Risk sentiment has soured in Europe this afternoon with European and US stocks moving the downside. Perceived safe-haven assets have rallied meanwhile with core EU bonds and Treasuries moving higher while the Japanese Yen moved to the top of the G10 pile. Trade war concerns appear to have resurfaced with notable losses seen in Boeing who could be one of the worst hit by Trump’s plan to slap $60Bln of tariffs on Chinese goods. On the data front, the US Dollar saw only a minor dip on a weak US retail sales report while PPI figures were in line with expectations. The Euro continues to lag after dovish ECB chatter earlier today, including from President Mario Draghi who warned that the upward trend of inflation is still subject to some degree of uncertainty and downside risks have not disappeared. Sterling has also lost some ground in recent trade after Russia said they will react to British actions in a fast, tough and reciprocal manner. Earlier this afternoon, UK PM May announced the expulsion of 27 Russian Diplomats in relation to the poisoning of a former Russian spy, adding that Russia has made an unlawful use of force in the UK.
* US Corporate News:
- Broadcom (-1.3%) | Qualcomm (-2.4%): Broadcom withdraws offer to acquire Qualcomm
- Ford (+3.1%): Ford recalls nearly 1.4 Mln cars | Morgan Stanley upgraded to overweight
- Boeing (-4.4%): CNBC – China’s path to tariff retribution could begin with Boeing
- United Continental (-2.5%): Facing criticism after a dog died after being placed in the overhead bin during a flight.
- Walt Disney (0.0%): Announces strategic reorganization
* Saudi Arabian Energy Ministry said they will keep oil production below 10 Mln BPD in April, while exports will remain under 7 Mln BPD.
* ECB Vice President Constancio said there is no margin for complacency on macro-prudential readiness
* EU Commission Proposes Measures to Speed up Offloading of Banks’ Bad Loans (Reuters):
- The European Commission proposed on Wednesday new measures to make banks set aside more money for new loans that turn bad and facilitate the offloading of the existing non-performing loans, in a move meant to reduce risks in the banking sector.
* US MBA Mortgage Applications (Mar 5) +0.9%, previous +0.3%
* US Retail Sales Data (Feb):
- Advance Retail Sales M/M -0.1% versus +0.3% expected, previous -0.3% revised to -0.1%
- Retail Sales Ex. Auto M/M +0.1% versus +0.4% expected, previous 0.0% revised to +0.1%
- Retail Sales Ex. Auto & Gas M/M +0.3% versus +0.3% expected, previous -0.2% revised to -0.1%
- Retail Sales Control Group M/M +0.1% versus +0.4% expected, previous 0.0%
* US Producer Price Index (Feb):
- PPI M/M +0.2% versus +0.1% expected, previous +0.4%
- PPI Y/Y +2.8% versus +2.8% expected, previous +2.7%
- PPI Ex. Food & Energy M/M +0.2% versus +0.2% expected, previous +0.4%
- PPI Ex. Food & Energy Y/Y +2.5% versus +2.5% expected, previous +2.2%
* UK PM May makes statement on Russia:
- May says Russia has not given a satisfactory response to the poisoning, has shown sarcasm, contempt and defiance
- Says Russia has made an unlawful use of force in the UK
- Says they are to expel 23 Russian Diplomats
- Says there is no alternative conclusion other than the Russia state was culpable for the attempted murder of Mr Skripal and his daughter
* OPEC Monthly Oil Report:
- Sees non-OPEC supply at 1.66 Mln BPD in 2018, up from 1.40 Mln BPD
- Sees higher demand growth this year at 1.60 Mln BOD, up from 1.59 Mln BPD
* Fitch says US, Euro Zone and China are all likely to grow well above trend in 2018:
- Says the global economy is experiencing boom like growth and central banks are becoming less cautious as inflation risks rise
- Expects oil prices to fall back below $60/barrel
- Expects the Fed to raise rate no less than seven-times before the end of next year
* US Business Inventories M/M (Jan) +0.6% versus +0.6% expected, previous +0.4% revised to +0.6%
* ECB’s Villeroy said the ECB are on course for gradual normalization. He added that economic growth is robust and there is gradual progress on inflation
* Fitch: Shale is Still the Key Long-Term Constraint on Oil Prices:
- Fitch Ratings-London-14 March 2018The OPEC-plus production cut agreement has improved the near-term outlook for oil prices, but U.S. shale growth and responsiveness should result in a production surplus this year, Fitch Ratings says.
- We think that this is likely to take prices back below USD60/bbl, and that shale’s ability to meet a significant portion of global demand growth will keep prices in the USD50-60/bbl range over the long term.
* DoE Weekly Oil Inventories:
- Crude +5.0 Mln versus +2.6 Mln expected, previous +2.4 Mln
- Distillate -4.4 Mln versus -1.3 Mln expected, previous -0.6 Mln
- Gasoline -6.3 Mln versus -1.6 Mln expected, previous -0.8 Mln
* Fitch: Global Growth Is Booming, Central Banks Turning Less Cautious:
- Fitch Ratings-London-14 March 2018: The global economy is experiencing boom-like growth conditions and central banks are becoming less cautious as inflation risks rise, according to Fitch’s latest “Global Economic Outlook” (GEO).
- The US, eurozone and China are all likely to grow well above trend in 2018 and global economic growth is set to remain above 3% for three consecutive years until 2019, a performance not achieved since the mid 2000s.
* White House Looks to Slash China’s Bilateral Trade Surplus by $100 Billion (WSJ):
- The U.S. is pressing China to reduce Beijing’s bilateral trade surplus by $100 billion, a White House spokeswoman said.
* Italian Northern League Salvini said he is open to all possibilities to form a majority apart from with the Democratic Party, but will only try to form a government as part of the centre-right coalition. He also said the Euro was and remains a flawed currency.
* Russian Upper House of Parliament head says Russian will react to British actions in a fast, tough and reciprocal manner.
* US Commerce Secretary Ross said he is optimistic a deal can be reached on NAFTA.