European cash equity markets are broadly lower ahead of the midway stage amid a resurgence in global growth concerns (FTSE -1.1%, DAX -0.7%, CAC -0.8%). The major US bourses slumped over three-percent yesterday as investors also fret about the likelihood of a positive outcome to the US-China trade dispute. As such, basic resource and technology stocks have underperformed the broader market this morning and pushed the Euro Stoxx 600 to its lowest level in almost two weeks. In the bond markets, we have seen divergence in core European yields with German government borrowing costs lower on the day while their UK counterparts are ahead – the ten-year spread touched its widest level since mid-November. Data releases were largely ignored, including a slight upward revision to Euro Zone service PMI and a big miss for the UK service sector. Turning to currencies, the Dollar Index has pared an earlier gain to trade flat at around 97.0. Sterling and the Swedish Krona have seen minor outperformance over their G10 counterparts while the Australian Dollar is the weakest after GDP surprised to the downside overnight. Elsewhere, oil prices are little changed for the day with Brent crude futures trading around $62/barrel. Spot gold is down -0.1%. Looking ahead, US equity futures are trading higher but cash equity markets will remain closed in observance of a national day of mourning for former President Bush.
Key Headlines/Data:
* European Corporate News:
– Shire (+2.7%): Takeda shareholders approved the takeover of Shire
– Hargreaves Lansdown (-3.9%): Morgan Stanley cut the stock to ‘underweight’
– Saint Gobain (-3.1%): JPMorgan cut the stock to neutral
* Corriere Della Sera: Italian Finance Minister Tria is reportedly closer to resigning that ever before.
* Italian PM Conte said he is ready to reduce the impact of some economic measures in the 2019 budget.
* Norwegian Current Account (Q3) 91.78 Bln, previous 80.94 Bln revised to 79.08 Bln
* Swedish Service PMI (Nov) 62.2, previous 56.3 revised to 56.4
* Swedish Industrial Production Data (Oct):
– Industrial Production M/M +2.8%, previous +0.1% revised to +0.5%
– Industrial Production Y/Y +4.6%, pervious +1.7% revised to +2.1%
* Russian Foreign Ministry said Washington has provided no evident that they have violated the nuclear treaty, adding that Russia is ready to continue dialogue over the treaty.
* Spanish Industrial Production Y/Y (Oct) +0.8%, previous -0.1% revised to -0.2%
* Spanish Service PMI (Nov) 54.0 versus 53.7 expected, previous 54.0
* Italian Service PMI (Nov) 50.3 versus 49.2 expected, previous 49.2
* French Service PMI (Nov F) 55.1 versus 55.0 flash/expected
* German Service PMI (Nov F) 53.3 versus 53.3 flash/expected
* Euro Zone Service PMI (Nov F) 53.4 versus 53.1 flash/expected, previous 53.7
* Chris Williamson, Chief Business Economist at HIS Markit said: “The final eurozone PMI for November came in higher than the flash reading but still only points to modest GDP growth of approximately 0.3% in the fourth quarter, suggesting the region remains stuck in a soft-patch.
* UK Service PMI (Nov) 50.4 versus 52.5 expected, previous 52.2
* Spain sold €2.92 Bln of 2021, 2023 & 2028 government bonds versus €2.5-3.5 Bln target
* Euro Zone Retail Sales Data (Oct):
– Retail Sales M/M +0.3% versus +0.2% expected, previous 0.0% revised to -0.5%
– Retail Sales Y/Y +1.7% versus +2.1% expected, previous +0.8% revised to +0.3%
* UK Trade Minister Fox said in light of yesterday’s parliament vote, there is a chance there might not be a Brexit.
* According to sources, the ECB are said to be debating ideas for a gradual stimulus withdrawal next year. Some policymakers are said to favour hiking just the deposit rate first while the door is also open for new TLTRO’s.
* Oman Oil Minister said he believes OPEC and their allies will reach a deal this week to cut output.
