HomeContributorsFundamental AnalysisEuropean Market Update: Markets Consolidates In Quiet Session

European Market Update: Markets Consolidates In Quiet Session

Markets consolidates in quiet session


French Q4 ILO jobless rate misses expectations but edges down q/q to 10.0%



Australia Jan Employment data beats expectations but mainly due to part-time workers (Employment Change: +13.5K v +10.0Ke; Unemployment Rate: 5.7% v 5.8%e)

China Jan Foreign Direct Investment (FDI) registered its 1st decline in 27 months (CNY80.1B; -9.2% y/y). Commerce Ministry downplayed that data noting base-effects and timing of the Lunar New Year holiday

China Total holding of US Treasuries registered its 1st raise after 6 straight months of decline ($1.06T v $1.05T prior)

Bank of Japan (BOJ) Gov Kuroda: Risk of another global financial crisis has fallen a lot, but cannot deny a different kind of crisis could happen


ECB’s Weidmann (Germany): would be a mistake to roll back financial market regulation as bad loans triggered crisis

German Bundesbank’s Wuermeling: FX devaluation race would only have losers


Fed’s Harker (hawk, voter): reiterates three Fed rate hikes appropriate for 2017

Fed’s Dudley (dove, FOMC voter): Economy growing a little above trend. Fed to raise rates a little further in months ahead.

Fed’s Rosengren (moderate, non-voter): it’s likely appropriate to raise rates at least as quickly as median projections; maybe even a bit more rapidly – Fed’s Bullard (non-voter, dovish): could raise rates later this year, given economic data


Kuwait state-run National Oil Company CEO Jafar: Kuwait oil production stands at 2.75M bpd (in-line with OPEC agreement); Will raise production 0.5M bpd after cuts expire

Economic data

(FR) France Q4 ILO Unemployment Rate (miss): 10.0% v 9.8%e r; Mainland (Ex-Overseas) Unemployment Rate: 9.7% v 9.6%e v 9.7% prior

(NL) Netherlands Jan Unemployment Rate: 5.3% v 5.4% prior

(EU) Jan EU27 New Car Registrations: 10.2% v 3.0% prior

(SE) Sweden Jan Unemployment Rate: 7.3% v 7.3%e, Unemployment Rate (Seasonally Adjusted): 6.8% v 6.8%e

(GR) ECB maintains emergency liquidity assistance (ELA) cap for Greece banks at €46.3B

Fixed Income Issuance:

(ES) Spain Debt Agency (Tesoro) sold total €4.547B vs. €4.0-5.0B indicated range in 2022, 2027 and 2028 Bonds

Sold €2.051B in 0.4% Apr 2022 SPGB; Avg yield: 0.532% v 0.399% prior; Bid-to-cover: 1.53x v 1.36x prior

Sold €1.02B in 1.5% Apr 2027 bond; Avg yield: 1.733% v 1.450% prior; Bid-to-cover: 2.95x v 1.41x prior

Sold €1.476B in 5.15% Oct 2028 bono; Avg Yield 1.894% v 2.272% prior; Bid-to-cover: 1.67x v 1.69x prior

(FR) France Debt Agency (AFT) sold total €6.998B vs. €6.0-7.0B indicated range in 2020 and 2022 Oats

Sold €3.248B in 0.00% Feb 2020 Oat; Avg Yield: -0.34% v -0.43% prior; Bid-to-cover: 2.06x v 1.58x prior

Sold €3.750B in 0.00% May 2022 Oat; Avg yield: +0.09% v -0.04% prior; Bid-to-cover: 2.05x v 1.64x prior

(SE) Sweden sold total SEK750M in I/L 2025 and 2027 Bonds


Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 -0.4% at 3,315, FTSE -0.4% at 7,273, DAX -0.2% at 11,777, CAC-40 -0.3% at 4,912, IBEX-35 -0.3% at 9,559, FTSE MIB -0.4% at 18,978, SMI -0.4% at 8,449, S&P 500 Futures -0.2%]

Market Focal Points/Key Themes: European equity indices are trading lower after a raft of corporate earnings pre-market, and a relatively mixed session in Asia overnight; shares of Schneider Electric leading the losses in the Eurostoxx after reporting worse than expected results; Banking stocks trading mixed in the index; Commodity and mining stocks trading notably lower in the FTSE 100 as copper prices trade lower intraday, energy stocks also trading lower; shares of Nestle the notable laggard in the SMI index after releasing worse than expected results.

A plethora of upcoming scheduled US earnings (pre-market) include Alexion Pharmaceuticals, Avon Products, Build-A-Bear Workshop, Cabela’s Inc, Charter Communications, Cenovus Energy, Dean Foods, Duke Energy, EnCana, EPAM Systems, Freddie Mac, Genesis Energy, GNC Holdings, Hyatt Hotel, Huntington Ingalls Industries, Himax Technologies, Laboratory Corp of America, MGM Resorts, Melco Crown Entertainment, Navigant Consulting, PBF Energy, PG&E Corp, Pool Corp, Reliance Steel and Aluminum, SCANA, Syntel, Time Inc, Tempur Sealey, The Wendy’s Company, Waste Management, West Pharmaceuticals Services, Yandex, and Zoetis.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Air France AF.FR +8.0% (FY16 results), Coca-Cola HBC CCH.UK +1.2% (FY16 results), Huntsworth HNT.UK +13.0% (trading update), Laura Ashley ALY.UK -4.0% (H1 results), Nestle NESN.CH -2.2% (FY16 results), Straumann Holding STMN.CH -3.0% (FY16 results), TF1 TFI.FR +5.3% (FY16 results)]

