European cash equity markets are broadly lower ahead of the midway stage with the Euro Stoxx 600 touching a fresh one-week low in recent trade (FTSE -0.9%, DAX -0.6%, CAC -0.5%, FTSE MIB -0.7%). Oil related stocks have led the latest leg lower after the Norwegian government announced the government pension fund plans to divest from oil exploration and production companies. We have also seen notable underperformance in sectors with greater exposure to China such as basic resources and autos after Chinese trade data disappointed overnight. In fixed, German 10-Year bunds did extend slightly above yesterday’s post-ECB high while its US counterpart is little changed as investors look ahead to the US jobs report this afternoon. European macro data has promoted limited reaction meanwhile despite stronger-than-expected readings for French, Spanish and Italian industrial production. German factory orders were soft. Turning to currencies, the New Zealand Dollar has emerged as the strongest of the G10’s this morning while the Japanese Yen is not far behind on safe-haven demand. The Euro has also ticked higher and is holding onto the $1.12 handle having fallen sharply yesterday. On the Brexit front, recent press reports suggest UK PM May is to tell the EU that the outcome of a historic vote on her Brexit deal next week is in its hands. This follows a sources report overnight that said the EU offer fell short of what the UK was demanding. Elsewhere, oil prices are firmly in the red with US crude futures down almost two-percent at the lows while spot gold has added +0.6%. Looking ahead, futures are pointing to a lower open on Wall Street with all eyes on the jobs reports at 13:30 GMT (08:30 ET). We also await US housing starts and building permits plus Canadian labour market data.
Key Headlines/Data:
* European Corporate News:
– Deutsche Bank (-0.8%) | Commerzbank (-0.8%): Focus Magazine reporting CEO’s have resumed talks over a potential merger
– Roche (-0.6%): Wins European approval for Tecentriq Combo Vs Lung Cancer
– Rio Tinto (-1.6%): Says Amrun bauxite mine set for full production
– Linde (+1.5%): To sell South Korean arm for 1.3 Tln Won
– Sanofi (+1.0%): FDA to undertake priority review of Dupixent
– GlaxoSmithKline (+0.5%): Notes Positive Results From Two HIV Studies
– BMW (-1.7%): Downgraded to ‘sell’ at Bankhaus Lampe
* May Asks EU to Help Break Impasse With Days to Save Brexit (Bloomberg):
– U.K. Prime Minister Theresa May on Friday will tell the European Union that the outcome of a historic vote on her Brexit deal next week is in its hands, as signs emerged that the two sides are at least trying to make progress toward a deal.
* Bank of France Governor VIlleroy said the French economy will grow above average in the Euro Zone this year. He did also say that France are considering a capital buffer.
* German Factory Orders Data (Jan):
– Factory Orders M/M -2.6% versus +0.5% expected, previous -1.6% revised to +0.9%
– Factory Orders Y/Y -3.9% versus -3.2%% expected, previous -7.0% revised to -4.5%
* Norwegian GDP Mainlaind M/M (Jan) +0.3% versus +0.3% expected, previous 0.0%
* U.S.-China Trade Deal Isn’t Imminent So No Summit Date Set, Envoy Says (WSJ):
– The U.S. and China have yet to set a date for a summit to resolve their trade dispute, the U.S. ambassador to China said Friday, as neither side feels an agreement is imminent.
* Riksbank Floden said he is surprised by the recent weakening in the Swedish Krona, adding that fundamental suggest a stronger Krona ahead. He also said that the weaker currency will have a short term impact on inflation and that will need to be weighed into policy.
* French Trade Balance (Jan) -€4.2 Bln versus -€4.9 Bln expected, previous -€4.7 Bln revised to -€3.6 Bln
* French Industrial Production Data (Jan):
– Industrial Production M/M +1.3% versus +0.1% expected, previous +0.8% revised to 0.0%
– Industrial Production Y/Y % versus % expected, previous % revised to %
* Spanish Industrial Production Y/Y (Jan) +2.4% versus -1.4% expected, previous -6.2% revised to -5.9%
* ECB’s Nowotny said the ECB made the correct decision in reaction to a lot of external risks. He also argued that the new measures must be well-prepared.
* Italian Industrial Production Data (Jan):
– Industrial Production M/M +1.7% versus +0.1% expected, previous -0.8% revised to -0.7%
– Industrial Production Y/Y -0.8% versus -3.0% expected, previous -5.5%
* FT – Trump-Xi summit pushed back from end-March as details hammered out
* Norwegian government confirms they are proposing the exclusion of companies classified as exploration and production companies within the energy sector from the Government Pension Fund
