European cash equity markets are broadly higher ahead of the midway stage with the Euro Stoxx 600 touching a fresh five-month high at the open (FTSE %, DAX %, CAC %, FTSE MIB %). Basic resource stocks are among the best performers, boosted by weekend press reports that suggested the US and China are in the final stages of completing a trade deal. The Wall Street Journal article has also underpinned broader risk sentiment and saw both the Australian Dollar and New Zealand Dollar gap higher overnight before fading back towards the flat line. The US ten-year yield opened at a fresh six-week high but has also retreated and slipped into negative territory in recent trade. Elsewhere in currency space, Sterling has emerged as the one of the stronger G10 performers to start the week as the threat of a no-deal Brexit appears to have receded further over the weekend. According to the Guardian, Theresa May’s “hopes of winning parliamentary approval for her Brexit deal grew last night as the leader of Conservative backbenchers softened his opposition”. Gains in the pound were tempered somewhat by a soft Construction PMI print while the Euro is in the red despite softer stronger readings for Euro Zone Sentix Investor Confidence and producer prices. Elsewhere, oil prices are ahead with US crude futures and Brent both up around one-percent. Spot gold has lost -0.5%. Looking ahead, futures are pointing to a slightly higher open on Wall with outperformance seen in the Nasdaq. On the data front, we await US construction spending and ISM New York.
Key Headlines/Data:
* European Corporate News:
– Daily Mail & General Trust (+4.4%): To return £900 Mln to shareholders
– Ted Baker (+3.8%): CEO Ray Kelvin resigned with immediate effect
– Rotork (-4.1%): FY Pretax Profit £120.7 Mln
– Carlsberg (+1.9%): Raised to ‘outperform’ from ‘sector-perform’ at RBC
– Heineken (-0.4%): Cut to ‘sector-perform’ from ‘outperform’ at RBC
* U.S., China Close In on Trade Deal (Wall Street Journal):
– China and the U.S. are in the final stage of completing a trade deal, with Beijing offering to lower tariffs and other restrictions on American farm, chemical, auto and other products and Washington considering removing most, if not all, sanctions levied against Chinese products since last year.
* May’s hopes rise as senior Tory MPs soften opposition to Brexit deal (The Guardian):
– Theresa May’s hopes of winning parliamentary approval for her Brexit deal grew last night as the leader of Conservative backbenchers softened his opposition – and suggested he will recommend that MPs back it – if the prime minister secures new assurances on the Irish backstop.
* Your deal must pass our three tests, Tory Brexiteers tell Theresa May (The Times):
– Conservative Brexiteers have said that they are still some distance from being able to back Theresa May’s deal despite a softening in their stance.
* Spanish Unemployment M/M (Feb) +3.3K, previous +83.5K
* Euro Zone Sentix Investor Confidence (Mar) -2.2 versus -3.1 expected, previous -3.7
* UK Construction PMI (Feb) 49.5 versus 50.5 expected, previous 50.6 – Lowest since March 2018
– Slight fall in construction output, led by commercial and civil engineering work
– Housing is the only category to register growth in February
– Sharp deterioration in supplier performance
* Euro Zone PPI Data (Jan):
– PPI M/M +0.4% versus +0.4% expected, previous -0.8%
– PPI Y/Y +3.0% versus +2.9% expected, previous +3.0%
* The Greek debt agency has mandated banks and are planning to issue a ten-year bond in the coming days, according to sources.
