EUROPEAN MIDDAY/US MORNING REPORT: WEDNESDAY – 28TH – NOVEMBER – 2018
EUROPEAN MIDDAY/US MORNING REPORT
WEDNESDAY – 28TH – NOVEMBER – 2018
European cash equity markets are mostly higher ahead of the midway stage with Stoxx 600 touching its best level since last Monday at the open (FTSE -0.1%, DAX +0.2%, CAC +0.4%, FTSE MIB -0.1%). Technology stocks
are leading gains, tracking a notable premarket rally in US cloud software firm SalesForce.com who beat on earnings overnight. Italian banks have also outperformed as investors hold out hope that the government will be able to settle the budget dispute with
the EU. Commission Vice President Dombrovskis did warn this morning that Italy will need to make substantial corrections to their draft 2019 budget while Handelsblatt suggested they could begin disciplinary action before Christmas. In the bond markets, both
the UK and German ten-year benchmarks have edged higher and came within touching distance of their recent long-term peaks before easing back. There was little reaction shown to macro data, including a drop in German GFK consumer confidence to 10.4 (f/c. 10.5)
from 10.6 and stronger Euro Zone M3 at +3.9% YoY (f/c. +3.5%). Turning to currencies, the Dollar Index is flat at 97.3 while Sterling outperforms and Gbp/Usd flirts with the $1.28 handle. Oil prices are lower meanwhile with US crude futures down around -1.0%
and Brent down -0.4%. Saudi Energy Minister al-Falih said recent oil market volatility has been amplified by geopolitics. He added that he is hopeful the upcoming meetings will reach a consensus to stabilise the market but warned Saudi Arabia will not and
cannot reduce output on their own. Looking ahead, futures are pointing to a higher open on Wall Street as investors await the latest look as US third-quarter GDP. We also expect possible comments from the ECB’s Praet and Coeure plus the DoE oil inventory report.
* European Corporate News:
- LafargeHolcim (+5.9%): Sees lower FY19 sales of 3-5% versus 4-6% prior but higher profitability | Confirmed full-year targets
- EDF (+2.6%): French government told EDF to make structural changes to improve efficiency
- Danone (-2.3%): Goldman Sachs downgrade the stocks to ‘sell’ from ‘neutral’
- Renault (+1.4%): Planning internal audit of Ghosn’s compensation
- Marks & Spencer (-0.9%): Cut to ‘sector-perform’ from outperform at RBC
- Astrazeneca (+0.2%): Cut to ‘hold’ from ‘buy’ at New Street Research
* Theresa May could suffer a 200-vote defeat when the Commons decides on her Brexit deal — dealing a fatal blow to her Premiership (The Sun):
- One has even said there is “zero chance” the deal will get through. But No 10 has warned that the PM will not ditch the deal — and will keep pushing it through Parliament until it passes.
* UK Finance Minister Hammond said a ‘no-deal’ Brexit could clearly happen.
* Handelsblatt: EU Commission could begin disciplinary action before Christmas, possible on December 19th according to sources
* EU Dombrovskis said Italy will need to make substantial corrections to their draft 2019 budget.
* Interfax: Russian Defence Ministry are to deploy more S-400 missiles on the Crimea peninsula.
* German GFK Consumer Confidence (Dec) 10.4 versus 10.5 expected, previous 10.6
* Swedish Consumer Confidence (Nov) 97.5 versus 99.0 expected , previous 99.5 revised to 98.5
* Swedish Retail Sales Data (Oct):
- Retail Sales M/M -1.1% versus +0.2% expected, previous +0.5%
- Retail Sales Y/Y -0.1% versus +2.0% expected, previous +2.1%
* Swiss ZEW Survey – Expectations (Nov) -42.3, previous -39.1
* Euro Zone Money Supply – M3 Y/Y (Oct) +3.9% versus +3.5% expected, previous +3.5%
* Spokesman for the Russian Kremlin said the Putin-Trump meeting is still set to go ahead.
* Saudi Energy Minister al-Falih said recent oil market volatility has been amplified by geopolitics. He added that he is hopeful the upcoming meetings will reach a consensus to stabilise the market but warned
Saudi Arabia will not and cannot reduce output on their own.
* Italian Finance Minister Tria said the government are in talks with the EU to find a shared improvement to the budget.
* Germany sold €1.683 Bln of a 2028 bond versus €2.0 Bln target:
- Bid to Cover: 1.64
- Yield: 0.34%