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Market Update – European Session: UK Retail Sales Miss Expectations

EU Mid-Market Update: Major European Manufacturing PMIs remain at multi-year highs; UK retail sales miss expectations


Major European Apr PMI Manufacturing data beats expectations to multi-year highs

ISIS claims responsibility for Paris shooting on eve of 1st round of Presidential election (6th terrorist attack in last three years)

The market likely unwilling to take on much risk ahead of French elections

US Congress returns from its spring break on Monday; has only a few days to resolve the debt ceiling issue before the current continuing resolution expires



BOJ’s Kuroda reiterated view to continue to pursue powerful easing until 2% inflation target achieved. Believe Japan had gained the global community’s understanding when we say we do not target currency when guiding monetary policy. No comment on President Trump’s remark that the USD was too strong; cautioned against unwinding free trade

Japan Fin Min Aso: No issue with US President Trump’s comments that USD was too strong; Discussed Japan efforts to raise potential growth rate and global economy at recent G20


Police responded to shots fired near Champs Elysee in Paris, France; one policeman killed with several others wounded. Gunman subsequently shot dead by French police; Islamic State claimed responsibility for attack

German Bundesbank’s Dombret (ECB SSM member): Germany surplus was not Germany’s fault. Situation could not be controlled as country did not have its own currency


Treasury Sec Mnuchin: Tax reform will be passed before end of 2017; will put forward a sweeping plan very soon; Infrastructure remains a big priority

Economic Data

(NO) Norway Mar Trade Balance (NOK): 22.7B v 23.5B prior

(NO) Norway Q1 Industrial Confidence: +1.1 v -0.2 prior

(NL) Netherlands Mar House Price Index M/M: 1.1% v 0.3% prior; Y/Y: 7.3 v 6.7% prior

(FR) France Apr Preliminary Manufacturing PMI (beat): 55.1 v 53.1e (7th month of expansion and and highest since Apr 2011), Services PMI: 57.7 v 57.0e, Composite PMI: 57.4 v 56.2e

(ES) Spain Feb Trade Balance: No est v -€3.1B prior

(DE) Germany Apr Preliminary Manufacturing PMI (beat): 58.2 v 58.0e (just off 6-year highs), Services PMI: 54.7 v 55.5e, Composite PMI: 56.3 v 56.8e

04:00 (EU) Euro Zone Apr Preliminary Manufacturing PMI: 56.8 v 56.0e (46th month of expansion and highest since Apr 2011), Services PMI: 56.2 v 55.9e, Composite PMI: 56.7 v 56.4e

(EU) Euro Zone Feb Current Account (Seasonally Adj): €37.9B v €26.1B prior; Current Account NSA (unadj): €27.9B v €3.1B prior

(UK) Mar Retail Sales (Ex Auto Fuel) M/M: -1.5% v -0.5%e; Y/Y: 2.6% v 3.8%e

(UK) Mar Retail Sales(Including Auto/Fuel) M/M: -1.8% v -0.5%e; Y/Y: 1.7% v 3.3%e

(HK) Hong Kong Mar CPI Composite Y/Y: 0.5% v 0.5%e

(HK) Hong Kong Mar Unemployment Rate: 3.2% v 3.3%e

Fixed Income Issuance:

(IN) India sold total INR150B vs. INR150B indicated in 2024, 2029, 2033 and 2051 bonds


Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 -0.5% at 3,425, FTSE +0.1% at 7,124, DAX flat at 12,025, CAC-40 -0.8% at 5,040, IBEX-35 -0.4% at 10,336, FTSE MIB -0.4% at 19,763, SMI -0.2% at 8,541, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European equity indices are trading mixed but generally lower as market participants remain cautious after the recent terror attack in Paris, and ahead of the highly anticipated first round of the presidential elections in France on Sunday; Banking stocks generally higher in the Eurostoxx with shares of SocGen and BNP Paribas leading the sector gains; shares of Koninklijke Philips also trading notably higher in the index as shares of its spin-off company Philips Lighting reported higher y/y results; shares of Danone the notable laggard in the index despite releasing higher y/y sales results and raising their FY outlook; Commodity and mining stocks trading notably higher in the FTSE 100 as copper prices trade higher intraday; energy stocks in the index trading negative as oil prices consolidate near weekly lows; shares of Reckitt Benckiser the notable laggard in the index after reporting lower than expected LFL sales results.

Upcoming scheduled US earnings (pre-market) include General Electric, Gentex, Honeywell International, Interpublic Group, Kansas City Southern, Manpowergroup, NextEra Energy, Rockwell Collins, Steven Madden, Schlumberger, SunTrust Banks, Stanley Black & Decker, WABCO Holdings, and Webster Financial.

