European cash equity markets are mostly lower ahead of the midway stage, tracking declines in Asia overnight (FTSE -0.1%, DAX -0.3%, CAC -0.5%). Basic resources are leading declines following reports late yesterday that White House economic adviser Cohn is to resign – Cohn was seen as one of Trump’s market friendly appointments and his departure has increased concerns of a global trade war. As such, futures are also pointing to a lower open on Wall Street with DJIA futures down over three-hundred points. Core EU bonds are ahead with Gilts showing minor outperformance over their German counterparts. Treasuries are also firmly in the green although have yet to trouble the overnight peaks. Macro releases were largely ignored with Euro Zone GDP confirmed at the prior reading of +0.6% QOQ and +2.7% YoY. In currency space, the Japanese Yen is the outperformer among the G10’s boosted by safe haven demand while the Canadian Dollar is the weakest on trade concerns. Elsewhere, oil prices are in the red with US crude futures losing over one-percent at the lows after a larger-than-expected build in API US crude inventories overnight. Looking ahead, data releases include US ADP employment change, trade data, non-farm productivity and unit labor costs plus Canadian trade figures and the BoC policy decision. We also expect comments from New York Fed President Dudley and Atlanta Fed President Bostic.


Key Headlines/Data:

* European Corporate News:

– Deutsche Post (-1.4%): Q4 net profit fell to €837 Mln from €841 Mln a year ago | Revenue rose 4.5% to €16.11 Bln | Proposed dividend of €1.15 for 2017, up from €1.05

– Legal & General (+0.6%): FY17 operating profit £2.1 Bln versus £1.9 Bln expected | To pay total dividend of 15.35p/share versus 15.31p expected

– Rolls Royce (+12.%): FY17 pre-tax profit £4.9 Bln, versus a loss of £4.64 Bln a year ago | Revenue rose 9% to £16.31 Bln

– Publicis (-1.8%) | WPP (-1.9%): FT – Procter & Gamble, the consumer goods group and world’s biggest advertiser, said it would “take back control” of its marketing and move more of it in-house, saving $2bn in spending with ad agencies.

– Anglo American (-2.2%) | BHP Billiton (-2.3%) | Rio Tinto (-1.7%): US import tariffs seen more likely with Cohn resignation


* May ‘double cherry-picking’ on Brexit, says leaked EU report (Guardian):

– Brussels analysis dismisses proposed model on trade as unworkable

* Forza Italia leader Berlusconi said he would support Leda Nord and leader Matteo Salvini in their attempt to form a government.


* French Trade Balance (Jan) -€5.56 Bln versus -€4.45 Bln expected, previous -€3.47 Bln:

– Current Account Balance -€1.60Bln, previous -€0.9 Bln


* UK Halifax House Prices (Feb):

– House Price Index M/M +0.4% versus +0.4% expected, previous -0.6% revised to -0.5%

– House Price Index Y/Y +1.8% versus +1.6% expected, previous +2.2%


* Euro Zone GDP Data (Q4 F):

– GDP Q/Q +0.6% versus +0.6% expected, previous +0.6%

– GDP Y/Y +2.7% versus +2.7% expected, previous +2.7%


* Germany sold €3.52 Bln of a 2023 bond versus €4.0 Bln target:

– Bid to Cover: 1.3, previous 1.3

– Yield: 0.05%, previous 0.08%


* EU Trade Plan Falls Short of What U.K. Is Seeking (Bloomberg):

– The European Union’s draft guidelines for a trade deal with Britain falls short of the comprehensive arrangement that Prime Minister Theresa May is demanding, Bloomberg News reports.

– According to the document seen by Bloomberg, to be published later by EU President Donald Tusk, the bloc will start working toward an arrangement similar to its trade deal with Canada, with limited access to the EU’s single market for British financial firms.


* EU Trade Commissioner Malstrom said he still hopes that the EU will be excluded from US tariffs. She said the EU are getting ready to put in place safeguard measures to prevent metal flooding into the EU. He added that the EU will respond in a proportionate way.


* EU rejects UK’s plans for post-Brexit trade relationship (FT):

– The EU has forcefully rebuffed Theresa May’s vision for trade after Brexit, laying out a narrow view of future relations with the UK and warning of the “negative economic consequences” of her choices.

– Being outside the customs union and the single market will inevitably lead to frictions,” the guidelines state.

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