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Market Update – European Session: South Africa President Zuma Survives Ruling Party Meeting; UK Services PMI Beats Expectations


FOMC Minutes in Focus; looking for indications on how much the Fed has discussed balance sheet reduction

Major European PMI Services numbers remain in expansion but most succumbing to a slower pace; France and Euro Zone revised lower in their final readings; UK handily beats



North Korea launches missile into waters off Korean peninsula’s east coast (towards Japan) ahead of China-US leader meeting

PBoC skipped open market operations for 8th straight session; drained CNY90B


Eurogroup Chief Dijsselbloem: Good progress being made in talks with Greece

Elabe Presidential survey, Melenchon seen as most convincing candidate in Tuesday’s election debate, Macron second


Richmond Fed President Lacker resigned effective Apr 4th over improper disclosure of confidential FOMC information, earlier than planned


Weekly API Oil Inventories: Crude: -1.8M v +1.9M prior; first draw in 3 weeks

Economic Data

(IE) Ireland Mar Services PMI: 56.9 v 60.6 prior (56th month of expansion), Composite PMI: 59.1 v 57.8 prior

(RU) Russia Mar PMI Services: 56.6 v 55.0e (14th month of expansion), PMI Composite: 56.3 v 55.4 prior

(SE) Sweden Mar PMI Services: 61.3 v 59.5e

(ZA) South Africa Mar PMI (Whole Economy): 50.7 v 50.5 prior

(ES) Spain Mar Services PMI: 57.4 v 57.4e (41st month of expansion), Composite PMI: 56.8 v 57.0e

(SE) Sweden Feb Industrial Production M/M: 0.2% v 0.1%e; Y/Y: 4.1% v 1.8%e

(IT) Italy Mar Services PMI: 52.9 v 54.3e (10th month of expansion), Composite PMI: 54.2 v 54.9e

(FR) France Mar Final Services PMI: 57.5 v 58.5e (9th month of expansion and highest since May 2011), Composite PMI: 56.8 v 57.6e

(DE) Germany Mar Final Services PMI: 55.6 v 55.6e (confirms 45th month of expansion and highest reading since Dec. 2015), Composite PMI: 57.1 v 57.0e

(EU) Euro Zone Mar Final Services PMI: 56.0 v 56.2e (confirms 45th month of expansion); Composite PMI: 56.4 v 56.7e

(UK) Mar Services PMI: 55.0 v 53.4e (8th month of expansion), Composite PMI: 54.9 v 53.8e v 53.8 prior

Fixed Income Issuance:

(DK) Denmark sold total DKK2.02B in 2021 and 2027 Bonds

(IN) India sold total INR140B vs. INR140B indicated in 3-month and 6-month Bills

(SE) Sweden sold SEK2.5B vs. SEK2.5B indicated in 0.75% 2028 bonds; Avg Yield: 0.8090% v 0.9444% prior; Bid-to-cover: 2.58x v 1.86x prior


Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 flat at 3,479, FTSE +0.2% at 7,335, DAX -0.3% at 12,245, CAC-40 flat at 5,102, IBEX-35 +0.4% at 10,401, FTSE MIB +0.1% at 20,276, SMI -0.1% at 8,640, S&P 500 Futures -0.1%]

Market Focal Points/Key Themes: European equity indices are trading mixed despite an overall positive end to the Asian session overnight; Dax underperforming weighed by shares of car manufacturers Volkswagen, Daimler and BMW; energy stocks across Europe trading notably higher as oil trades sharply higher intraday; homebuilder stocks trading notably lower in the FTSE 100; banking stocks trading mostly higher providing some support across some of the major indices.

Upcoming scheduled US earnings (pre-market) include Greenbrier Companies, Monsanto, and Walgreens Boots Alliance.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Bovis Homes BVS.UK +2.1% (operational update, new CEO, Galliford Try confirms no longer interested in combination), DCC Plc DCC.UK +1.7% (to acquire Shell’s LPG business, CEO transition), Galliford Try GFRD.UK +0.6% (confirms no longer interested in Bovis combination), Hollywood Bowl Group BOWL.UK +2.9% (H1 sales)]

Energy: [Premier Oil PMO.UK +4.1% (sales of Pakistan business for $65.6M)]

Industrials: [John Wood Group WG.UK +3.3% (Increased cost synergies as a result of offer for Amec Foster Wheeler), Obrascon Huarte Lain OHL.ES +1.4% (FY17 and FY18 outlook), Telford Homes TEF.UK +2.5% (trading update)]


South Africa President Zuma retained support of ANC following key meeting (Zuma survived calls to resign as President)

