European Markets Under Pressure On Concerns Of New Virus Strain In The UK

Notes/Observations

• UK and EU parliaments go on holiday recess making it “too late” to reach an agreement; UK hints at possible “mini agreement” to ensure smooth transition. Fisheries remain sticking point in negotiations.
• EMA expected to approve Pfizer/BioNTech vaccine at around 8:00 EST (14:00 CET)

Asia:

• (ID) Indonesia Fin Min Indrawati: Lowers growth forecast to -2.2% to -1.7%% for 2020; Q4 GDP at -2.9% to 0.9%
• (CN) China Foreign Ministry spokesperson Wang Wenbin: US accusation of China cyber attack is a ‘farce’
• (CN) NDRC White paper: Will lift restriction on foreign investment in coal, oil, gas and other power (excluding nuclear)
• (HK) Hong Kong Food and Health Sec Chan: To ban entry to anyone who has visited the UK in the last 14 days
• (CN) China National Energy Administration Chief: China power shortage is only partial

Coronavirus

• New strain of Covid detected in UK, leading to Ireland and France to close border to cargo transport, and air travel suspensions
• (UK) UK Transport Min Shapps: advises truckers not to travel to Kent (Southeast UK)

Europe:

• EU and UK fail to reach agreement over Brexit in talks over the weekend, with fisheries remaining sticking point being fisheries; to continue with emergency meeting today.
• UK PM calls Cobra meeting to discuss potential impact from new strain of covid detected in south-east England, with that area of the country entering Tier 4 lockdown
• (FR) French Health Min Veran: possible new coronavirus strain circulating in France, but has not been identified
• (FI) Finland State Treasury: Sees 2020 GDP -3.3%

Americas:

• US) President Trump signed temporary spending bill, avoiding government shutdown
• (US) Stimulus bill expected to be approved later today, after US Senate Leader McConnell announced finalizing agreement on ~$900B rescue package

Energy:

• Saudi official says OPEC+ to meet monthly, as concurs with Russia that oil market has not recovered and remains volatile.
• (RU) Russia Dep PM Novak: Russia and Saudi are committed to OPEC+ agreement and cooperation on balancing the global oil market
• (CN) China National Energy Administration Chief: China power shortage is only partial

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -2.45% at 386.16, FTSE -1.90% at 6,405.26, DAX -2.70% at 13,262.25, CAC-40 -2.83% at 5,371.19, IBEX-35 -3.29% at 7,773.00, FTSE MIB -2.49% at 21,429.50, SMI -1.39% at 10,377.70, S&P 500 Futures -1.08%]
• Market Focal Points/Key Themes: European indices open broadly lower in all indices and continued lower as the session progressed; risk sentiment impacted on new covid strain fears; better performing sectors (although still in the red) include health care and materials; underperforming sectors lead by consumer discretionary and energy; France and Ireland close freight transport from UK, airline travel to UK suspended over new covid strain fears; DAX and FTSE 100 rebalance components; RDSA sells stake in QCLNG; Vodafone terminates merger agreement with Saudi Telecom and Egypt unit; Aryzta rejects proposal from Elliott; focus on upcoming stimulus approval in US and continuing meetings between UK and EU; earnings expected during the upcoming US session include Lockheed Martin

Equities

• Consumer discretionary: EasyJet [EZJ.UK] -10%, Air France-KLM [AF.FR] -6% (restrictions to UK flights), Getlink [GET.FR] -5% (Eurotunnel closed for 48 hours)
• Energy: Royal Dutch Shell [RDSB.UK] -4% (updates outlook)
• Financials: Metro Bank [MTRO.UK] +13% (portfolio of prime UK mortgages)
• Industrials: Signature Aviation [SIG.UK] +1.5% (offer)
• Technology: Tele Columbus [TC1.DE] +12% (offer)

