholesale Price Index M/M +0.3% versus +0.2% expected, previous +0.4%
– Wholesale Price Index Y/Y +4.0%, previous +3.5%
* ECB President Mario Draghi:
– We have recently seen a loss in growth momentum.
– The slowdown has raised questions about the strength of the growth outlook and, in turn, about whether the ongoing convergence of inflation towards our objective will be sustained
– Uncertainties surrounding the medium-term outlook have increased
– When the latest round of projections is available at our next meeting in December, we will be better placed to make a full assessment of the risks to growth and inflation.
* Italian Industrial Orders/Sales Data (Sep):
– Industrial Orders M/M -2.9%, previous +4.9%
– Industrial Orders Y/Y -0.9%, previous +0.9% revised to +0.8%
– Industrial Sales M/M 0.0%, previous +1.2% revised to +1.3%
– Industrial Sales Y/Y +3.9%, previous +3.2%
* Euro Zone CPI Data (Oct F):
– CPI Y/Y +2.2% versus +2.2% flash/expected
– Core CPI Y/Y +1.1% versus +1.1% flash/expected
* Italian Trade Balance (Sep) €1.27 Bln versus €2.87 Bln expected, previous €2.56 Bln revised to €2.49 Bln
* Italian CPI Data (Oct F):
– CPI M/M 0.0% versus -0.4% flash/expected
– CPI Y/Y +1.6% versus +1.6% flash/expected
– CPI EU Harmonized M/M +0.2% versus +0.2% flash/expected
– CPI EU Harmonized Y/Y +1.7% versus +1.7% flash/expected
