European cash equity markets are mostly higher ahead of the midway stage (FTSE +0.5%, DAX +0.3%, CAC +0.1%, FTSE MIB -0.5%). Basic resource stocks are among the best performers following optimistic remarks from both sides of the US-China trade negotiations. Bank stocks have lagged meanwhile after Swedbank dismissed their CEO Bonnesen amid the ongoing money laundering scandal. Optimism has also likely be tempered by recent Brexit related developments as the DUP refused to budge aND support May’s Brexit deal, even after she offered her resignation once it had passed. Sterling has subsequently declined with Gbp/Usd touching its lowest level since last Friday this morning at $1.3126. Elsewhere in FX, the Swedish Krona is the weakest of the G10’s following pretty dismal retail sales data while the Japanese Yen is the strongest as it maintain a safe-haven bid. There was not much reaction in the Euro meanwhile to broadly softer confidence indicators or comments from ECB Chief Economist Praet who said the Governing Council would need to see a solid monetary policy case before acting to mitigate the side effects of negative rates on banks. In commodity space, oil prices are in the red with US crude futures down -0.7% while spot gold has lost -0.2%. Looking ahead, futures are pointing to a relatively flat open on Wall Street. Data wise, we await US Q4 GDP, jobless claims and pending home sales plus possible comments from Fed Governor’s Clarida and Bowman.
Key Headlines/Data:
* European Corporate News:
– Swedbank (-3.7%): Board has dismissed CEO Bonnesen and started the search for a replacement
– Evotec (+4.7%): Sees FY19 Adj. EPS up 10% this year
– Bayer (-0.8%): US jury ruled Bayer should pay $80 Mln to claimant
– British American Tobacco (+1.6%): Raised to ‘buy’ at Citigroup
– Imperial Brands (+1.8%): Raised to ‘buy’ at Citigroup
– Fiat Chrysler (-1.2%): Nissan CEO said he was not aware of possible Fiat Chrysler bid
* May vows to resign before next phase of negotiations if deal is passed (Guardian):
– Theresa May has played her final desperate card to tame the Brexit rebels in her warring party, by promising to sacrifice her premiership if they back her twice-rejected Brexit deal.
* DUP confirms it will not back withdrawal deal (BBC News):
– The DUP has confirmed it will not back Theresa May’s Brexit deal despite the prime minister’s promise to step down if MPs backed it.
* No majority for any options after MPs’ votes (BBC News):
– None of MPs’ eight proposed Brexit options have secured clear backing in a series of votes in the Commons.
* ECB Chief Economist Praet said the Governing Council would need to see a solid monetary policy case before acting to mitigate the side effects of negative rates on banks. He did add that staff are examining the issue of tiered rates but the action is not a done deal.
* Chinese Premier Li said he does not think there is trust deficit between the US and China.
* Norwegian Credit Indicator Y/Y (Feb) +5.7%, previous +5.7%
* Chinese Commerce Ministry said both sides have made progress in trade negotiations but there is still work to do.
* German State CPI (Feb):
– Saxony: M/M +0.5%, previous +0.3% | Y/Y +1.4%, previous +1.4%
– Brandenburg: M/M +0.4%, previous +0.6% | Y/Y +1.4%, previous +1.6%
– Bavaria: M/M +0.5%, previous +0.5% | Y/Y +1.5%, previous +1.7%
– Hesse: M/M +0.5%, previous +0.5% | Y/Y +1.1%, previous +1.1%
– North Rhine Westphalia: M/M +0.4%, previous +0.5% | Y/Y +1.5%, previous +1.6%
– Baden Wuerttemberg: M/M +0.3%, previous +0.5% | Y/Y +1.5%, previous +1.7%
* Spanish CPI Data (Mar P):
– CPI M/M +0.4%, previous +0.2%
– CPI Y/Y +1.3% versus +1.4% expected, previous +1.1%
– CPI EU Harmonized M/M +0.4%, previous +0.2%
– CPI EU Harmonized Y/Y +1.3% versus +1.5% expected, previous +1.1%
* S&P lowered their Euro Zone GDP forecast to +1.1% from +1.6%
* Swedish Retail Sales Data (Feb):
– Retail Sales M/M +0.2% versus +0.2% expected, previous +0.8% revised to +0.7%
– Retail Sales Y/Y +3.0% versus +2.8% expected, previous +2.2% revised to +1.7%
* Euro Zone Money Supply – M3 Y/Y (Feb) +4.3% versus +3.9% expected, previous +3.8%
* Euro Zone Consumer Confidence (Mar F) -7.2 versus -7.2 flash/expected, previous -7.2 revised to -7.4
– Business Climate Indicator 0.53 versus 0.66 expected, previous +0.69
– Economic Confidence 105.5 versus 105.9 expected, previous 106.1 revised to 106.2
– Services Confidence 11.3 versus 12.0 expected, previous 12.1
– Industrial Confidence -1.7 versus -0.8 expected, previous -0.4
* ECB’s Nowotny said it would make sense to lessen the impact of negative rates, adding that they are approaching a discussion on negative rates.