Energy: [Fuchs Petrolub FPE.DE -0.4% (prelim FY16 results), OMV OMV.AT +0.8% (Q4 results), Petroleum Geo-Services PGS.NO -3.5% (Q4 results), REC Silicon REC.NO +8.3% (Q4 results)]

Industrials: [Cobham Plc COB.UK -19.7% (prelim FY16 results), Fincantieri FCT.IT+3.9 % (awarded order for 4 cruise ships valued at ~€3.2B), Valeo FR.FR -0.9% (FY16 results)]

Materials: [Clariant CLN.CH -1.7% (Q4 results), Imerys NK.FR +2.3% (FY16 results)]

Technology: [Cap Gemini CAP.FR +2.5% (FY16 results), Kudelski KUD.CH -5.3% (FY16 results), Schneider Electric SU.FR -4.2% (FY16 results)]

Telecom: [Telenet TNET.BE +2.6% (FY16 results)]


Italy Fin Min Padoan: Financial Transaction Tax (Tobin tax) was not on the agenda at this time

EU’s Moscovici reiterated that an agreement on Greece bailout review was needed and could be reached

German CDU Parliamentary leader Kauder: Greece aid only possible with IMF participation

French prosecutors: Police had finalized its preliminary probe on Fillon; saw no reason to drop investigation at this time

Japanese Bankers Association Chairnan Kunibe: US economy and rising interest rates were factors for weaker JPY currency (Yen); not the BOJ policy

Russia Energy Min Novak: To cut oil production by 300K bps by May/Jun period. Saw Feb-Mar production cuts ahead of schedule


USD retraced some of its recent gains Treasury yields came off its highs. The greenback did seen some traction after Wed’s 2nd round of somewhat more hawkish Fed chair Yellen testimony, along with hotter CPI and retail sales data out of the US. The data helped to raise the prospect of a rate increase by the Fed soon

USD/JPY dipped to 113.60 area. Dealers were noticing some comments from Bank of Japan (BOJ) Gov Kuroda in which he noted that low interest rates could sow the seeds of a new financial crisis

Fixed Income:

Bund futures tradeat 163.52 up 21 ticks retracing off lows as European indices give back some of the weeks gains. A continued move higher targets 163.64 initially followed by 164.07, 164.46 then 164.94. Support moves to yesterday low of 163.13 then 162.92 followed by 162.44.

Gilt futures trade at 125.32 up 11 ticks drifting higher inline with Bunds. Resistance remains just above highs at 125.56 followed by 125.90 then 126.28. Support remains at 124.91 followed by 124.46. Short Sterling futures continue to trade flat with Jun17Jun18 trading 18/19bp.

Thursday’s liquidity report showed Wednesday’s excess liquidity rose to €1.328T up €4B from €1.324T prior. Use of the marginal lending facility falls to €137M from €3M prior.

Corporate issuance saw $5.65B come to market via 4 issuers headlined by Philip Morris $2.5B 4 part offering, and Mitsubishi UFJ 3 part $2.5B offering. Weekly issuance pushes above $22B, with Monthly issuance above $47B.

Political/In the Papers:

Britain said to be preparing to ask for substantial share of €150B assets from EU in attempt to cut cost of Brexit divorce bill while EU’s chief negotiator Barnier also said to be preparing a list of up to €60B of liabilities

Looking Ahead

(ID) Indonesia Central Bank (BI) Interest Rate Decision: Expected to leave all key rates unchanged

(BR) Brazil Feb CNI Industrial Confidence: No est v 50.1 prior

(EG) Egypt Central Bank Interest Rate Decision; Expected to leave Deposit Rate unchanged at 14.75%

05:30 (BR) Brazil Dec Economic Activity Index (Monthly GDP) M/M: -0.2%e v 0.2% prior; Y/Y: -1.7%e v -2.0% prior

05:30 (HU) Hungary to sell Bonds (3 tranches)

05:30 (PL) Poland to sell Bonds

05:50 (FR) France Debt Agency (AFT) to sell €1.5-2.5B in new 0.10% March 2028 I/L Bonds (Oatei) (no history)

06:00 (IL) Israel Q4 Advance GDP Annualized: 3.7%e v 3.6% prior

06:00 (CZ) Czech Republic to sell Bills – 07:30 (EU) ECB account of the monetary policy meeting (Jan Minutes)

08:00 (RU) Russia Jan Industrial Production Y/Y: 3.0%e v 3.2% prior

08:00 (RU) Russia Gold and Forex Reserve w/e Feb 10th: No est v $394.1B prior

08:00 (PL) Poland Jan Employment M/M: 1.2%e v 0.1% prior; Y/Y: 2.8%e v 3.1% prior

08:00 (PL) Poland Jan Average Gross Wages M/M: -7.7%e v 7.1% prior; Y/Y: 4.3%e v 2.7% prior

08:00 (AT) EU’s Moscovici and ECB’s Nowotny (Austria) participate on panel in Vienna

08:15 (UK) Baltic Dry Bulk Index – 08:30 (US) Jan Housing Starts: 1.226Me v 1.226M prior; Building Permits: 1.230Me v 1.228M prior (revised from 1.210M)

08:30 (US) Initial Jobless Claims: 245Ke v 234K prior; Continuing Claims: 2.05Me v 2.078M prior

08:30 (US) Feb Philadelphia Fed Business Outlook: 18.0e v 23.6 prior

08:30 (US) Weekly USDA Net Export Sales

09:00 (BR) Brazil to sell Fixed Rate 2023 and 2027 Bonds

09:00 (BR) Brazil to sell 2017, 2019 and 2020 LTN Bills

10:30 (US) Weekly EIA Natural Gas Inventories

13:00 (US) Treasury to sell 30-Year TIPS

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