European cash equity markets are mostly lower ahead of the midway stage (FTSE -0.7%, DAX -0.2%, CAC -0.1%, FTSE MIB +0.1%). Basic resource stocks are among the worst performers following disappointing Chinese macro data overnight and tempered expectations surrounding US-China trade negotiations. After USTR Lighthizer said yesterday that there is still a long way to go in talks, President Trump said this morning that he is not afraid to walk away without a deal. From a regional perspective, the FTSE 100 has underperformed for a third day with the UK benchmark touching a three-week low as miners and a stronger currency weigh. Gbp/Usd it little changed for the day but remains in close proximity to yesterday’s seven-month high as the threat of a no-deal Brexit appears to have receded this week. Yesterday’s votes in the UK parliament do not appear to have changed much although there have been rumours that the meaningful vote could be held as early as next week. In the bond markets, US ten-year yields are slightly lower for the day while German ten-year borrowing costs are slightly higher after a barrage of data releases this morning. German State CPI’s were the main focus and we saw higher year-on-year prints in four of the six regions compared to the prior month while two were unchanged. French, Spanish and Italian CPI prints were largely in line with expectations as was French GDP. Turning to currency space, data releases have had more of an impact with stronger-than-expected GDP data propelling the Swedish Krona to the top of the G10 pile while the Swiss Franc is the weakest of soft Q4 growth figures. The Dollar Index has lost -0.2% to 95.9 with minor outperformance seen in the Euro and the Japanese Yen. Elsewhere, oil prices have reversed some of yesterday’s rally with US crude futures down -0.7% while spot gold has added +0.4%. Looking ahead, futures are pointing to a lower open on Wall Street with US fourth-quarter GDP data due for release at 13:30 GMT (08:30 ET). We also await Chicago PMI and Canadian producer prices plus pan-German CPI and possible comments from the Fed’s Clarida, Bostic and Harker.
Key Headlines/Data:
* European Corporate News:
– Carrefour (+2.7%): FY18 Operating Profit -3.4% | Raises cost savings goal
– British American Tobacco (-2.8%): FY18 Adj. Revenue rose +3.5% to £25.76 Bln
– Erste Group (-0.1%): Sees FY19 operating profit growth
– ABInbev (+4.9%): Q4 Adj. EBITDA $6.7 Bln versus $6.1 Bln expected | Sees strong profit and revenue growth this year
– ABB (-1.9%): Q4 Operating EBITA $584 Mln versus $577 Mln expected | Confirmed Mid-Term Targets
– Vivendi (+3.8%): KKR and Tencent said to be considering bids for UMG
* US President Trump said he had a very productive meeting with North Korean leader Kim but would not be signing anything as they were looking for sanctions to be lifted in their entirety.
* @EamonJavers (CNBC Washington Correspondent) – President Trump suggests he could walk away from trade negotiations with the Chinese, too: “I’m never afraid to walk from a deal, and I would do that with China too if it didnt work out.”
* Swiss GDP Data (Q4):
– GDP Q/Q +0.2% versus +0.4% expected, previous -0.2% revised to -0.3%
– GDP Y/Y +1.4% versus +1.7% expected, previous +2.4%
* UK Nationwide House Price Data (Feb):
– House Price Index M/M -0.1% versus 0.0% expected, previous +0.3% revised to +0.2%
– House Price Index Y/Y +0.4% versus +0.4% expected, previous +0.1%
* German Import Price Data (Jan):
– Import Price Index M/M -0.2% versus +0.2% expected, previous -1.3%
– Import Price Index Y/Y +0.8% versus +1.3% expected, previous +1.6%
* French GDP Data (Q4 P):
– GDP Q/Q +0.3% versus +0.3% expected, previous +0.3%
– GDP Y/Y +0.9% versus +0.9% expected, previous +0.9%
* French CPI Data (Feb P):
– CPI M/M 0.0% versus +0.4% expected, previous -0.5%
– CPI Y/Y +1.3% versus +1.5% expected, previous +1.2%
– CPI EU Harmonized M/M +0.1% versus +0.3% expected, previous -0.6%
– CPI EU Harmonized Y/Y +1.5% versus +1.7% expected, previous +1.4%
* German State CPI (Feb):
– Saxony: M/M +0.3%, previous -1.0% | Y/Y +1.4%, previous +1.4%
– Brandenburg: M/M +0.6%, previous -0.5% | Y/Y +1.6%, previous +1.3%
– Hesse: M/M +0.5%, previous -1.0% | Y/Y +1.1%, previous +0.9%
– Bavaria: M/M +0.5%, previous -1.0% | Y/Y +1.7%, previous +1.7%
– North Rhine Westphalia: M/M +0.5%, previous -0.7% | Y/Y +1.6%, previous +1.5%
– Baden Wuerttemberg: M/M +0.5%, previous -0.9% | Y/Y +1.7%, previous +1.6%
* Swiss KOF Leading Indicator (Feb) 92.4 versus 95.4 expected, previous 95.0 revised to 96.2
* Spanish CPI Data (Feb P):
– CPI M/M +0.2% versus +0.3% expected, previous -1.3%
– CPI Y/Y +1.1% versus +1.1% expected, previous +1.0%
– CPI EU Harmonized M/M +0.2% versus +0.1% expected, previous -1.7%
– CPI EU Harmonized Y/Y +1.1% versus +1.0% expected, previous +1.0%
* Swedish GDP Data (Q4 P):
– GDP Q/Q +1.2% versus +0.6% expected, previous -0.2% revised to -0.1%
– GDP Y/Y +2.4% versus +1.5% expected, previous +1.6% revised to +1.5%
* Swedish Retail Sales Data (Jan):
– Retail Sales M/M +0.8% versus +0.7% expected, previous -1.4% revised to -0.9%
– Retail Sales Y/Y +2.2%, previous -1.1% revised to 0.0%
* Italian CPI Data (Feb P):
– CPI M/M +0.2% versus +0.2% expected, previous +0.1%
– CPI Y/Y +1.1% versus +1.1% expected, previous +0.9%
– CPI EU Harmonized M/M -0.2% versus -0.1% expected, previous -1.7%
– CPI EU Harmonized Y/Y +1.2% versus +1.2% expected, previous +0.9%
* @KenReid_utv (UTV Policial Editor) – Brussels sources saying there is still a considerable gap in the EU and UK positions on backstop. Talk of an imminent breakthrough are premature.
* UK House of Commons leader Leadsom said if they can bring a vote on May’s Brexit deal back to parliament before March 12th, they will do so.
