European cash equity markets are mixed ahead of the midway stage (FTSE +1.3%, DAX -0.3%, CAC +0.6%, FTSE MIB +0.2%). Luxury good stocks are among the best performers after strong results from LVMH despite concerns of a slowdown in China. The telecommunication sector was also impacted by earnings with soft numbers from Telenor and KPN providing a weight. In currency space, the Australian Dollar is at the top of the G10 pile having rallied overnight on stronger-than-expected Q4 CPI data. Sterling is also ahead after a rare victory of sorts for UK PM May in the House of Commons after lawmakers voted to give her a mandate to renegotiate the Irish backstop. EU leaders have so far steadfast in their argument that the withdrawal agreement cannot be reopened although Verhofstadt added “there is a possibility to discuss the future relationship”. There has been plenty of data for investors to work with this morning, including Euro Zone confidence indicators which were broadly weaker-than-expected. French Q4 GDP was stronger-than-expected while UK mortgage approvals also beat. Elsewhere, oil prices have advanced with US crude futures and Brent both up around one-percent while spot gold has added +0.1%. Looking ahead, futures are pointing to a slightly higher open on Wall Street while Apple shares are up sharply in premarket after they reported after the bell yesterday. DJIA component Boeing and McDonalds are both due this afternoon plus US ADP employment data (Q4 GDP has been delayed)
Key Headlines/Data:
* European Corporate News:
– LVMH (+5.2%): Q4 revenue rose +9% to €13.7 Bln | “Cautiously confident”
– Novartis (-1.4%): Q4 Operating Profit $3.39 Bln versus $3.44 Bln expected
– Telenor (-2.3%): Missed on earnings
– KPN (-0.7%): Cut guidance
– Santander (-2.0%): Q4 Net Profit €2.07 Bln | FY Profit €7.81 Bln versus €7.83 Bln expected
– Siemens (-1.9%): Q4 Operating Profit €2.07 Bln versus €2.15 Bln expected
* PM enjoys good night as MPs back Brady amendment and reject five out of six others – but EU block renegotiation (ITV):
– Prime Minister Theresa May has enjoyed a good night in the House of Commons as she won the backing of MPs to demand the backstop be dropped from her Brexit deal.
– But the prime minister’s claim that renegotiation “will not be easy” was quickly underlined as EU leaders issued a statement confirming the Withdrawal Agreement is not open for discussion.
* Guy Verhofstadt: Brexit breakthrough depends on future relationship (Politico):
– Asked about the status of the deal following Tuesday night’s House of Commons vote, the European Parliament’s Brexit coordinator Guy Verhofstadt said Wednesday he doesn’t think there’s room to reopen the pact, but “there is a possibility to discuss the future relationship.”
* UK Brexit Minister Barclays said they are exploring a number of options to the backstop, including a time limit.
* According to an EU source, UK PM May and EU Council President Tusk will speak by phone later today.
* French GDP Data (Q4 P):
– GDP Q/Q +0.3% versus + 0.2% expected, previous +0.3%
– GDP Y/Y +0.9% versus +0.9% expected, previous +1.4%
* Norwegian Core Retail Sales M/M (Dec) -1.8% versus -0.4% expected, previous +0.9%
* German GFK Consumer Confidence (Feb) 10.8 versus 10.3 expected, previous 10.4
* German Import Price Data (Dec):
– Import Price Index M/M -1.3% versus -0.8% expected, previous -1.0%
– Import Price Index Y/Y +1.6% versus +2.1% expected, previous +3.1%
* French Consumer Spending M/M (Dec) -1.5% versus -0.2% expected, previous -0.3% revised to -0.1%
* Swiss KOF Leading Indicator (Jan) 95.0 versus 97.0 expected, previous 96.3 revised to 96.4
* Spanish Retail Sales Y/Y (Dec) +0.8%, previous +1.4% revised to +1.1%
* Swedish Consumer Confidence (Jan) 92.0 versus 96.0 expected, previous 96.4 revised to 96.1
* Italian Consumer Confidence (Jan) 114.0 versus 112.6 expected, previous 113.1 revised to 113.2
* Swiss ZEW Survey – Expectations (Jan) -44.0. previous -22.2
* UK Net Consumer Credit (Dec) £0.69 Bln versus £0.80 Bln expected, previous £0.92 Bln revised to £0.96 Bln:
– Mortgage Lending £4.11 Bln versus £3.45 Bln expected, previous £3.45 Bln revised to £3.61 Bln
– Mortgage Approvals 63.79K versus 63.00K expected, previous 63.73K revised to 63.95K
* Euro Zone Confidence Indicators (Jan):
– Consumer Confidence -7.9 versus -7.9 flash/expected
– Business Climate Indicator 0.69 versus 0.75 expected, previous 0.82 revised to 0.86
– Economic Confidence 106.2 versus 106.8 expected, previous 107.3 revised to 107.4
– Services Confidence 11.0 versus 11.1 expected, previous 12.0 revised to 12.2
– Industrial Confidence 0.5 versus 0.5 expected, previous 1.1 revised to 2.3
* German Economy Ministry cut their 2019 growth forecast to +1.0% from +1.8%
