Euro Zone bank stocks led the Euro Stoxx 600 to a fresh five-month high this afternoon after ECB sources suggested policymakers will lower their economic forecasts tomorrow and this would be enough to justify another round of loans for banks. Gains proved short lived however with the index falling back into negtative territory ahead of the closing bell (STOXX 600 -0.1%, FTSE +0.2%, DAX -0.3%, CAC -0.1%). Auto stocks are among the worst performers, dragged lower by German bearings makers Schaeffler who announced restructuring plans and warned of an “extremely challenging” environment. The ECB sources story also boosted Italian BTP’s with the ten-year yield falling nine basis-points to a fresh one-month low in recent trade. The other notable move this afternoon came in the Canadian Dollar which sunk to a two-month low after the Bank of Canada noted increased uncertainty about the timing of future rate increases. Weak data also played its part as the Canadian trade deficit widened, labour productivity dropped as did IVEY PMI. We did see a relatively flat open on Wall Street meanwhile although bourses have since turned lower with energy stocks bearing the brunt as oil prices declined – US crude fell over -1.5% at the lows before finding support. The Dollar Index is down -0.1% at 96.8 after a choppy reaction to a mixed ADP report – the headline print was a touch softer at 183K (f/c. 189K) while January was revised to 300K from 213K. Still to come today, possible comments from Fed President’s Mester and Williams plus the Fed’s Beige Book.
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