European cash equity markets are mixed ahead of the midway stage; the Euro Stoxx 600 touched its lowest level since last Monday earlier this morning but has rebounded in recent trade (FTSE -0.4%, DAX +0.4%, CAC 0.0%, FTSE MIB +0.3%). Energy related stocks are among the worst performers, dragged lower by Royal Dutch Shell amid reports they are in talks to buy Endeavor Energy Resources for around $8.0 Bln. Oil prices have also provided a weight with US crude futures losing close to four-percent at the lows. In fixed, core European bonds are higher on the day with German Bunds scaling new peaks after German IFO data fell short of expectations – the business climate index fell to 101.0 (f/c. 101.8) from 102.0. Turning to currencies, the Dollar Index has lost -0.3% and fallen below the 97.0 level while the New Zealand Dollar is the clear G10 outperformer. The Japanese Yen and Swiss Franc have also gained this morning on safe-haven demand. Elsewhere, the Swiss government have lowered their 2018 growth forecast to +2.6% from +2.9%, and cut 2019 to +1.5% from +2.0%. Italian press also reported that the Italian government and EU are said to be €3.0 Bln apart on the 2019 budget. Looking ahead, futures are pointing to a higher open on Wall Street with US housing starts and building permits due for release.
Key Headlines/Data:
* European Corporate News:
– Royal Dutch Shell (-1.9%): Said to be in talks to buy Endeavor Energy Resources for around $8.0 Bln
– Deutsche Telekom (-0.9%): T-Mobile and Sprint win US security approval for merger
– Ericsson (%) | Nokia (-0.8%): Huawei reportedly secured 5G trials in India.
– Sapiem (-1.6%): Says not data was lost or stolen in recent cyber attack
* Italy and the EU are said to be €3.0 Bln apart on the 2019 budget; Commission required structural savings of around €2.5-3.0 Bln – Corriere Della Sera
– The EU remain unconvinced about €2.0 Bln within the budget
– Italian government have lowered their 2019 growth forecast to +0.9-1.0% from +1.5% – Il Sole
* German IFO Business Climate (Dec) 101.0 versus 101.8 expected, previous 102.0
– Current Assessment 104.7 versus 104.9 expected, previous 105.4 revised to 105.5
– Expectations 97.3 versus 98.3 expected, previous 98.7
* Swiss government lowered their 2018 growth forecast to +2.6% from +2.9%, and cut 2019 to +1.5% from +2.0%
* Norges Bank Governor Olsen reiterated their plan to gradually raise the key policy rate in the coming years.
