2018Jan

FC: EUROPEAN MIDDAY/US MORNING REPORT: TUESDAY – 30TH – JANUARY – 2018 January 30, 2018 at 11:32AM

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European cash equity markets are broadly lower ahead of the midway stage, continuing the trend seen late on Wall Street and Asia overnight (FTSE -0.5%, DAX -0.5%, CAC -0.3%). Basic resources are leading declines in the Stoxx 600 amid fears of a possible power crisis in the Chinese province of Shanxi. The Swiss SMI index has managed to buck the trend however and inched higher after watcher maker Swatch reported a sizeable FY profit increase and improved outlook. In fixed, core EU bonds are onside with German government debt outperforming its UK counterpart after some mixed macro releases. German State CPI’s offered three lower YoY readings and two above while the largest state of North Rhine Westphalia unchanged at +1.5%. UK mortgage approvals were soft but balanced by stronger readings for consumer credit and mortgage lending. Euro Zone confidence indicators were flat to slightly softer while Q4 GDP numbers were in line. US Treasuries have also edged higher and the pullback in US yields has weighed on the Dollar this morning while analysts have also highlighted some month-end related selling of the Greenback. Moves elsewhere in FX have been relatively muted so far, the Swiss Franc is currently at the top of the G10 pile. In commodity space, oil prices are offside with US crude futures losing over 1.0% at the lows while gold prices are up around 0.3%. Looking ahead, futures are pointing to a lower open on Wall Street with triple digit losses for the DJIA. Data wise, pan German CPI, US house prices and consumer confidence are all due before possible comments from BoE Governor Carney and ECB’s Mersch.

 

Key Headlines/Data:

*  European Corporate News:

  • SAP (-0.8%): Q4 Operating Profit €2.36 Bln versus €2.40 Bln expected  |  Revenue €6.81 Bln versus €6.84 Bln
  • Philips (-2.2%): Q4 Ad. EBITDA €884 Mln versus €898 Mln expected  |  Revenue €5.30 Bln versus €5.39 Bln
  • Anglo American (-1.9%)/BHP Billiton (-1.4%): Chinese Shanxi province has asked coal miners to shorten or cancel staff holidays during upcoming Spring Festival to avoid  a power crisis; wants to tame a price rally and ensure fuel supplies.
  • Swatch (+3.1%): 2017 net profit rose 27% to €733 Mln  |  Projects a positive outlook for 2018
  • Telecom Italia (+2.4%): Sources suggest they have drawn up plans to put its network into a separate company fully owned by the group

*  French GDP Data (Q4 A):

  • GDP Q/Q +0.6% versus +0.6% expected, previous +0.6% revised to +0.5%
  • GDP Y/Y +2.4% versus +2.3% expected, previous +2.3%

*  French Consumer Spending Data (Dec):

  • Consumer Spending M/M -1.2% versus -0.1% expected, previous -2.2% revised to +3.0%
  • Consumer Spending Y/Y +1.0% versus +1.6% expected, previous +1.2% revised to +2.1%

*  Sources said the German government have upped their 2018 inflation forecast to +1.7% from +1.6%

*  German State CPI (Dec):

  • Saxony: M/M -0.8%, previous +0.6%  |  Y/Y +1.4%, previous +1.7%
  • Brandenburg: M/M -0.5%, previous +0.6%  |  Y/Y +1.7%, previous +1.5%
  • Bavaria: M/M -0.7%, previous +0.5%  |  Y/Y +1.8%, previous +1.7%
  • Hesse: M/M -0.8%, previous +0.6%  |  Y/Y +1.3%, previous +1.7%
  • North Rhine Westphalia: M/M -0.6%, previous +0.5%  |  Y/Y +1.5%, previous +1.5%
  • Baden Wuerttemberg: M/M -0.7%, previous +0.6%  |  Y/Y +1.7%, previous +1.8%

*  Spanish GDP Data (Q4 P);

  • GDP Q/Q +0.7% versus +0.7% expected, previous +0.8%
  • GDP Y/Y +3.1% versus +3.1% expected, previous +3.1%

*  Italian Confidence Indicators (Jan):

  • Consumer Confidence 115.5 versus 116.87 expected, previous 116.6
  • Manufacturing Confidence 109.9 versus 110.5 expected, previous 110.5
  • Economic Sentiment 105.6, previous 108.9

*  UK Lending Data (Dec):

  • Consumer Credit £1.5 Bln versus £1.4 Bln expected, previous £1.4 Bln revised to £1.5 Bln
  • Net Lending Secured On Dwellings £3.7 Bln versus £3.4 Bln expected, previous £3.5 Bln revised to £3.7 Bln
  • Mortgage Approvals 61.0K versus 66.0K expected, previous 65.1K revised to 64.7K
  • Money Supply – M4 Y/Y +3.7%, previous +3.7% revised to +3.8%

*  Euro Zone GDP Data (Q4 A):

  • GDP Q/Q +0.6% versus +0.6% expected, previous +0.6% revised to +0.7%
  • GDP Y/Y +2.7% versus +2.7% expected, previous +2.7% revised to +2.8%

*  Euro Zone Confidence Indicators (Jan):

  • Consumer Confidence F 1.3 versus 1.3 flash/expected
  • Economic Confidence 114.7 versus 116.2 expected, previous 116.0 revised to 115.3
  • Business Climate Indicator 1.54 versus 1.68 expected, previous 1.66 revised to 1.60
  • Industrial Confidence 8.8 versus 8.9 expected, previous 9.1 revised to 8.8
  • Services Confidence 16.7 versus 18.6 expected, previous 18.4 revised to 18.0

*  Italy sold €7.00 Bln of 2022, 2028 & 2067 BTP’s versus €5.5-8.0 Bln target:

  • Sold €1.75 Bln of a 2022 BTP: Bid to Cover 1.61  |  Yield 0.66%
  • Sold €4.50 Bln of a 2022 BTP: Bid to Cover 1.25  |  Yield 2.06%
  • Sold €0.75 Bln of a 2022 BTP: Bid to Cover 1.85  |  Yield 3.19%

*  @dpa_intl: German Chancellor Merkel’s conservative bloc, Social Democrats reach agreement on refugee family reunions, overcoming key hurdle in path to forming coalition government.

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