European cash equity markets are broadly higher ahead of the midway stage with the Euro Stoxx 600 touching a fresh five-month peak in recent trade (FTSE +0.8%, DAX +1.0%, CAC +1.1%, FTSE MIB +1.1%). Technology stocks are among the best performers following an after-hours post-earnings rally for US chipmaker Broadcom. Investors have also welcomed positive signals from the US-China trade dispute with latest reports suggesting a possible Trump-Xi meeting in mid-April or later. On the Brexit front, there had been some hope that PM May would be able to tempt ERG and DUP lawmakers to back her deal in a third meaningful vote next week but lawyers have since rejected additional legal advice from Attorney General Cox. There had been suggestions the UK could use the Vienna Convention to pull out of the backstop unilaterally. Sterling has been resilient however with Gbp/Usd little changed for the day at $1.3250. The Antipodeans have seen a mild benefit from the aforementioned US-China trade developments but the Swedish Krona is top of the G10 pile. The Euro showed minimal reaction to Euro Zone CPI data which was unrevised from the flash reading of +1.5% YoY. Looking ahead, futures are pointing to a higher open on Wall Street while data releases due include US empire manufacturing, industrial production, Michigan Sentiment and JOLTS job openings.
Key Headlines/Data:
* European Corporate News:
– UBS (-0.9%): Raising litigation provisions by $400 Mln
– BMW (+1.9%): FY EBIT18 €9.12 Bln versus €8.94 Bln expected
– Swedbank (-0.5%): Swedish media reported internal report by the bank noted suspicious customers
– Volkswagen (+1.1%): SEC filed lawsuit related to emissions scandal
– Wirecard (-8.9%): Downgraded to ‘sell’ at Citigroup
– TUI (+3.0%): Upgraded to ‘overweight’ at Morgan Stanley
– H&M (-4.8%): Q1 local currency sales +4%
* Brexit votes: Blow for May as lawyers reject Geoffrey Cox bid to ease backstop fears (The Times):
– Theresa May faced a further set back to convincing Eurosceptics and the Democratic Unionist Party to support her deal after a panel of pro-Brexit lawyers rejected another attempt to quell fears about the backstop.
– The lawyers rejected additional legal advice from Geoffrey Cox, the attorney-general, which said that the UK could use the Vienna Convention — the international treaty that outlines rules on treaties — to pull out of the backstop unilaterally. They described it as “badly misconceived”.
* Bank of Japan Governor Kuroda said momentum towards their two-percent inflation target is maintained.
* German Wholesale Price Data (Feb):
– Wholesale Price Index M/M +0.3%, previous -0.7%
– Wholesale Price Index Y/Y +1.6%, previous +1.1%
* Norwegian Trade Balance (Feb) 15.8 Bln, previous 28.8 Bln
* Russian Energy Minister Novak said it is too soon so decide whether OPEC/non-OPEC output cuts should be extended.
* Italian Industrial Orders/Sales Data (Jan):
– Industrial Orders M/M +1.8%, previous -1.8% revised to -1.4%
– Industrial Orders Y/Y -1.2%, previous -5.3% revised to -4.7%
– Industrial Sales M/M +3.1%, previous -3.5% revised to -3.6%
– Industrial Sales Y/Y +0.6%, previous -7.3% revised to -7.4%
* ECB’s Rehn said they may need to review how they conduct monetary policy given the failure to lift inflation back to target after years of monetary stimulus.
* IEA Monthly Oil Report:
– Our global growth estimate for 2018 and our forecast for 2019 are nevertheless unchanged, at 1.3 mb/d and 1.4 mb/d, respectively,
– Global oil production fell by 340 kb/d in February as OPEC and non-OPEC cuts deepened.
* Euro Zone CPI Data (Feb F):
– CPI Y/Y +1.5% versus +1.5% expected, previous +1.5% revised to +1.4%
– Core CPI Y/Y +1.0% versus +1.0% expected, previous +1.0% revised to +1.1%
* Italian CPI Data (Feb F):
– CPI M/M +0.1% versus +0.2% expected, previous +02%
– CPI Y/Y +1.0% versus +1.1% expected, previous +1.1%
– CPI EU Harmonized M/M -0.3% versus -0.2% expected, previous -0.2%
– CPI EU Harmonized Y/Y +1.1% versus +1.2% expected, previous +1.2%
* US Secretary of State Pompeo said President Trump and Chinese President Xi may meet in mid-April or later.
