European markets open lower tracking US equity markets

EU Market Update: European markets open lower tracking US equity markets; Italy has record low yields in latest debt auction

Notes/Observations

- Global equity sell-off led by the decline in the tech sector; focus in the US earnings season shifts toward financials with JPMorgan and Wells Fargo on tap to report Q1 results.

- (JP) BOJ March 10-11 meeting minutes reiterated that the domestic economy was moderately recovering in line with expectations

- (CN) China Mar CPI registers its first MoM rise in six months (Y/Y: 2.4%e v 2.0% prior) but well contained within its 3.5% official target; PPI data fell to its lowest level in eight months and registered its 25th straight negative reading (-2.4% vs. -2.3%e)

- (PT) Fitch raises Portugal outlook to positive from negative; Affirms sovereign rating at BB+

- (FI) S&P lowers Finland outlook from stable to negative; affirms AAA sovereign rating

- (UK) Retailer John Lewis reports weekly LFL sales for week ending April 5th (y/y): 9.3% v 5.9% prior

- (ES) Spain Fin Min de Guindos: Reiterates view that Spain can create jobs with 1% GDP growth

- Bang & Olufsen, BO.DK, considering strengthening capital base; look at various possibilities but no final decision has been made

Equities

- Market Focal Points: Equity markets open lower following losses in Tokyo and on Wall St, Equity losses come as bond yields move higher, Technology sector underperforms, Swedish truck maker Scania has first quarterly earnings beat since 2012, Upcoming US bank earnings (JPMorgan, Wells Fargo)

- Indices [Stoxx50 -0.8% at FTSE 100 -1% at 6,577, DAX -1.1% at 9,343, CAC-40 -1% at 4,369, IBEX-35 -0.8% at 10,253, FTSE MIB -0.9% at 21,232, SMI -1.3% at 8311, S&P 500 Futures flat at 1,828]

By Sector

- Consumer Discretionary [Bang & Olufsen BO.DK -15% (reported Q3 loss, capital raising options), Givaudan GIVN.CH -1% (Q1 sales in line)]

- Industrials [Areva AREVA.FR -2.5% (French probe)]

- Telecom [Mediaset Espana TL5.ES -4.5% (share placement)]

- Stoxx50 sectors [Technology -1.3%, Industrials -0.9%, Basic Materials -0.7%, Consumer Non-Cyclical -0.5%, Energy -0.4%, Telecom -0.3% Consumer Cyclical -0.2%, Financials -0.1% ;Utilities +0.1%]

Currencies/Fixed Income

- The recent sharp sell-off in equities provided a supportive climate for safe-haven securities but did not include the USD this time around. Dealers noted that currencies were currently diverging from traditional risk barometers

- The EUR/USD hovered around the 1.39 handle in the session and the pair supported by expectations the ECB would have to enact QE at some point. Press reports noted that ECB was not yet ready to carry out QE and that the details of any asset purchases had yet to be worked out.

- USD/JPY continued to recover from a three-week lows (aided by unsubstantiated rumors of BoJ rate check). The Niikei225 Index was lower again exacerbated by the strength of the yen currency but scale of the yen strength seemed muted compared to the decline in the Nikkei. The pair was at 101.75 just ahead of the NY morning.

- (IT) Italy in a good bond auction selling €7.23B (in line) in 2016, 2021 and 2044 BTP bonds, hitting a 3-yr low in yields but mixed bid to covers

Economic Data

- (DE) Germany Mar Final CPI M/M: 0.3% v 0.3%e; Y/Y: 1.0% v 1.0%e

- (DE) Germany Mar Final CPI EU Harmonized M/M: 0.3% v 0.3%e; Y/Y: 0.9% v 0.9%e

- (DE) Germany Mar Wholesale Price Index M/M: 0.0% v -0.1% prior; Y/Y: -1.7% v -1.8% prior

