European cash equity markets are mostly higher ahead of the midway stage (FTSE -0.2%, DAX +0.6%, CAC +0.8%, FTSE MIB +1.3%). Technology stocks are among the best performers, led higher by French firm STMicroelectronics after they posted stronger-than-expected fourth-quarter results. German sporting goods manufacturer Adidas are at the other end of the Stoxx 600 after Morgan Stanley cut the stock to ‘underweight’ from ‘equal-weight’. From a regional perspective, the FTSE 100 has lagged behind as a stronger currency weighed after Sterling touched a fresh eleven-week high versus the Greenback overnight.In fixed, core EU bonds are ahead with Bunds extending their lead over their UK counterparts on soft PMI data from the Euro Zone – manufacturing slowed to 50.4 (f/c. 51.4) from 51.4 while services dipped to 50.8 (f/c. 51.5) from 51.2. The data has also weighed on the Euro in currency space although the Australian Dollar remains the weakest after the soft domestic jobs data released overnight. We also saw some upside in the Norwegian Krone after the Norges Bank left rates on hold and said the policy rate would most likely be raised in March. Elsewhere, oil prices are mixed with US crude futures up +0.42 but Brent down -0.5%. Spot gold has lost -0.25%. Looking ahead, futures are pointing to a relatively flat open on Wall Street with earnings due from American Airlines, Bristol Myers Squibb and Freeport McMoRan. Data wise, we await US jobless claims and Markit PMI plus the DoE inventory report. The European Central Bank are also due with the ‘Monetary Policy Decisions’ and ‘Press Conference’ due at 12:45/13:30 GMT.
Key Headlines/Data:
* European Corporate News:
– STMicroelectronics (+9.1%): Q4 Net Income $418 Mln versus $375 Mln expected | Q4 Revenue $2.65 Bln versus $2.64 Bln expected
– Novozymes (-3.7%): CFO warned of dampening factors that they see continuing in Q1 this year
– Fresenius SE & Co (+5.7%): Upgraded to ‘buy’ at Bank of America
– Adidas (-2.2%): Cut to ‘underweight’ from ‘equal-weight’ at Morgan Stanley
* French Finance Minister Le Maire maintained his growth forecast of +1.7% for this year, adding that they are looking for ways to cut public spending.
* EU Brexit Minister Barnier said he thinks they need decisions and not more time for negotiations. He reiterated that the backstop cannot have a time limit, adding that the EU are ready to negotiate if the UK compromises on their red lines.
* Norwegian Unemployment Rate (Nov) 3.8% versus 4.0% expected, previous 4.0%
* Chinese Commerce Ministry said Vice Premier Lie He will go the US at the end of the month for in depth negotiations on economic and trade issues.
* French PMI Data (Jan P):
– Manufacturing 51.2 versus 49.9 expected, previous 49.7
– Services 47.5 versus 50.5 expected, previous 49.0
* Swedish Unemployment Rate (Dec) 6.4% versus 6.2% expected, previous 6.1%
* German PMI Data (Jan P):
– Manufacturing 49.9 versus 51.3 expected, previous 51.5
– Services 53.1 versus 52.1 expected, previous 51.8
* Norges Bank kept the key policy rate unchanged at 0.75%:
– The Executive Board’s assessment of the outlook and balance of risks suggested that the policy rate would most likely be raised in March 2019
– “Overall, new information indicates that the outlook for the policy rate for the period ahead is little changed since the December Report”, says Governor Øystein Olsen.
* Euro Zone PMI Data (Jan P):
– Manufacturing 50.5 versus 51.4 expected, previous 51.4
– Services 50.8 versus 51.5 expected, previous 51.2
* Swiss National Bank President Jordan said they are to continue monetary policy for some time, adding that they still have room to manoeuvre on interest rates.
* @PippaCrerar (Daily Mirror Political Editor): NEW: Cross-party MPs including @sarahwollaston and @ChukaUmunna announce they will NOT be tabling an amendment for a second referendum for now. Labour MP @lucianaberger appeals to @jeremycorbyn to “do the right thing” as plan doesn’t have the numbers without him.
* France sold €8.957 Bln of multiple OAT’s versus €8.0-9.0 Bln target
* Bank of England Governor Carney said data has borne out their Brexit predictions. He added that it was not automatic which way rates would move in the event of a hard Brexit.
* @bbclaurak (Political Editor, BBC): Meetings so far with other union leaders don’t sound like they have got v far – PM apparently didn’t rule out extending article 50 but didn’t broach any other major changes to her plan