Equities (as of 09:50 GMT)

Consumer Discretionary: [WS Atkins ATK.UK +5.1% (Reached agreement on the terms and conditions on acquisition by SNC-Lavalin for £20.80/shr in cash)]

Consumer Staples: [Danone BN.FR -2.2% (Q1 sales, raises outlook)]

Financials: [Deutsche Bank DBK.DE +0.1% (to pay a penalty of $157M to Federal Reserve for violating forex trading and Volcker)]

Healthcare: [Reckitt Benckiser RB.UK -1.2% (Q1 sales)]

Industrials: [Philips Lighting LIGHT.NL +2.2% (Q1 results), SSAB SSABA.SE +8.8% (Q1 results)]

Technology: [Software SOW.DE +7.0% (prelim Q1 results)]


France Presidential candidate Le Pen (Far right): France must immediately reinstate border checks; Expel foreigners who are on the watch lists of intelligence services.

China Foreign Ministry Lu Kang: China and US have improved mutual understanding on North Korea issue. China upholds using dialogue to resolve North Korea issue


FX markets were relatively quiet in the session. Market appeared to be unwilling to take on much risk ahead of the French 1st round of the Presidential election. Consensus expect a market-friendly outcome and likely strengthen EUR currency pairs and provide opportunity to buy USD/JPY.

EUR/USD little changed in the session despite better PMI data for the major countries. Pair staying above the 1.07 level and off its multi-week highs registered earlier in the week

GBP/USD was slightly softer after Mar Retail Sales came in below expectations. UK Mar Retail Sales fell steeply fueled by the pound’s sharp post-Brexit vote depreciation caused Britons to rein in spending. Pair hovering around 1.28 just ahead of the NY morning.

Fixed Income

Bund futures trade at 162.81 up 7 ticks consolidating below 163 on generally upbeat PMI data out of Germany and France. Futures target support at 162.52 yesterday low initially followed by 162.25. Resistance moves to 163.44 followed by 163.99.

Gilt futures trade at 128.61 up 23 ticks trading towards day highs after weaker than expected March retail sales figures out of the UK. Continuation higher targets yesterday high at 128.66 then 128.76 followed by 129.14. Short Sterling curve is flattening with the fronts flat to up 2bp, with Jun17Jun18 flattening to 9bp choice.

Friday’s liquidity report showed Thursday’s excess liquidity rose to €1.568T a rise of €2B from €1.566T prior. Use of the marginal lending facility rose to €223M from €206M prior.

Corporate issuance saw no activity yesterday, with issuance for the week just below $24B.

For the week ending April 19th Lipper fund flows reported IG funds net inflows of $1.45B bringing YTD inflows to $43.34B. High yield funds reported out flows of $362.2M bringing YTD outflows of $4.27B.

Looking Ahead

(UR) Ukraine Mar Industrial Production M/M: -2.5%e v -2.2% prior; Y/Y: -1.3%e v -4.6% prior

06:00 (UK) DMO to sell combined £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively)

06:00 (IE) Ireland Mar PPI M/M: No est v 0.0% prior; Y/Y: No est v 2.4% prior

06:45 (US) Daily Libor Fixing

07:30 (IN) India Weekly Forex Reserves

08:00 (PL) Poland Central Bank (NBP) Apr Minutes

08:15 (UK) Baltic Dry Bulk Index

08:30 (CA) Canada Mar CPI M/M: 0.4%e v 0.2% prior; Y/Y: 1.8%e v 2.0% prior; Consumer Price Index: No est v 129.7 prior

08:30 (CA) Canada Mar CPI Common Core Y/Y: 1.3%e v 1.3% prior; CPI Medium Core Y/Y: No est v 1.9% prior; CPI Trim Core Y/Y: No est v 1.6% prior

09:00 (MX) Mexico Mar Unemployment Rate (Seasonally Adj): 3.5%e v 3.5% prior; Unemployment Rate (unadj): 3.2%e v 3.4% prior

09:45 (US) Apr Preliminary Manufacturing PMI: 53.7e v 53.3 prior, Services PMI: 53.2e v 52.8 prior, Composite PMI: No est v 53.0 prior

10:00 (US) Mar Existing Home Sales: 5.60Me v 5.48M prior

11:00 (EU) Potential sovereign ratings expected after European close:

(NO) Norway Sovereign Debt to be rated by S&P

(PL) Poland Sovereign Debt to be rated by S&P

(EG) Egypt Sovereign Debt to be rated by Moody’s

(RO) Romania Sovereign Debt to be rated by Moody’s

(CY) Cyprus Sovereign Debt to be rated by Fitch

(IT) Italy Sovereign Debt to be rated by Fitch

(AT) Austria Sovereign Debt to be rated by Canadian rating agency DBRS

(PT) Portugal Sovereign Debt to be rated by Canadian rating agency DBRS

13:00 (US) Weekly Baker Hughes Rig Count data

15:00 (CO) Colombia Feb Economic Activity Index (Monthly GDP) Y/Y: 1.5%e v 1.2% prior

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