2018Mar

FC: EUROPEAN MIDDAY/US MORNING REPORT: TUESDAY – 13TH – MARCH – 2018 March 13, 2018 at 11:02AM

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European cash equity markets are mostly higher ahead of the midway stage (FTSE 0.0%, DAX +0.1%, CAC +0.5%). Utilities are leading gains for the second session following news of the RWE/EON/Innogy deal. UK miner Antofagasta has also jumped after they reported a surge in full-year profits and raises their dividend. Core EU bonds have also crept higher this morning amid a quiet data slate – Spanish CPI was unchanged from the flash readings  (+1.1% YoY) while Italian unemployment edged down to 11.0% (f/c. 11.0%) from 11.2%. Treasuries are slightly lower meanwhile with US CPI data to follow this afternoon. In currency space, the Japanese Yen is the underperformer while the New Zealand Dollar has strengthened for a second session. The Dollar Index is in the green and just about holding above the 90 level. Elsewhere, oil prices are onside with small gains seen in Brent and WTI while gold prices have shed a few dollars on the day. EU Brexit Minister Barnier warned the UK cannot expect to be a third country and have EU membership post-Brexit. He added that they are ready to replace the backstop option on Ireland if the UK proposes a better solution to the border issue. In Italy, Northern League Deputy Leader Giorgetti said there is a more than 50% chance of a new vote in Italy this year. Looking ahead, futures are pointing to a slightly higher open on Wall Street. Data wise, the aforementioned US CPI report at 12:30 GMT will be the main focus for investors.

 

Key Headlines/Data:

*  European Corporate News:

  • RWE (+2.2%): FY17 net profit €1.9 Bln versus €2.4 Bln expected  |  Adj. net income €1.23 Bln versus €1.22 Bln expected  |  Will propose dividend of €1.50/share for 2017
  • Antofagasta (+1.9%): FY17 net profit $750.6 Mln, up from $158 Mln a year ago  |  Revenue $4.75 Bln versus $4.70 Bln  |  Proposed final dividend of 40.6 cents/share
  • EON (+5.6%):EON to acquire RWE’s share in Innogy with RWE taking a significant stake in Eon in return  |  EON to pay €1.5 Bln in cash to RWE
  • Anglo American (-0.1%): Halts output at its Brazil ore unit after duct failure
  • Veolia (-2.0%): Qatar sovereign wealth fund to sell stake worth $640 Mln

*  Northern League Deputy Leader Giorgetti said there is a more than 50% chance of a new vote in Italy this year

*  French Private Sector Payrolls Q/Q (Q4 F) +0.3%, previous +0.3%

*  Spanish CPI Data (Q4 F):

  • CPI M/M +0.1% versus +0.1% expected, previous +0.1%
  • CPI Y/Y +1.1% versus +1.1% expected, previous +1.1%
  • CPI EU Harmonized M/M +0.1% versus +0.1% expected, previous +0.1%
  • CPI EU Harmonized Y/Y +1.2% versus +1.2% expected, previous +1.2%

*  EU Brexit Minister Barnier said the UK cannot expect to be a third country and have EU membership post-Brexit. He added that they are ready to replace the backstop option on Ireland if the UK proposes a better solution to the border issue.

*  EU Commission President Juncker said there is a solid raft text of the UK withdrawal pact. He did also warn that the UK will regret their Brexit decision.

*  Juncker later said they are ready for tit-for-tat levies against the US and will make a WTO complaint.

*  Italian Unemployment (Q4) 11.0% versus 11.0% expected, previous 11.2%

*  Italian Northern League party leader Salvini has rejected the idea of an alliance with the PD party

*  US NFIB Small Business Optimism (Feb) 107.6 versus 107.1 expected, previous 106.9

*  OECD raised their forecast for 2018 global growth to +3.9% from +3.6%, and 2019% to +3.9% from +3.6%:

  • US: Raises 2018 GDP to +2.9% from +2.5%, 2019 to +2.8% from +2.1%  |  Sees four US rate increases this year instead of three
  • Euro Zone: Raises 2018 GDP to +2.3% from +2.1%, 2019 to +2.1% from +1.9%
  • UK: Raises 2018 GDP to +1.3% from +1.2%, 2019 unch. at +1.1%

*  ECB’s Lane said there is no concerns about the current level of the Euro.

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