European cash equity markets are broadly lower ahead of the midway stage with the Euro Stoxx 600 flirting with Thursday’s two-year low (FTSE -0.2%, DAX -0.4%, CAC -0.4%, FTSE MIB -0.3%). Chemical stocks are the worst performers, dragged lower by Germany’s BASF who slumped after issuing a profit warning. Trade sensitive stocks, including basic resources and autos, have also underperformed as US-China trade tensions remained elevated over the weekend. In the bond markets, both US and German ten-year yields have advanced but UK borrowing costs have declined slightly with weaker than expected UK macro data providing a weight. The data also put Sterling onto the back foot and we saw further losses for the pound in recent trade amid rumours UK PM May could pull tomorrow’s Brexit vote. Elsewhere in FX, the Dollar Index is flat around 96.7 having pared an overnight drop. The New Zealand Dollar is the strongest of the G10 currencies, closely followed by the Norwegian Krone which jumped after stronger-than-expected CPI data. Turning to commodities, oil prices have retreated this morning with US crude futures and Brent both down over one-percent. Spot gold has lost -0.2%. Looking ahead, futures are pointing to a slightly lower open on Wall Street. Data wise, we await US JOLTS job openings and employment trends index plus Canadian housing starts and building permits.
Key Headlines/Data:
* European Corporate News:
– BASF (-4.3%): Now expects a 15-20% decrease in FY18 earnings, previously saw a slight decline.
* Theresa May makes eleventh hour phone call to Donald Tusk as she considers postponing ‘doomed’ vote (Telegraph):
– Theresa May held 11th-hour crisis talks with EU leaders on Sunday as she agonised over whether to postpone Tuesday’s “doomed” vote on her Brexit deal.
– With time rapidly running out, Mrs May phoned Donald Tusk, the European Council president, to explain that MPs would kill off the deal – and possibly her premiership – unless Brussels could throw her a lifeline.
* Swiss Unemployment Rate (Nov) 2.4% versus 2.4% expected, previous 2.5%
* German Trade Balance (Oct) €17.3 Bln versus €17.7 Bln expected, previous €17.6 Bln:
– Exports M/M +0.7% versus +0.5% expected, previous -0.8%
– Imports M/M +1.3% versus +0.4% expected, previous -0.4%
* Norwegian CPI Data (Nov):
– CPI M/M +0.5% versus +0.1% expected, previous -0.2%
– CPI Y/Y +3.5% versus +3.1% expected, previous +3.1%
– Core CPI Y/Y +2.2% versus +1.8% expected, previous +1.6%
* Bank of France cut their Q4 GDP forecast to +0.2% from +0.4%
* Italian Industrial Production Data (Oct):
– Industrial Production M/M +0.1% versus -0.4% expected, previous -0.2% revised to -0.1%
– Industrial Production Y/Y +1.0%, previous +1.3% revised to +1.4%
* Irish Foreign Minister Coveney said the Brexit deal agreed with the UK will not change.
* UK Industrial Production Data (Oct):
– Industrial Production M/M -0.6% versus -0.4% expected, previous 0.0%
– Industrial Production Y/Y -0.8% versus -0.2% expected, previous +1.0%
* UK Trade Balance (Oct) -£11.88 Bln versus -£10.50 Bln expected, previous -£9.73 Bln revised to -£10.68 Bln
* UK GDP (3M/3M (Oct) +0.4% versus +0.4% expected, previous +0.6%
* Euro Zone Sentix Investor Confidence (Dec) -0.3 versus 8.3 expected, previous 8.8
* @tnewtondunn (Political Editor – The Sun) – The PM has called together all her senior aides for a meeting on the Meaningful Vote in No10 now. A decision on whether to pull it appears imminent.
* Spokeswoman for UK PM May said tomorrows Brexit vote is going ahead as planned, adding that PM May was confident of winning the vote.
