European Q1 results remain mixed and negatively impacted by currencies

EU Market Update: Tensions escalate over Ukraine; European Q1 results remain mixed and negatively impacted by currencies

Notes/Observations

- Risk appetite soothed by tech-led rebound on Wall Street

- China Q1 GDP reading comes in at slowest pace since September of 2012 (QoQ 1.4% v 1.5%e; YoY: 7.4% v 7.3%e)

- US Treasury Semi-Annual Currency Report names no country as FX manipulator (even China despite the recent reversal in gradual Yuan appreciation)

- UK ILO Unemployment Rate moves below the BOE 7.0% threshold

- Credit Suisse sees Q1 profit lower due to weak investment banking, private banking/wealth management saw improvement. CSGN.CH: Reports Q1 Net profit CHF859M (unclear if comp) v CHF1.16Be, Pretax profit CHF1.4B v CHF1.63Be, Rev CHF6.47B (core) v CHF6.83Be

- (RU) Russia Foreign Min Lavrov: Still planning to attend Geneva talks despite recent escalation in Ukraine situation

- SODA: There is speculation that the firm is in talks to sell an up to 16% stake - Calcalist

- UK's Tesco saw its FY13 statutory profit decline, Rev ex-VAT slightly higher y/y to £63.6B. UK LFL ex fuel/VAT -1.4%.

- Retailer Burberry, reports H2 Rev £1.30B v £1.29Be; SSS +12% (in line with their expectations). Like most other companies expects a material negative currency impact.

- France's Danone had Q1 Rev slower than expectations at €5.06B v €5.15Be. LFL organic growth was in line +2.2%, and had a nearly 9% negative impact from currency.

- (CN) China Stats Bureau: Can no longer expect double digit growth; Q1 GDP slow down is also due to govt reform efforts, such as cutting overcapacity

Equities

- Market Focal Points: Tesco rises on better than expected FY trading profits, Credit Suisse declines after Q1 revenues miss estimates, Cautious outlook weighs on ASML, Chipmakers opened higher following Intel results, Miners opened higher following China's Q1 GDP data and BHP production update but later pared gains, European Biotech merger (France's Bioalliance Pharma and Denmark's Topotarget), European corporate bond issuance remains subdued

- Indices [FTSE 100 +0.3% at 6,563, DAX +1% at 9,262, CAC-40 +1% at 4,386, IBEX-35 +1.3% at 10,232, FTSE MIB +1.9% at 21,222 (prior session's underperformer), SMI +0.4% at 8,314, S&P 500 Futures +0.5% at 1,848]

By Sector

- Consumer Staples [Danone BN.FR -1% (Q1 sales below ests)

- Consumer Discretionary [Tesco TSCO.UK +3% (FY trading profit above ests), Persimmon PSN +1% (forward sales +35% y/y)

- Industrials [GEA Group G1A.DE +5% (confirmed unit sale), Technip TEC.FR +2% (contract award), Syngenta SYNN.CH +1% (Q1 sales in line); Metso MEO1V.FI -4% (rejected offer from Weir Group)]

- Healthcare [TopoTarget TOPO.DK +20% (merger agreement), Bioalliance BIO.FR +3% (merger agreement), Reckitt - Benckiser RB.UK +1% (Q1 sales in line, reaffirmed outlook)]

- Financials [Credit Suisse -1.5% (Q1 revenues below estimates)]

- Technology [ASML ASML.NL -4% (cautious outlook)]

- Stoxx50 sectors [Industrials +1.3%, Energy +1% Telecom +1%, Consumer Cyclical +0.9%, Basic Materials +0.8%, Financials +0.6%, Utilities +0.4%, Consumer Non-Cyclical +0.4%; Technology -2%]

Currencies/Fixed Income

- Risk appetite donned a relief rally after Chinese data registered a slightly better than expected Q1 GDP figures. The USD continued to be on the defensive.

- The GBP was firmer after the UK employment picture continued its improvement. UK ILO Unemployment Rate moved below the BOE 7.0% threshold (**Note back in Feb the central bank stated that it would look at a broader range of economic indicators). The Claimant Count registered its 17 straight month of improvement. GBP/USD re-approached its April highs above 1.68 as a result of the better data. EUR/GBP cross testing below 0.8240.

- The USD/JPY held above the 102 handle aide by it's inverse relationship with equity market direction. BOJ gov Kuroda spoke several times over the last 24 hours and continued to stress that the BoJ was not in early easing mode following the recent tax hike.