ECB’s Likanen (Finland): Reiterates General Council view that interest rates would remain low beyond end of asset purchases. Improvements not seen big enough to fundamentally change guidance, strong monetary support was still required

European Parliament members debated on a resolution setting out its position in the negotiations

EU’s Weber: EU was ready for negotiations; must prepare for hard stance

EU’s Verhofstadt: EU-UK relationship had never been easy

EU’s Barnier: No deal scenario was NOT the one the EU was looking for

German Economy Ministry report on ECB monetary policy: Zero interest rates damaged the financial system

Italy Stats Agency (ISTAT) Monthly Economic Note: Q2 GDP growth seen slower but likely to continue at same pace going forward

Russia Central Bank (CBR) Gov Nabiullina: Regardless of oil price, GDP growth to stabilize around 1.5-2.0% without structural reformseasy

Russia Econ Min Oreshkin: Domestic economy is actively growing


FX markets retained a cautious tone after North Korea fired a ballistic missile into the sea ahead of a summit between US and Chinese leaders. The USD/JPY was little changed at 110.65 area despite the traditional safe-haven status of the Japanese currency under such siotuations.

The GBP/USD found some traction after UK Mar PMI Services beat expectations. Pair higher by 0.3% just ahead of the NY morning as it approached the 1.25 handle. The FX market was watching the European Parliament members debate its position in the Brexit negotiations

The USD/ZAR pair was higher after reports that South African President Jacob Zuma again survived calls to resign by members of the ruling African National Congress

Fixed Income:

Bund futures trade at 162.38 down 15 ticks reversing earlier gains after mixed European PMI data. Support moves to 162.07 initially followed by 161.52 then 161.02. A move back higher targets 162.72 followed by 162.98 then Feb contract high at 163.12.

Gilt futures trade at 128.06 down 31 ticks pressured by stronger UK Services PMI data which came ahead of consensus and marked an 8th month of expansion. Support remains at 127.75 then 127.34 followed by 127.05. Resistance remains at 128.96 followed by 129.24. Short Sterling futures have steepened following the stronger data with Jun17Jun18 coming of day lows to trade at 13.5/14bp

Wednesday’s liquidity report showed Tuesday’s excess liquidity rose sharply to €1.575T a rise of €131B from €1.444T prior. Use of the marginal lending facility fell to €114M from €212M prior.

Corporate issuance saw $8.4B come to market via 5 issuers headlined by European Banking name Banco Santander 3 part $2.5B offering and ABN Amro 2 part $1.25B offering alongside Cenovus Energy $2.9B 3 part offering. This puts weekly issuance at $11.2B.

Looking Ahead

(RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rates unchanged at 1.75%

05:30 (ZA) South Africa Mar Sacci Business Confidence: No est v 95.5 prior

05:30 (DE) Germany to sell €4.0B in 0% Apr 2022 BOBL

06:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 1.50%

06:00 (IE) Ireland Feb Industrial Production M/M: No est v 3.4% prior; Y/Y: No est v -9.4% prior

07:00 (US) MBA Mortgage Applications w/e Mar 31st: No est v -0.8% prior

07:00 (RU) Russia to sell combined RUB43B in OFZ bonds

07:30 (CL) Chile Feb Economic Activity Index (Monthly GDP) M/M: -1.0%e v +0.4% prior; Y/Y: -1.4%e v +1.4% prior (revised from 1.7%)

08:00 (BR) Brazil Mar PMI Services: No est v 46.4 prior; PMI Composite: No est v 46.6 prior

08:00 (UK) EU Commissioner Oettinger (Germany) speaks on Brexit

08:00 (RO) Romania Central Bank Gov Isarescu post rate decision press conference

08:15 (US) Mar ADP Employment Change: +185Ke v +298K prior

08:15 (UK) Baltic Dry Bulk Index

08:30 (UK) BOE Vlieghe speaks in London

09:00 (MX) Mexico Mar Consumer Confidence: 79.0e v 75.7 prior

09:00 (MX) Mexico Jan Gross Fixed Investment: 0.8%e v 0.9% prior

09:45 (US) Mar Final Markit Services PMI: 53.1e v 52.9 prelim, Composite PMI: No est v 53.2 prelim

10:00 (US) Mar ISM Non-Manufacturing Composite: 57.0e v 57.6 prior

10:00 (PL) Poland Central Bank Gov Glapinski post rate decision press conference

10:30 (US) Weekly DOE Crude Oil Inventories

13:00 (EU) Germany Fin Min Schaeuble speaks on EU crisis as an opportunity

14:00 (US) FOMC Minutes from Mar 15th Meeting

15:00 (MX) Mexico Citibanamex Survey of Economists

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