Speakers

• (UK) Govt official Gove: UK and EU can agree a series of mini-deals to ease the chaos of a no-deal Brexit
• (JP) Tokyo Gov Koike: Tokyo to provide ¥300K/day to medical facilities that accept coronavirus patients with advanced conditions during holidays
• (UK) UK Transport Min Shapps: reiterates stance UK will not extend Brexit transition period
• (FI) Finland State Treasury: Sees 2020 GDP -3.3%
• (IE) Ireland Transport Min Ryan: 48-hour travel ban to the UK likely to be extended
• (NO) Norway Central Bank (Norges) Gov Olsen: Oil industry to remain very important for Norway Economy
• (FR) FNTR (road cargo federation) spokes: Situation with stuck drivers is becoming catastrophic
• (NO) Norway Central Bank (Norges) Gov Olsen: Reiterates that he does not see negative rates, but has not completely ruled out negative rates, but sees it how to foresee a shock that would lead to negative rates

Currencies/Fixed Income

• Pound under pressure as new strain of covid is detected in the UK and Brexit negotiations fail over the weekend. Higher volatility expected as a series of key events relating to both situations are scheduled through the day. GBP/USD down by over 1.8%, while the EUR/GBP cross us up over 1.5%.
• Euro as well under pressure following covid developments, with EUR/USD heading towards resistance at the 1.22 handle, last seen on Wednesday.
• Safehaven flows keep the dollar, yen and swissie stronger.
• OPEC+ news putting pressure on oil, CAD slipping over 0.7% compared to the greenback

Economic Data

• (DK) Denmark Dec Consumer Confidence: -3.8 v -7.6 prior
• (DK) Denmark Nov Retail Sales M/M: 6.2% v 8.2% prior; Y/Y: 6.2% v 13.7% prior
• (TR) Turkey Dec Consumer Confidence: 80.1 v 80.0 prior
• (HU) Hungary Q3 Current Account: +€0.7B v +€0.1Be
• (TW) Taiwan Nov Export Orders Y/Y: 29.7% v 14.3%e
• (CH) Swiss Nov M3 Money Supply Y/Y: 5.7% v 5.5% prior
• (TW) Taiwan Nov Export Orders Y/Y: 29.7% v 14.3%e
• (CH) Swiss Nov M3 Money Supply Y/Y: 5.7% v 5.5% prior
• (HK) Hong Kong Nov CPI Composite Y/Y: -0.2% v 0.0%e
• (CH) Swiss weekly Total Sight Deposits (CHF): 705.0B v 704.9B prior
• (PL) Poland Nov Retail Sales M/M: -5.4% v -8.9%e; Y/Y: -5.3% v -8.7%e
• (PL) Poland Nov Construction Output Y/Y: -4.9% v -5.3%e
• (IS) Iceland Nov Wage Index M/M: 0.4% v 0.7% prior; Y/Y: 7.3% v 7.1% prior
• (HU) Hungary Central Bank: Maintains banks countercyclical capital buffer rate at zero from Jan 1st

Fixed income Issuance

• n/a

Looking Ahead

• 06:00 (UK) Dec CBI Retailing Reported Sales: No est v -25 prior; Total Distribution: No est v -21 prior
• 06:00 (PT) Portugal Nov PPI M/M: No est v 0.1% prior; Y/Y: No est v -4.6% prior
• 06:25 (BR) Brazil Central Bank Weekly Economists Survey
• 07:00 (MX) Mexico Oct Retail Sales M/M: No est v 2.7% prior; Y/Y: No est v -7.1% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Nov Chicago Fed National Activity Index: No est v 0.83 prior
• 09:30 (UR) Ukraine Q3 Final GDP Q/Q: No est v 8.5% prelim; Y/Y: No est v -3.5% prelim
• 10:00 (EU) Euro Zone Dec Advance Consumer Confidence: No est v -17.6 prior
• 16:00 (KR) South Korea Nov PPI Y/Y: No est v -0.6% prior
• 17:00 (CO) Colombia Central Bank Dec Minutes
• 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 111.2 prior
• 19:30 (AU) Australia Nov Preliminary Retail Sales M/M: 2.5%e v 1.4% prior