European cash equity markets are broadly higher ahead of the midway stage (FTSE +0.3%, DAX +0.7%, CAC +0.8%, FTSE MIB +0.6%). Basic resource stocks are among the best performers, boosted by renewed trade optimism after US Treasury Secretary Mnuchin said they have held constructive talks in Bejing. Bank stocks are also in focus this morning with heavy losses in Swedbank and Nordea amid the ongoing money laundering scandal. The risk on tone was also evident in the bond markets where UK and German government borrowing costs have edged higher following a barrage of economic data. In short, UK Q4 GDP was revised a touch higher YoY to +1.4% from +1.3%, German retail sales were stronger but unemployment fell less than expected while Spanish GDP was soft. Reaction to the aforementioned data was muted with investors firmly focused on Brexit developments. Sterling did rally to a new daily highs in recent trade at $1.3136 amid speculation that a substantial number of Labour MP’s will vote for the withdrawal agreement this afternoon (debate ends at 14:30 GMT). Elsewhere in FX, we have seen minor outperformance in the trade sensitive currencies (Australian Dollar and New Zealand Dollar). In commodity space, oil prices are firmly in the green with US crude futures up over one-percent while spot gold has gained +0.1%. Looking ahead, futures are pointing to a higher open on Wall Street having risen to new highs in recent trade. On the data front, we await US personal income/spending, PCE, Chiago PMI, Michigan Sentiment and new home sales plus Canadian GDP and producer prices.
Key Headlines/Data:
* European Corporate News:
– H&M (-13.0%): Q1 Pretax Profit 1.04 Bln versus 0.71 Bln expected
– Swedbank (-8.1%) | Nordea (-10.2%): US regulators have asked both banks for details of their transaction with Danske Bank as part of the money laundering investigation
– AstraZeneca (-5.4%): Announced $6.9 Bln tie-up with Japan’s Daiichi Sankyo
– TUI (-8.1%): Expects to take a €200 Mln hit this year related to Boeing 737 issues.
– Antofagasta (+2.4%): Price target raised by Deutsche Bank
* U.S., China hold ‘constructive’ trade talks in Beijing (Reuters):
– U.S. Treasury Secretary Steven Mnuchin held “constructive” talks in Beijing, he said on Friday, concluding the latest round of dialogue aimed at resolving the bitter trade dispute between the world’s two largest economies.
* MPs asked to vote on withdrawal agreement only (BBC News):
– MPs will be asked to vote again on Brexit on Friday but only on part of the deal negotiated with the EU.
– But it will not amount to a third “meaningful vote” on the deal, as it will not include a vote on the UK’s future relationship with the EU.
* Stewart McDonald MP @StewartMcDonald: Rumours sweeping the Commons that a substantial number of Labour MPs are going to vote with the Tories to get the Withdrawal Agreement through. Labour whips running back and forth from the Chamber and locked in worried looking conversations.
* @steve_hawkes (Deputy Political Editor – The Sun): Suggestions that Dominic Raab has come round and will back the PM
* UK Nationwide House Price Data (Mar):
– House Price Index M/M +0.2% versus 0.0% expected, previous -0.1% revised to 0.0%
– House Price Index Y/Y +0.7% versus +0.6% expected, previous +0.4%
* German Retail Sales Data (Feb):
– Retail Sales M/M +0.9% versus -0.9% expected, previous +3.3%
– Retail Sales Y/Y +4.7% versus +2.8% expected, previous +2.6%
* German Import Price Data (Feb):
– Import Price Index M/M +0.3% versus +0.5% expected, previous -0.2%
– Import Price Index Y/Y +1.6% versus +1.8% expected, previous +0.8%
* Norwegian Core Retail Sales M/M (Feb) -1.3% versus -0.3% expected, previous +1.6% revised to +1.5%
* French CPI Data (Mar P):
– CPI M/M +0.8% versus +0.9% expected, previous +0.1%
– CPI Y/Y +1.1%, previous +1.3%
– CPI EU Harmonized M/M +0.9% versus +1.0% expected, previous +0.1%
– CPI EU Harmonized Y/Y +1.3% versus +1.5% expected, previous +1.6%
* Swiss KOF Leading Indicator (Mar) 97.4 versus 93.9 expected, previous 92.4 revised to 93.0
* Spanish GDP Data (Q4 F):
– GDP Q/Q +0.6% versus +0.7% expected, previous +0.7%
– GDP Y/Y +2.3% versus +2.4% expected, previous +2.4%
* Spanish Retail Sales Y/Y (Feb) +1.2%, previous +0.8% revised to +0.9%
* German Unemployment Rate (Mar) 4.9% versus 4.9% expected, previous 5.0%
– Unemployment Change -7K versus -10K expected, previous -21K revised to -20K
* Norwegian Unemployment Rate (mar) 2.4% versus 2.4% expected, previous 2.5%
* CBC – Canada is considering new ways to retaliate against the United States in hope of getting steel and aluminum tariffs lifted. A senior source with direct knowledge of the situation says Canada is considering launching consultations on whether it should increase its retaliatory tariffs.
* ECB’s Visco said rates are expected to remain at current levels at least until the end of 2019 and then for as long as necessary.
* UK GDP Data (Q4 F):
– GDP Q/Q +0.2% versus +0.2% expected, previous +0.2%
– GDP Y/Y +1.4% versus +1.3% expected, previous +1.3%
* UK Net Consumer Credit (Feb) +£1.1 Bln versus +$0.9 Bln expected, previous +£1.1 Bln revised to +£1.2 Bln
– Net Lending Secured On Dwellings +£3.5 Bln versus +£3.7 Bln expected, previous +£3.7 Bln revised to +£3.6 Bln
– Mortgage Approvals 64.34K versus 65.00K expected, previous 66.77K revised to 66.70K
* ECB’s Coeure:
– The marked fall in the inflation risk premium suggests that investors assign only a small probability to inflation turning out to be higher than expected.
– Medium-term inflation expectations have remained close to levels consistent with price stability.
* Italian CPI Data (Mar P):
– CPI M/M +0.3% versus +0.3% expected, previous +0.1%
– CPI Y/Y +1.0% versus +1.0% expected, previous +1.0%
– CPI M/M EU Harmonized +2.3% versus +2.2% expected, previous -0.2%
– CPI Y/Y EU Harmonized +1.1% versus +1.0% expected, previous +1.1%
