European cash equity markets are broadly higher ahead of the midway stage (FTSE +1.1%, DAX +0.9%, CAC +1.6%). Trade sensitive stocks such as basic resources have surged to the top of the Euro Stoxx 600 after upbeat remarks from US President Trump regarding the prospects of a deal with China. Retail stocks have provided a drag meanwhile with heavy losses for Inditex, Superdry and Dixons Carphone after their respective trading updates. UK politics have been the main focus this morning after lawmakers triggered a vote of no-confidence in UK PM May over her handling of Brexit negotiations – the vote is expected to take place between 18:00 GMT and 20:00 GMT with the result due around 21:00 GMT. Sterling did drop initially to a fresh twenty-month low but has since rebounded as May is widely expected to win the vote. UK government bond yields are also trading higher on the day. Elsewhere in FX, the Dollar Index has slipped slightly to 97.4 while the New Zealand Dollar and Swedish Krona are the weakest of the G10’s, the latter weighed by soft CPIF print. The Euro is slightly higher although showed minimal reaction to stronger-than-expected Euro Zone industrial production data. Turning to commoditis, oil prices are firmly in the red with US crude futures down over one-percent after API reported a large crude drawdown overnight,. Spot gold is flat. Looking ahead, futures are pointing to a higher open on Wall Street while US CPI figures are due for release.
Key Headlines/Data:
* European Corporate News:
– British American Tobacco (+1.6%): Maintained FY guidance
– Rolls Royce (+3.9%): Sees FY profit in upper end of guidance
– Pernod Ricard (+4.0%): Elliot Management has taken a stake
– Pandora (-8.9%): Carnegie cut its price target
– Sainsbury’s (-4.7%): Challenges CME over merger with Asda
* Italian Deputy PM Salvini reportedly denied earlier reports that he was seeking early elections in March.
* UK PM May will face a confidence vote after the 48-letter threshold was breached. The ballot will take place between 18:00 GMT and 20:00 GMT today.
* UK PM May said she will fight the leadership challenge with everything she has. She added that she met with EU leaders yesterday and believes a deal with the EU is attainable.
* @BethRigby (Deputy Political Editor – Sky News) – Cabinet source tells me ministers think she’s going to win. But caution that she needs a decisive win. 230-80 is good result for her. 180-130 – not good, at all.
* AFP: The French parliament are expected to debate a no-confidence motion tomorrow.
* Swedish CPI Data (Nov):
– CPI M/M -0.1% versus -0.1% expected, previous -0.1%
– CPI Y/Y +2.0% versus +2.0% expected, previous +2.3%
– CPIF M/M -0.1% versus -0.1% expected, previous -0.1%
– CPIF Y/Y +2.1% versus +2.2% expected, previous +2.4%
* Italian Unemployment Rate (Q3) 10.2% versus 10.3% expected, previous 10.7%
* Euro Zone Industrial Production Data (Oct):
– Industrial Production M/M +0.2% versus +0.2% expected, previous -0.6% revised to -0.3%
– Industrial Production Y/Y +1.2% versus +0.7% expected, previous +0.9% revised to +0.8%
* Portuguese CPI Data (Nov):
– CPI M/M -0.4% versus -0.4% expected, previous -0.4%
– CPI Y/Y +0.9% versus +0.9% expected, previous +0.9%
* According to sources, Italian PM Conte will present EU Commission President Juncker with revised budget numbers.