- Dealers also noted that commodity currencies could move back into focus given the slowing of Chinese data and the increased uncertainty in Ukraine

Economic Data

- (JP) Japan Feb Final Industrial Production M/M: -2.3% v -2.3% prelim; Y/Y: 7.0% v 6.9% prelim; Capacity Utilization M/M: -2.6% v 5.9% prelim

- (CZ) Czech Mar PPI Industrial M/M: -0.2% v 0.0%e; Y/Y: -0.8% v -0.6%e

- (CZ) Czech Feb Export Price Index Y/Y: 4.4% v 4.7% prior; Import Price Index Y/Y: 2.9% v 2.9% prior

- (AT) Austria Mar CPI M/M: 0.9% v 0.2% prior; Y/Y: 1.6% v 1.5% prior

- (EU) ECB €0.0M borrowed in overnight loan facility vs. €0.0M prior; €24.9B parked in deposit facility vs. €21.5B prior - Daily Eurosystem Liquidity Conditions

- 03:15 (EU) ECB calls for bids in 7-day USD Liquidity Tender (**Note: it has been 29 weeks without an allotment (last was back on Sept 18th)

- (NO) Norway Mar Trade Balance (NOK): 31.4B v 33.1B prior

- (IT) Italy Feb Total Trade Balance: €2.6B v €2.5Be; Trade Balance EU: €1.3B v €1.3B prior

- (EU) Euro Zone Feb Current Account (Seasonally Adj): €21.9B v €25.3B prior; Current Account NSA (unadj): €13.9B v €6.4B prior

- (ES) Spain Feb Trade Balance: -€1.6B v -€2.8B prior

- (UK) Mar Jobless Claims Change: -30.4K (17 straight month of improvement) v -30.0Ke; Claimant Count Rate: 3.4% v 3.4%e; (lowest since Jan 2009)

- (UK) Feb Average Weekly Earnings 3M/Y: 1.7% v 1.8%e; Weekly Earnings ex bonus 3M/Y: 1.4% v 1.7%e

- (UK) Feb ILO Unemployment Rate: 6.9% v 7.1%e; Employment Change 3M/3M: +239K v +90Ke prior

- (EU) Euro Zone Mar CPI M/M: 0.9% v 1.0%e; Y/Y: 0.5% (lowest since Nov 2009 v 0.5%e; CPI Core Y/Y: 0.7% v 0.8%e

- (CH) Swiss Apr Credit Suisse ZEW Expectations Survey: 7 v 19 prior

- (IT) Italy Feb Current Account Balance: +€0.3B v -€1.3B prior

Looking Ahead

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

- 07:00 (US) MBA Mortgage Applications w/e Apr 11th: No est v -1.6% prior

- 07:00 (BR) Brazil Apr Prelim IGP-M Inflation (2nd Preview): 0.8%e v 1.4% advance

- 07:00 (ZA) South Africa Feb Retail Sales M/M: -0.5%e v +0.8% prior; Y/Y: 3.8%e v 6.8% prior

- 07:30 (BR) Brazil Feb Economic Activity Index M/M: 0.3%e v 1.3% prior; Y/Y: 3.9%e v 0.9% prior

- 08:00 (US) Fed's Stein to speak on Quantitative Easing in Georgia

- 08:00 (PL) Poland Mar CPI Core M/M: 0.3%e v 0.2% prior; Y/Y: 1.0%e v 0.9% prior

- 08:00 (PL) Poland Mar Average Gross Wages M/M: 3.2%e v 1.3% prior; Y/Y: 3.9%e v 4.0% prior

- 08:00 (PL) Poland Mar Employment M/M: 0.1%e v 0.0% prior; Y/Y: 0.4%e v 0.2% prior

- 08:15 Baltic Dry Bulk Index

- 08:30 (US) Mar Housing Starts: 975Ke v 907K prior; Building Permits: 1.015Me v 1.014M prior (revised from 1.018M)

- 08:30 (CA) Canada Feb Int'l Securities Transactions: C$3.0Be v C$1.1B prior

- 09:15 (US) Mar Industrial Production M/M: 0.5%e v 0.6% prior; Capacity Utilization: 78.7%e v 78.4% prior (revised from 78.8%); Manufacturing Production: 0.6%e v 0.8% prior

- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 1.00%

- 10:30 (US) Weekly DOE Crude Oil Inventories

- 11:00 (CZ) Czech Central Bank gov Singer

- 11:00 (US) Fed to purchase $0.90-1.15B in Notes

- 11:00 (BR) Brazil to sell 2014, 2016 and 2018

- 11:00 (BR) Brazil to sell Fixed-rate 2021 and 2025 bonds

- 11:30 (US) Fed's Lockhart gives closing remarks on Financial Markets

- 11:30 (BR) Brazil Weekly Currency Flows

- 12:15 (US) Fed's Yellen speaks to Economic Club of New York

- 13:25 (US) Fed's Fisher speaks on the Economy in Austin, Texas

- 14:00 (US) Fed Beige Book