European cash equity markets are broadly higher ahead of the midway stage with the Euro Stoxx 600 touching a fresh five-month peak (FTSE +0.5%, DAX +1.0%, CAC +0.6%, FTSE MIB +0.6%). Auto stocks are among the best performers, led higher by French equipment firm Faurecia after they unveiled plans to purchase Clarion and launch a business group in Japan. UK advertising giant WPP has also surged higher this morning after full-year earnings surpassed relatively low expectations. Broader risk sentiment remains underpinned by expectations of a US-China trade accord with overnight reports suggesting a final deal is being prepared for Trump and Xi to sign in the coming weeks. Chinese Caixin manufacturing PMI data also surprised to the upside overnight although remains in contraction territory. European data releases have failed to have much of an impact meanwhile with Euro Zone manufacturing PMI revised a touch higher to 49.3 from 49.2 and UK manufacturing PMI inline with expectations at 52.0. Headline Euro Zone CPI also met expectations at +1.5% although the core rate did soften slightly to +1.0% (f/c. +1.1%). In currency space, the Dollar Index is flat at around 96.2 with little reaction shown to comments made by Fed Chair Powell overnight. The Japanese Yen is the weakest among the G10’s while the Swiss Franc and the Pound are also nursing minor losses versus the Greenback. The Canadian Dollar and New Zealand Dollar are the strongest. Elsewhere, oil prices are little changed for the day with US crude futures up around +0.1% while spot gold has lost -0.3%. Looking ahead, futures are pointing to a higher open on Wall Street amid a busy data slate – US personal income/spending, PCE deflator, Markit manufacturing PMI, ISM manufacturing and Michigan Sentiment plus Canadian GDP and PMI.
Key Headlines/Data:
* European Corporate News:
– WPP (+8.1%): FY18 Pretax Profit £1.46 | Sees FY19 like-for-like sales down 1.5% – 2.0%
– Carrefour (-1.1%): Downgraded to underweight at JPMorgan
– Rightmove (-5.1%): FY18 Pretax Profit £198.3 Mln
– Faurecia (+4.8%): Faurecia to buy Clarion, launch business group in Japan
* U.S. Prepares Final China Trade Deal as Hawks Urge Caution (Bloomberg):
– U.S. officials are preparing a final trade deal that President Donald Trump and his Chinese counterpart Xi Jinping could sign in weeks, people familiar with the matter said, even as a debate continues in Washington over whether to push Beijing for more concessions
* Labour could let May’s Brexit deal pass in return for second referendum (Guardian):
– Labour is moving towards a compromise plan that would allow Theresa May’s Brexit deal to pass but make clear that parliament “withholds support” until it has been put to a public vote, according to multiple party sources.
* German Retail Sales Data (Jan):
– Retail Sales M/M +3.3% versus +1.9% expected, previous -4.3%
– Retail Sales Y/Y +2.6% versus +1.2% expected, previous -2.1%
* Swedish Manufacturing PMI (Feb) 52.5, previous 51.5
* Swiss Retail Sales Y/Y (Jan) -0.4%, previous -0.3% revised to -0.2%
* Norwegian Manufacturing PMI (Feb) 56.3 versus 56.0 expected, previous 58.3 revised to 58.2
* Spanish Manufacturing PMI (Feb) 49.9 versus 51.7 expected, previous 52.4
* Swiss Manufacturing PMI (Feb) 55.4 versus 53.6 expected, previous 54.3
* Italian Manufacturing PMI (Feb) 47.7 versus 47.2 expected, previous 47.8
* French Manufacturing PMI (Feb F) 51.5 versus 51.4 flash/expected
* German Manufacturing PMI (Feb F) 47.6 versus 47.6 flash/expected
* German Unemployment Rate (Feb) 5.0% versus 5.0% expected, previous 5.0%:
– Unemployment Change -21K versus -5K expected, previous -2K revised to -4K
* Euro Zone Manufacturing PMI (Feb F) 49.3 versus 49.2 flash/expected:
– Concurrent declines in output and new orders seen during February
– Prices pressures continue to soften
* Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: “Euro area manufacturing is in its deepest downturn for almost six years, with forward-looking indicators suggesting risks are tilted further to the downside as we move into spring.
* Italian Unemployment Rate (Jan) 10.5% versus 10.4% expected, previous 10.3% revised to 10.4%
* We’ve got your back over Brexit, pledges Bank of England governor as deadlock in Westminster leaves business in despair (Daily Mail)
* UK Consumer Credit (Jan) £1.1 Bln versus £0.8 Bln expected, previous £0.7 Bln:
– Mortgage Lending £3.7 Bln versus £3.9 Bln expected, previous £4.1 Bln revised to £3.9 Bln
– Mortgage Approvals 66.8K versus 63.4K expected, previous 63.8K revised to 64.5K
* UK Manufacturing PMI (Feb) 52.0 versus 52.0 expected, previous 52.8 revised to 52.6:
– Stocks of inputs and finished goods rise sharply
– Rate of job losses at six-year high as optimism hits series low
* Euro Zone CPI Y/Y (Feb P) +1.5% versus +1.5% expected, previous +1.4%
– Core CPI Y/Y +1.0% versus +1.1% expected, previous +1.1%
* Euro Zone Unemployment Rate (Jan) 7.8% versus 7.9% expected, previous 7.9% revised to 7.8%
