EU Market Update: Japan data and weekend G20 highlight renewed concerns of a global economic slowdown


Notes/Observations

- Japan expectantly falls into recession likely delaying a planned sales tax increase; Japan faces choice between recovery and fiscal sustainability

- Japan data and weekend G20 highlight renewed concerns of a global economic slowdown


Economic Data

- (HK) Hong Kong Oct Unemployment Rate in line (Seasonally Adj): 3.3% v 3.3%e

- (SE) Sweden Oct Unemployment Rate: 7.5% v 7.3%e; Unemployment Rate (Seasonally Adj): 8.1% v 7.8%e €2.0B v €2.1B prior; Trade Balance EU: €0.5B v €0.3B prior

- (IN) India Oct Trade Balance better than consensus: -$13.4B v -$14.3B prior

- (EU) Euro Zone Sept Trade Balance higher than expected; Seasonally Adj: €17.7B v €16.0Be; Trade Balance NSA (unadj): €18.5B v €18.0Be

Fixed Income:

- (TR) Turkey to sell USD-denominated 10-year bond; guidance seen at +220 to Treasuries


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.6%, FTSE 100 -0.3% at 6,628, DAX -0.6% at 9,193, CAC-40 -0.6% at 4,174, IBEX-35 -0.6% at 10,092, FTSE MIB -0.8% at 18,805, SMI -0.4% at 8,878, S&P 500 Futures -0.3% at 2,030]

- Market Focal Points/Key Themes: Equity markets open lower amid weaker Japan GDP data, H&M Oct sales above ests

By Sector

- Technology [Sonova SOON.CH -2% (H1 results below ests)]

- Telecom [Telecom Italia TIT.IT -1% (denied speculation related to capital raise) ]

- Consumer Discretionary [Tesco TSCO.UK -1% (broker commentary); H&M HMB.SE +1% (Oct sales above ests)]

- Healthcare [Merck KGaA MRK.DE +3% (agreement with Pfizer)]

- Energy [Abengoa ABG.ES +10% (clarification statement related to debt)]

- Stoxx50 sectors [Utilities -1%, Consumer Cyclical -0.8%, Financials -0.6%, Industrials -0.6%, Basic Materials -0.5%, Consumer Non-Cyclical -0.5%, Energy -0.3%, Telecom -0.1%, Technology -0.1%]


Speakers

- ECB's Mersch (Luxembourg): Must let prior measures take effect before considering new ones but stressed the ECB could act if needed. Unconventional measures could theoretically include buying state bonds or alterative assets such as stocks, gold, and ETFs

- BoEs Weale stated that the situation in Euro Zone was not as gloomy as some had feared as businesses had broad-based optimism and saw signs companies were planning larger wage hikes

- EU Foreign Min Mogherini to discuss sanctions over Ukraine criss and ways to engage Russia

- Japan PM Abe: GDP figures were not good; to decide on sales-tax increase after careful analysis

- Japan Econ Min Amari: Given the state of the economy there is a high change that PM Abe to decide on some form of stimulus

- Japan Gov advisor Honda: Appropriate to compile a ¥3T stimulus

- India Central Bank (RBI) Dep Gov Mundra stated that it had seen relative stability in economy in recent months; FY15 GDP growth looking around 5.5%


Currencies

- The USD was a touch firmer against the major European pairs in the session. Dealers continued to debate whether the correction in the USD would begin and how far it could go.

- The session was all about the JPY currency following the surprise contraction in Japan's Q3 GDP data. The weak GDP report had broadened the case for not hiking the tax, and instead argued for additional fiscal and monetary stimulus and for snap elections

- HSBC analyst pushed back its view on first potential BOE rate hike by a year from Q1 2015 to Q1 2016

Political/In the Papers:

- G20 members agree to a series of measures to boost global economy by estimated 2.1% over 5 years

- (RU) Russia President Putin leaves G20 early over Ukraine

- (CN) China Academy of Social Sciences (CASS) researcher Zhang Ming: China should lower Reserve Requirement Ratio (RRR) by 25-50 bps

- (JP) Japan PM Abe to hold a news conference tomorrow announcing sales tax hike delay

- (BE) Fitch revised Belgium sovereign rating outlook to Negative; affirms AA rating

**Looking Ahead***

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- EU Foreign Ministers hold meeting in Brussels

- (UK) Commons reconvenes following November recess

- 05:30 (BR) Brazil Central Bank Weekly Economists Survey

- 05:30 (BR) Brazil Sept Economic Activity Index (Monthly GDP) M/M: 0.2%e v 0.3% prior; Y/Y: +0.5%e v -1.4% prior

- 06:00 (BE) Belgium Debt Agency to sell €1.5-2.0B in 2019 and 2024 OLO Bonds

- 06:00 (NL) Netherlands Debt Agency (DSTA) to sell combined €2.0-4.0B in 3-Month and 6-Month Bills

- 06:00 (TR) Turkey to sell 2019 Bonds

- 06:00 (RO) Romania to sell 2027 Bonds

- 06:45 (US) Daily Libor Fixing

- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming Bill and Bond - auctions

- 08:15 Baltic Dry Bulk Index

- 08:30 (CA) Canada Sept Int'l Securities Transactions (CAD): 7.0Be v 10.3B prior

- 08:30 (US) Nov Empire Manufacturing: 12.00e v 6.17 prior

- 08:30 (BE) ECB's Praet (Belgum) in London

- 08:50 (FR) France Debt Agency (AFT) to sell to sell combined €6.0-7.2B in 3-month, 6-month and 12-month bills

- 09:00 (EU) ECB chief Draghi in Brussels

- 09:00 (PL) Poland Oct YTD Budget Balance Level (PLN): No est v -22.4B prior; Budget Balance: Performance No est v 47.2% prior (revised from 47.1%)

- 09:00 (CA) Canada Oct Existing Home Sales M/M: No est v -1.4% prior

09:00 (BE) Belgium Trade Balance: No est v -€1.2B prior

- 09:15 (US) Oct Industrial Production M/M: 0.2%e v 1.0% prior; Capacity Utilization: 79.3%e v 79.3% prior; Manufacturing Production: 0.3%e v 0.5% prior

- 09:30 (EU) ECB announces weekly purchases under its covered bond program 3 (CBPP3)

- 09:35 (EU) ECB calls for bids in 7-day main Refi

- 09:45 (FR) ECB's Coeure (France) in Frankfurt

- 10:00 (US) Fed's Evans gives opening remarks at Agriculture Conference

- 11:30 (US) Treasury to sell combined $52B in 3-Month and 6-month Bills

- 14:00 (AR) Argentina Q3 Unemployment Rate: 7.7%e v 7.5% prior

- 16:00 (US) Crop Progress Report

- 19:30 (AU) RBA Nov Minutes

- 20:30 (CN) China Oct Property Prices

- 21:30 (CA) Partial elections held to fill 2 Canada Parliament vacancies

- Bank of Japan (BOJ) continue policy meeting (Decision on Wed)

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