European cash equity markets are mostly lower ahead of the midway stage although declines are relatively modest (FTSE -0.2%, DAX -0.3%, CAC -0.2%, FTSE MIB -0.2%). Heavy losses in the basic resource sector have provided a weight on the broader market after US President Trump said overnight he plans to move ahead with raising tariffs on Chinese goods. Travel & leisure stocks have also underperformed, led lower by Thomas Cook after they warned on profit and suspended their final dividend for the year. Weakness in equity space have pushed core European bonds higher meanwhile and they likely derived further support from weaker-than-expected French and Italian consumer confidence data. Italian bonds have steading with the ten-year yield flat at 3.26% amid ongoing speculation that could lower next year’s deficit target. Turning to currencies, the Dollar Index has edged up +0.2% to 97.2 with mixed performance against its G10 rivals. The Antipodean currencies are at the top of the pile while Sterling is the weakest after UK Conservative lawmaker Fallon said it may be possible to delay the date that they UK leaves the EU to try and renegotiate a better deal. The pound was unresponsive to UK CBI data despite retailing reported sales surging to 19 (f/c. 10) from 5 previously. Elsewhere, oil prices are little changed on the day with Brent crude futures paring an earlier move above $61/barrel. Spot gold us up +0.15%. Looking ahead, futures are pointing to a slightly lower open on Wall Street with underperformance seen in Apple and the broader technology sector. On the data front, we await US house prices and consumer confidence plus possible comments from Fed Vice Chair Clarida at 13:00 GMT.
Key Headlines/Data:
* European Corporate News:
– Dialog Semiconductor (-1.5%) | STMicroelectronics (-1.1%): Apple suppliers under pressure after Trump suggested a 10% tariffs on iPhones and laptops imported from China
– Thomas Cook (-23.8%): YTD underlying profit £250 Mln versus £280 Mln expected | Dividend suspended
– Credit Suisse (-1.8%): Morgan Stanley cut to ‘equalweight’ from ‘overweight’
– BBVA (-2.9%): Downgraded at Morgan Stanley
* Messagerro: The Italian 2019 deficit target will almost certainly be 2.2%; PM Conte expects €3.6 Bln in budget cuts:
– Italian Finance Committee Head said there is neither a political or economic reason to change the structure of the 2019 budget
– EU’s Moscovici said the EU Commission are still in dialogue with Italy regarding the budget and it will be discussed at the G20
* UK Conservative lawmaker Fallon said it may be possible to delay the date that they UK leaves the EU to try and renegotiate a better deal
* Swedish Trade Union Confederation warned the Riksbank that plans to raise rates as early as next month could hurt the labour market and urged a lot of caution.
* Spokesman for the Chinese Foreign Ministry said Chinese President Xi and US President Trump have agreed to reach mutually beneficial agreements, referring to a phone call on November 1st.
* French Consumer Confidence (Nov) 92 versus 94 expected, previous 95
* Swedish Trade Balance (Oct) -8.4 Bln, previous 1.4 Bln revised to 2.3 Bln
* Swedish PPI Data (Oct):
– PPI M/M -0.3%, previous +1.2%
– PPI Y/Y +9.5%, previous +10.1%
* Italian Consumer Confidence (Nov) 114.8 versus 115.9 expected, previous 116.6 revised to 116.5
– Manufacturing Confidence 104.4 versus 104.1 expected, previous 104.9
* UK CBI Retailing Reported Sales (Nov) 19 versus 10 expected, previous 5
* Kuwait Oil Minister said it is too early to talk about OPEC+ production cuts.
