European cash equity markets are mixed ahead of the midway stage with moves in either direction on the small side (FTSE +0.3%, DAX -0.1%, CAC -0.1%, FTSE MIB 0.0%). The perceived safe-haven sectors have seen minor outperformance this morning while auto related stocks are among the worst performers. We also saw heavy losses for ABN Amro and ING after allegations the two lenders were involved in a money laundering operation. In fixed, both core European bonds and Treasuries are in the red with Bunds touching the lows of the day not long after Euro Zone service PMI’s were revised higher from the flash readings. Euro Zone retail sales were also a touch stronger-than-expected while UK service PMI improved. The aforementioned data did send Sterling to session highs although gains proved short lived with Gbp/Usd now lower for the day. Elsewhere in FX, the Dollar Index has gained +0.1% to 96.8 while the New Zealand Dollar and Canadian Dollar are the weakest among the G10’s. Elsewhere, oil prices are little changed for the day with US crude futures down around -0.1% while spot gold is also down -0.1%. Looking ahead, futures are pointing to a relatively flat open on Wall Street with earnings still to come from Target and Kohl’s. On the data front, we await US Markit service PMI, ISM non-manufacturing and new home sales plus possible comments from Fed Presidents Rosengren, Kashkari and Bank of England Governor Carney.
Key Headlines/Data:
* European Corporate News:
– ABN Amro (-2.0%) | ING (-3.0%): De Groene Amsterdammer – Lenders involved in money laundering operating involving billions
– Richemont (-3.3%): Downgraded to ‘underperform’ at Bank of America
– Debenhams (-5.5%): Warned prior FY profit guidance was no longer valid
– Vodafone (+2.9%): To issue €4.0 Bln of convertible bonds to help finance takeover of Liberty Global assets
– Moncler (-2.5%): Cut to ‘hold’ at Berenberg
– EON (-0.5%): Cit to ‘neutral’ at JPMorgan
– Orange (+0.7%): Cut to ‘equalweight’ at Barclays Capital
– Altice (-9.2%): Cut to ‘underweight’ at Barclays Capita
* China sets 2019 GDP growth target of 6.0-6.5 pct – Premier Li (Reuters):
– China has set its 2019 economic growth target at 6.0 to 6.5 percent, Premier Li Keqiang said in his annual work report on Tuesday, lower than last year’s goal of around 6.5 percent.
* Theresa May warned she must whip MPs to stop them taking no-deal Brexit off the table (Telegraph):
– Theresa May has been warned she must whip her MPs to keep a no-deal Brexit on the table in a vote next week as Geoffrey Cox travels to Brussels for make-or-break talks with EU negotiators.
– Senior Eurosceptics are convinced Mrs May will lose a vote on a revised Brexit deal on March 12 because they do not expect the Attorney General to win meaningful concessions on the Irish backstop.
* Swedish Service PMI (Feb) 55.9, previous 54.1
* Swiss CPI Data (Feb):
– CPI M/M +0.4% versus +0.4% expected, previous -0.3%
– CPI Y/Y +0.6% versus +0.6% expected, previous +0.6%
* Spanish Service PMI (Feb) 54.5 versus 54.1 expected, previous 54.7
* UK Foreign Minister Hunt said the government are determined to leave the EU on March 29th, adding that things have improved over the last month.
* Swedish Industrial Production Data (Jan):
– Industrial Production M/M +0.1%, previous +1.8% revised to +1.6%
– Industrial Production Y/Y +1.5%, previous +2.6% revised to +2.0%
* Italian Five State lawmaker Buffagni warned they could quit the coalition over the Turn-Lyon high speed rail.
* Italian Service PMI (Feb) 50.4 versus 49.4 expected, previous 49.7
* French Service PMI (Feb F) 50.2 versus 49.8 flash/expected
* German Service PMI (Feb F) 55.3 versus 55.1 flash/expected
* Euro Zone Service PMI (Feb F) 52.8 versus 52.3 flash/expected:
* Chris Williamson, Chief Business Economist at IHS Markit said: “The final PMI for February indicated a slightly improved performance compared to the flash estimate, lifted higher than January in part due to the further easing of one-off dampening factors such as the yellow vest protests in France and new auto sector emissions rules. However, the survey remained subdued as other headwinds continued to increasingly constrain business activity. These include slowing global economic growth, rising geopolitical concerns, trade wars, Brexit and tightening financial conditions. “Measured overall, the survey shows the quarterly rate of GDP growth picking up to 0.2% in February from 0.1% in January, meaning the first quarter could see the eurozone economy struggle to beat the 0.2% expansion seen in the fourth quarter of last year
* Italian GDP Data (Q4 F):
– GDP Q/Q -0.1% versus -0.2% expected, previous -0.2% revised to -0.1%
– GDP Y/Y 0.0% versus +0.1% expected, previous +0.1%
* Riksbank Deputy Governor Skingsley reiterated his forecast for rates to rise. He also said they are struggling to understand the recent developments in the Krona and do not thing the weakness is justified.
* UK Service PMI (Feb) 52.8 versus 52.3 expected, previous 52.3:
– Modest upturn in service sector output in February
– Slight fall in new work
– Staffing levels drop to greatest extent for over seven years
* Bank of England Financial Policy Committee Summary – The core of the UK financial system, including banks, dealers and insurance companies, is resilient to, and prepared for, the wide range of risks it could face, including a worst case disorderly Brexit.
* Euro Zone Retail Sales Data (Jan):
– Retail Sales M/M +1.3% versus +1.2% expected, previous -1.6% revised to -1.1%
– Retail Sales Y/Y +2.2% versus +1.9% expected, previous +0.8% revised to +0.3%
* Norwegian House Prices Y/Y (Feb) +3.0%, previous +3.6%
* Greece said the order book for their new 10-year benchmark has exceeded
