EU inflations widely lower than expected

EU Market Update: Greece showing positive response to bond offering, Spain and Ireland auctions solid; EU inflations widely lower than expected

Notes/Observations

- Marks & Spencer cautious in Q4 preview; Reports Q4 Group Rev +1.9% y/y (ex-VAT); General Merchandise SSS -0.6% v -0.9%e

- Carrefour, expects results in line with market; Reports Q1 Rev €19.8B v €19.8Be, Organic sales +3.7%

- Japan's Fast Retailing, 9983.JP, cuts its FY14 op profit outlook, sees higher sales costs. Saw no rush buying before sales tax increase; sales have remained stable since.

- (ES) Spain holds solid 6-month and 12-month bill auction; selling €4.56B v €3.5-4.5B indicated, bid-to-covers higher, yields slightly higher.

- (GR) Greece Debt Agency (PDMA) formally opens book to sell Apr 2019 bonds with strong response; Size of issue set at €3.0B with Order book over €20B; Yield at 4.95%, despite car bond that exploded outside of Bank of Greece

- (RU) Russia First Dep PM Shuvalov: Will not impose any retaliatory economic sanctions - Russian Media

- (IE) Ireland has strong 2024 bond auction; selling top of range at €1.0B, yield lower at 2.917% v 2.967% prior

- Various EU March inflation data comes in below expectations (includes France, Netherlands, Sweden and Denmark,). ECB had previously stressed it was April data that would be catalyst for updating its views on the topic

Asia Review

- (CN) China Mar Trade Balance registers a bigger surplus due to poor components : ($7.7B v +$1.8Be) with both Exports and Imports declining MoM ; Exports (market was expecting rises for both components). Overall markets remain sanguine as components did improve from Feb levels. Declines were partly due to artificially high export data a year earlier and the severe winter in the US

- China Premier Li: Won't adopt short-term and strong stimulus policies in response to temporary fluctuations in the economy

- (KR) Bank of Korea (BoK) leaves 7-Day Repo Rate unchanged at 2.50% (as expected for its 11th straight pause)

- (AU) Australia Apr Consumer Inflation Expectation Survey hits a 9-month high (2.4% v 2.1% prior)

- (AU) Australia Mar Employment data comes in better than expectations (+18.1K v +2.5Ke) with Unemployment Rate hitting a 3-month low (5.8% v : 6.1%e)

- (JP) Japan govt Downgrades Capex Assessment to Stalling from Increasing Trend (1st downgrade in 16 months)

Equities

- Market Focal Points: Equity markets in Europe open higher as dealers assess recent FOMC minutes, Shanghai Composite rises on confirmation of cross-border trading agreement with Hong Kong, Resource related shares rise as China March imports of key commodities (iron ore, copper, crude oil) rose y/y, French retailer Carrefour reports in line Q1 sales, Large US banks begin to report Q1 results on Friday (JPMorgan and Wells Fargo)

- Indices [Stoxx50 -0.4%, FTSE 100 +0.2% at 6,648, DAX flat at 9,513, CAC-40 -0.1% at 4,438, IBEX-35 -1% at 10,372, FTSE MIB -0.3% at 21,640, SMI +0.2% at 8,424, S&P 500 Futures -0.1% at 1,863]

By Sector

- Financials [RBS RBS.UK +1.5% (agreement related to dividend access shares); Tryg TRYG.DK -3.5% (Q1 results below ests)]

- Consumer Discretionary [Mothercare MTC.UK +13% (Q4 results above ests), Hays HAS.UK +4% (Q3 LFL fees +14% y/y, upbeat outlook), LVMH MC.FR +3% (Q1 organic growth +6%), Marks & Spencer MKS.UK +2% (Q4 merchandise sales above ests), Carrefour CA.FR flat (Q1 sales in line); Daimler DAI.DE -2% (ex-dividend)]

- Basic Materials/Resources [Wacker Chemie WCH.DE +3.5% (broker commentary), Lanxess LXS.DE +2% (renewed takeover speculation); Akzo Nobel AKZA.NL -1% (broker commentary)]

- Industrials [R Stahl RSL1.DE +42% (takeover offer), Gerresheimer GXI.DE +4% (Q1 results above ests), Finmeccanica FNC.IT +1% (asset sale speculation); Imtech IM.NL -11% (reviewing debt reduction options) Thales HO.FR -2% (issued 2018 targets)]

- Telecom [Telecom Italia Media TME.IT +5% (signed agreement with L'Espresso); Axis Communications AXIS.SE -2.5% (profit warning)]

- Stoxx50 sectors [Technology +0.9%, Basic Materials +0.8%, Consumer Cyclical +0.8%, Consumer Non-Cyclical +0.2%, Financials +0.2%, Industrials +0.2%; Utilities -0.9%, Energy -0.3%, Telecom -0.2%]

Currencies/Fixed Income

- USD maintained a soft tone following dovish FOMC minutes. Policy makers played down played down predictions made by some of its own members that interest rates might rise faster than expected

- AUD/USD at it highest level since early Nov following better employment data. Pair trades above 0.9450 area. Aussie shrugged off the weaker components of the Chinese trade data.

