European cash equity markets are mostly lower ahead of the midway stage (FTSE -0.5%, DAX 0.0%, CAC -0.4%, FTSE MIB -0.6%). Bank stocks are among the worst performers, dragged lower by HSBC who reported lower-than-expected full-year profits before the open. This has also prompted underperformance in the FTSE 100 while the German DAX has been underpinned by Wirecard shares that have surged for a second day after the German government banned short selling in its shares. In fixed, core European bonds are ahead having scaled new session highs after soft Italian industrial orders/sales data which also pushed BTP’s lower. Bunds and Gilts have since eased back from their best levels after mixed UK labour market data and German ZEW. For the record, the UK economy added +167K jobs in December (f/c. 152K) while average earnings ex. bonus rose +3.4% YoY (f/c. +3.85%). Turning to currencies, the Dollar Index has edged up +0.1% to 96.9 while Eur/Usd and Gbp/Usd both sit flat for the day. The Antipodeans are the weakest among the G10’s while the Swedish Krona shot to the top of the pile after CPI data surprised to the upside. Elsewhere, oil prices are mixed with US crude futures up +0.6% while Brent has lost -0.6%. Spot gold is up +0.2%. Looking ahead, futures are pointing to a slightly lower open on Wall Street with earnings due from DJIA component Walmart. On the data front, we await the NAHB housing index plus possible comments from Cleveland Fed President Mester and ECB Chief Economist Praet.
Key Headlines/Data:
* European Corporate News:
– HSBC (-3.9%): FY18 Adj. Pretax Profit $19.9 Bln versus $21.41 Bln expected
– BHP (-1.0%): H1 Underlying Profit $3.73 Bln versus $4.37 Bln expected
– Wirecard (+4.7%): German government has banned short selling in shares of Wirecard
– Heidelberg Cement (+3.4%): Q4 Revenue €4.7 Bln versus €4.4 Bln expected
– Volkswagen (-0.8%): Wins appealing German court against diesel car customers
* EU Official warned Greece is at risk of not receiving some debt relief money in April after failing to implement agreed reforms.
* Swiss Trade Balance (Jan) 3.043 Bln, previous 1.897 Bln revised to 1.962 Bln
* Swedish CPI Data (Jan):
– CPI M/M -1.0% versus -0.7% expected, previous +0.4%
– CPI Y/Y +1.9% versus +2.2% expected, previous +2.0%
– CPIF M/M -1.0% versus -0.7% expected, previous +0.4%
– CPIF Y/Y +2.0% versus +2.3% expected, previous +2.2%
* Italian Industrial Orders/Sales Data (Dec):
– Industrial Orders M/M -1.8%, previous -0.2% revised to -0.4%
– Industrial Orders Y/Y -5.3%, previous -2.0% revised to -2.2%
– Industrial Sales M/M -3.5%, previous +0.1% revised to -0.1%
– Industrial Sales Y/Y -7.3%, previous +0.6% revised to +0.5%
* Euro Zone Current Account NSA (Dec) €33.0 Bln versus €36.2 Bln expected, previous €23.2 Bln revised to €25.6 Bln
* UK Unemployment Rate (Dec) 4.0% versus 4.0% expected, previous 4.0%:
– Employment Change 3M/3M +167K versus +152K expected, previous +141K
– Average Weekly Earnings Y/Y +3.4% versus +3.5% expected, previous +3.4%
– Average Weekly Earnings Ex. Bonus Y/Y +3.4% versus +3.4% expected, previous +3.3%
* UK Claimant Count Rate (Jan) 2.8%, previous 2.8%:
– Jobless Claims Change +14.2K versus +12.3K expected, previous +20.8K* German ZEW Survey – Current Conditions 15.0 versus 23.0 expected, previous 27.6
– Expectations -13.4 versus -14.1 expected, previous -15.0
* Euro Zone Construction Output (Dec):
– Construction Output M/M -0.4%, previous +0.3% revised to -0.1%
– Construction Output Y/Y +0.7%, previous +1.1% revised to +0.9%
* ECB Vice President De Guindos said the Governing Council are still analysing the cause of the Euro Zone slowdown, adding that they won’t take a decision before thorough analysis has taken place. He added that they have a large range of tools at their disposal and said policy will remain accommodative for a long while yet.
* EU Commission said they will not reopen the withdrawal agreement, nor will they accept any time limit on the backstop. They also confirmed President Juncker would meet with UK PM May tomorrow.