- (SE) Sweden Mar PES Unemployment Rate: 4.3% v 4.4%e

- (RU) Russia Narrow Money Supply w/e Apr 4th (RUB): No est v 7.98T prior

- (FR) France Feb Current Account Balance: -€1.4B v -€4.5B prior

- (ES) Spain Mar CPI M/M; 0.2% v 0.2%e; Y/Y: -0.1% v -0.2%e

- (ES) Spain Mar CPI EU Harmonized M/M; 1.6% v 1.6%e; Y/Y: -0.2% v -0.2%e

- (ES) Spain Mar CPI Core M/M; 0.5% v 0.0% prior; Y/Y: 0.0% v 0.1% prior

- (HU) Hungary Mar CPI M/M: 0.2% v 0.4%e; Y/Y: 0.1% v 0.2%e

- (TR) Turkey Feb Current Account Balance: -$3.2B v -$3.0Be

- (EU) ECB €50M borrowed in overnight loan facility vs. €1.8B prior; €20.3B parked in deposit facility vs. €16.5B prior - Daily Eurosystem Liquidity Conditions

- (RU) Russia Mar YTD Budget Balance (RUB): 110B v 30.5B prior

- (NL) Netherlands Feb Trade Balance: €4.5B v €4.3B prior

- (IN) India Mar Trade Balance: -$10.5B v -$8.1B prior; Exports Y/Y: -3.2% v -3.7% prior; Imports Y/Y: -2.1% v -17.1% prior

- (CN) Shanghai Futures Exchange (SHFE) Weekly Copper Stockpiles: 142.7K v 172.4K tons prior

- (NO) Norway Q1 Existing Home Sales Q/Q: +2.1% v -2.6% prior

- (CZ) Czech Feb Current Account Monthly (CZK): 2.0B v 22.0Be

- (UK) Feb Construction Output M/M: -2.8% v -1.3%e; Y/Y: 2.8% v 4.4%e

Looking Ahead

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

- World Bank and International Monetary Fund begin 3-day spring Meeting

- (GR) German Chancellor Merkel to meet Greece PM Samaras in Athens

- (SE) Sweden Sovereign Debt Rating May Be Published by Moody's

- (DE) Germany Sovereign Debt Rating by DBRS

- (IT) Italy Sovereign Debt Rating by DBRS

- (ES) Spain Sovereign Debt Rating by DBRS

- (RU) Russia Feb Trade Balance: $17.2Be v $18.9B prior; Exports: $41.8Be v $39.5B prior; Imports: $24.7Be v $20.6B prior

- 06:00 (IS) Iceland to sell Bills/Bonds

- 06:00 (EU) ECB weekly 3-year LTRO Repayment amount

- 06:10 (UK) DMO to sell combined £2.0B in 1-month, 3-month and 6-month Bills

- 06:45 (US) Daily Libor Fixing

- 07:30 (IN) India Forex Reserves w/e April 4th: No est v $303.7B prior

- 08:00 (IN) India Feb Industrial Production Y/Y: 0.9%e v 0.1% prior

- 08:00 (PL) Poland Feb Current Account Balance: -€0.5Be v -€1.1B prior; Trade Balance: €445Me v €419M prior; Exports: €13.5Be v €13.5B prior; Imports: €13.0Be v €13.1B prior

- 08:15 Baltic Dry Bulk Index

- 08:30 (US) Mar PPI Final Demand M/M: +0.1%e v -0.1% prior; Y/Y: 1.1%e v 0.9% prior

- 08:30 (US) Mar PPI Ex Food and Energy M/M: +0.2%e v -0.2% prior; Y/Y: 1.1%e v 1.1% prior

- 09:00 (MX) Mexico Feb Industrial Production M/M: 1.0%e v 0.5% prior; Y/Y: 0.5%e v 0.7% prior; Manufacturing Production Y/Y: 2.2%e v 2.5% prior

- 09:55 (US) Apr Preliminary University of Michigan Confidence: 81.0e v 80.0 prior

- 11:00 (US) Fed to purchase $2.0-2.5B in bonds

- 12:00 (IS) Iceland Mar International Reserves (ISK): No est v 496B prior