European cash equity markets are little changed ahead of the midway stage having recovered from opening declines (FTSE -0.2%, DAX -0.1%, CAC +0.2%, FTSE MIB 0.0%). Technology stocks are among the worst performers, dragged lower by French payment group Ingenico after they issued a profit warning. Shares in UK lender Metro Bank have also nosedived after they said full-year profits would be below their prior guidance. From a broader perspective, risk sentiment has been dampened by reports that the US administration turned down an offer from China for preparatory trade talks although this was later denied by White House Advisor Kudlow. As such, core European bonds began the session on the front foot but have since turned lower while Treasuries have also carved out new daily lows. In currency space, the Dollar Index is flat for the day at 96.3 while the New Zealand Dollar is the strongest of the G10’s after Q4 CPI data surprised to the upside overnight. Sterling is also ahead having hit new highs in recent trade (Gbp/Usd > $1.30) amid reports that the Labour party will back the Cooper-Boles Amendment. Elsewhere, comments from the Bank of England’s Broadbent were also relatively mundane as he argued the neutral rate is more likely to rise than fall in the future. On the data front, UK CBI Trends Total Orders slipped to -1 (f/c. 5) from 8 prior while French business confidence held steady at 103 (f/c. 103). Oil prices have seen a modest rebound from yesterday drop with US crude futures and Brent both up around one-percent. Spot gold is flat. Looking ahead, futures are pointing to a slightly higher open on Wall Street with earnings due from DJIA components United technologies and Procter & Gamble. Data wise, we await US house prices, Canadian retail sales and Euro Zone consumer confidence.
Key Headlines/Data:
* European Corporate News:
– ASML (-1.8%): Q4 Net Profit €788 Mln versus €752 Mln expected | Q4 Net Sales €3.1 Bln versus €3.0 Bln expected
– Santander (+0.8%): Sky – Santander to cut 140 UK branches placing 1,270 jobs at risk
– Carrefour (+6.6%): Q4 Sales €22.6 Bln versus €22.6 Bln expected
– Deutsche Bank (+0.8%) | Danske Bank (-1.4%): Federal Reserve investigating Deutsche Bank’s role in Danske Bank money laundering scheme
– Ingenico (-13.2%): Sees FY18 EBITDA below prior guidance
– Metro Bank (-29.7%): Sees FY18 underlying pretax profit £50 Mln versus £59 Mln expected
– Burberry (+1.1%): Same Store Q3 sales +1.0%
* French Business Confidence (Jan) 103 versus 103 expected, previous 104 revised to 103:
– Manufacturing Confidence 103 versus 103 expected, previous 103
* UK Trade Minister Fox said there is a very real possibility of a no-deal Brexit. He also said he would not bet on an extension of Article 50.
* @JamesCrisp6 (Brussels Correspondent -Telegraph): Source told me yesterday EU was ready if asked to rework, rather than just renegotiate, the whole political declaration to facilitate a closer relationship. As stands PD allows for Canada or Norway. Of course closer relationship, more obligations (ECJ etc).
* Bank of England’s Broadbent said the neutral rate is more likely to rise than fall in the future. He also said it was puzzling that UK debt is unsustainably high.
* Germany sold €3.2 Bln of a 2024 bond versus €4.0 Bln target:
– Bid to Cover: 1.2, previous 1.5
– Yield: -0.29%, previous -0.22%
* @steve_hawkes (Deputy Political Editor, The Sun) – Labour has told second referendum campaigners it is backing the Cooper-Boles Amendment
* UK CBI Trends – Total Orders (Jan) -1 versus 5 expected, previous 8
