2018Feb

FC: EUROPEAN OPENING REPORT : MONDAY – 12TH – MARCH – 2018 March 12, 2018 at 05:50AM

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US stocks added to earlier gains on Friday. Investors welcomed reduced fears of global trade war as US President Trump signalled an openness to exemptions beyond Canada and Mexico to his proposed import tariffs. Sentiment for risk was also boosted by improving relations between the US and North Korea amid speculation of a meeting between the two leaders. Sector wise, oil related stocks saw slight outperformance as prices rallied with US crude futures settling at $62.04 (+$1.92). Elsewhere, there was a mixed reaction to the US jobs report as the Dollar softened but US yields moved higher. The jobs figure itself was impressive with a hefty 313K jobs created in January, way above the market consensus for around 200K. However, average hourly earnings were on the soft side as the January print was revised a tenth lower to +2.8% y/y and February slowed to +2.6% y/y.

Over the weekend, US President Trump said a deal with North Korea very much in the making. In US steel and aluminium tariff news, Trump tweeted that he spoke with Australian PM Turnbulll and that they are working on a security agreement so they don’t have to impose steel tariffs on Australia, while Japan Trade Minister Seko said there is still time to seek steel tariff exemption. On the search for Gary Cohn’s replacement, the NYT reported that Christopher Liddell is strongly being considered for the role of Chief Economic Adviser. At the Fed, St. Louis Fed Governor Bullard said four rate hikes this year could slow the economy, adding if the Fed went too far they would start to put downward pressure on inflation in an environment where inflation is already below target. In oil news, the WSJ reported that OPEC is divided on the right price for oil, stating Iran wants oil around $60 a barrel, while Saudi Arabia wants it at $70.

Following the strong gains in the US on Friday, Asian bourses ascended. Japan’s Nikkei 225 had outperformed in the early stages of Monday’s session but pared some of its gains after NHK reported Japan’s Finance Ministry will admit to parliament that alterations were made to documents on a controversial state land deal. Following the headline, Japan’s Chief Cabinet Secretary Suga said Finance Minister Aso should take charge of investigation into land sale issue that is ongoing, while Kyodo, citing a government source, said the name of Japanese PM Abe’s wife was removed from related documents to controversial land sale. Usd/Jpy fell to session lows on the news as risk sentiment was partially dented. On the data front, Japan’s BSI large manufacturing rose 2.9% q/q in Q1, while all industry climbed 3.3% q/q. In other news, the PBoC set the yuan mid-point at 6.3333 against the Dollar and injected 50 Bln yuan via 7-day reverse repos and 40 Bln yuan via 28-day reverse repos.

Looking ahead, at 05:30 GMT, we get Dutch manufacturing production, followed by Japanese machine tool orders at 06:00 GMT. Next at 07:00 GMT, we get Danish CPI, trade balance & current account balance, Swedish unemployment and Turkey’s current account balance, followed by Sweden’s housing price indicator at 07:30 GMT. Then at 10:00 GMT, we get Greek industrial production, followed by Portugal’s CPI and trade balance at 11:00 GMT.

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