- Sweden's SEK currency (Krona) hit 2014 lows after softer CPI data with the pair testing above 9.06. Various analysts note that Sweden Mar CPI data opens the door for a possible July rate cut

Economic Data

- (FI) Finland Feb Industrial Production M/M: 0.2% v 1.0%e; Y/Y: -5.4% v -1.7%e

- (JP) Japan Mar Preliminary Machine Tool Orders Y/Y: 41.8% v v 26.1% prior

- (FR) France Feb Industrial Production M/M: 0.1% v 0.2%e; Y/Y: -0.8% v -0.3%e

- (FR) France Feb Manufacturing Production M/M: 0.3% v 0.3%e; Y/Y: 1.2% v 1.0%e

- (FR) France Mar CPI M/M: 0.4% v 0.6%e; Y/Y: 0.6% v 0.7%e; CPI Ex-Tobacco Index: 126.29 v 126.32e

- (FR) France Mar CPI EU Harmonized M/M: 0.5% v 0.5%e; Y/Y: 0.7% v 0.8%e

- (DK) Denmark Mar CPI M/M: 0.1% v 0.2%e; Y/Y: 0.4% v 0.5%e

- (DK) Denmark Mar CPI EU Harmonized M/M: 0.2% v 0.3%e; Y/Y: 0.2% v 0.3%e

- (GR) Greece Debt Agency (PDMA) expected to sell 5-year bonds (first such sales in four years)

- (EU) ECB €1.8B borrowed in overnight loan facility vs. €104M prior; €16.5B parked in deposit facility vs. €38.2B prior - Daily Eurosystem Liquidity Conditions

- (SE) Sweden Mar CPI M/M: 0.0% v 0.3%e; Y/Y: -0.6% v -0.3%e; CPI Level: 312.68 v 313.66e

- (SE) Sweden Mar CPI Underlying (CPIF) M/M: 0.1% v 0.4%e; Y/Y: 0.0% v 0.3%e

- (SE) Sweden Mar Average House Prices (SEK): 2.314M v 2.273M prior

- (NL) Netherlands Mar CPI M/M: 0.8% v 1.1%e; Y/Y: 0.8% v 1.1%e

- (NL) Netherlands Mar CPI EU Harmonized M/M: 1.1% v 1.2%e; Y/Y: 0.1% v 0.3%e

- (NO) Norway Mar CPI M/M: 0.2% v 0.3%e; Y/Y: 2.0% v 2.1%e

- (NO) Norway Mar CPI Underlying M/M: 0.5% v 0.3%e; Y/Y: 2.6% v 2.5%e

- (NO) Norway Mar PPI including Oil M/M: -2.9 v -0.7% prior; Y/Y: 0.1% v 4.0% prior

- (IT) Italy Feb Industrial Production M/M: -0.5% v -0.3%e; Y/Y: +0.4 v -1.7% prior; Industrial Production WDA Y/Y: 0.4% v 1.1%e

- (GR) Greece Mar CPI Y/Y: -1.3% v -1.2%e; CPI EU Harmonized Y/Y: -1.5-1.1%e

- (GR) Greece Jan Unemployment Rate: 26.7% v 27.5%e

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- 06:00 (IE) Ireland Mar CPI M/M: No est v 0.5% prior; Y/Y: No est v -0.1% prior

- 06:00 (IE) Ireland Mar CPI EU Harmonized M/M: No est v 0.6% prior; Y/Y: No est v 0.1% prior

- 06:00 (PT) Portugal Mar CPI M/M: 1.4%e v -0.3% prior; Y/Y: -0.3%e v -0.1% prior

- 06:00 (PT) Portugal Mar CPI EU Harmonized M/M: No est v -0.3% prior; Y/Y: No est v -0.1% prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to leave both Interest Rates and Asset Purchase Target (APT) unchanged at 0.50% and £375B respectively

- 07:00 (ZA) South Africa Feb Manufacturing Production M/M: 0.3%e v 0.5% prior; Y/Y: 3.5%e v 2.5% prior

- 07:00 (RU) Russia Gold and Forex Reserve w/e Apr 4th: No est v $484.0B prior

- 07:30 (BR) Brazil Central Bank (BDB) COPOM Monetary Policy Meeting Minutes

- 07:30 (CL) Chile Central Bank's Economist Survey

- 08:15 Baltic Dry Bulk Index

- 08:30 (US) Initial Jobless Claims: 320Ke v 326K prior; Continuing Claims: 2.84Me v 2.836M prior

- 08:30 (US) Mar Import Price Index M/M: 0.2%e v 0.9% prior; Y/Y: -1.0%e v -1.1% prior

- 08:30 (CA) Canada Feb New Housing Price Index M/M: 0.1%e v 0.3% prior; Y/Y: No est v 1.5% prior

- 08:30 (US) Weekly USDA Net Export Sales

- 08:45 (US) IMF chief Lagarge press conference

- 09:00 (BE) ECB's Praet (Belgium) in Washington DC

- 10:30 (US) Weekly EIA Natural Gas Inventories

- 11:00 (US) Fed to purchase $2.75-3.5B in notes

- 11:00 (US) Treasury 5-year Tips announcement

- 11:30 (US) Various central bankers speak in Washington DC (includes RBI's Rajan, ECB's Constancio (Portugal) and Fed's Evans

- 13:00 (US) Treasury to sell $13B in 30-Year Bonds Reopening

- 13:00 ECB's Constancio in Washington DC

- 14:00 (US) Mar Monthly Budget Statement: -$72.0Be v -$106.5B prior

- 19:00 (PE) Peru Central Bank Interest Rate Decision: Expected to leave Reference Rate unchanged at 4.00%

- 19:50 (JP) Bank of Japan (BOJ) March 10-11 meeting minutes

- 21:30 (CN) China Mar CPI Y/Y: 2.4%e v 2.0% prior

- 21:30 (CN) China Mar PPI Y/Y: -2.2%e v -2.0% prior