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European Market Update

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Euro−Zone Industrial Production highlights slowing economic outlook ahead of US retail sales

Fri, Sep 12 2008, 12:19 GMT
by Trade The News Staff

TradeTheNews.com

ECONOMIC DATA

- (IN) India Jul Industrial production Y/Y: 7.1% v 6.0%e

- (FR) August Bus. Sentiment: 94 v 92e

- (FR) August CPI M/M: 0.0% v 0.1%e; Y/Y: 3.2%v 3.3%e

- (FR) CPI (EU-Harmonized) M/M: -0.1% v 0.1%e; Y/Y: 3.5% v 3.7%e

- (FR) August CPI Ex Tobacco Index: 118.64 v 118.81

- (CZ) August PPI M/M: 0.4% v 0.0%e; Y/Y: 5.7% v 5.3%e

- (SW) Q2 GDP Q/Q: 0.0% v 0.0%e; Y/Y: 0.6% v 0.7%e

- (IT) July Industrial Production M/M: -1. 1% v -0.5%e; Y/Y: -3.2% v-2.7%e; Y/Y (NSA): -0.6% v -4.4% prior.

- (CZ) July Current Account Monthly (CZK): -0.31B v -15.75Be

- (EU) Q2 Eurozone Employment Q/Q: % v 0.3% prior; Y/Y: % v1.6% prior.

- (EU) July Euro-Zone Ind. Prod. M/M: % v -0.2%e; Y/Y: % v -1.0%e;

- (US) Aug foreclosures +12% y/y; Filings +27% y/y - Realtytrac

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- In Corporate news: Infosys [INFY] stated that the recent USD gains vs GBP could impact its earnings (The company gets between 30% and 35% of its total revenue in GBP terms) || Statoil [STL.NO] Reported gas discovery in Njord field located in Norwegian Sea. || Deutsche Post [DPW.GE] WSJ reported that co. expected to sell a close to 30% stake in Postbank unit to Deutsche Bank for as much as €3B. Other sources narrowed the price tag to 2. 7B-2.8B or EUR57/shr for Post Bank [DPB.GE]. || Natisix [KN.FR] acquired a 25% of Dorval Finance; terms not disclosed. LDK Solar [LDK] signed a 11- year agreement with Germany's Q-Cells AG [QCE.GE]. LDK is due to provide Q- Cells with wafers in the amount of up to 5 GWp. || Repsol [REP.SP] traded firmer in the session following press reports that Sacyr [SYV.SP] might sell its 20% stake in company to reduce debt. Sacyr stated that it was exploring asset sales, but no decisions have been made at this time || Photo-Me [PHTM.UK] issued an interim management report and noted that trading was encouraging back in May and June period, but disappointing in July. || Alitalia [AZA.it] Italian Investor Group led by Piaggio [PIA.IT] says conditions not right for rescue talks and threatened to pull out of bid.

- Speakers: (BE) Belgium Reynders made comments in a French newspaper interview on ECB policy. He stated that the ECB should measure policy impact on economic growth and did not exclude possibility of an interest rate cut from the central bank. Reynders added that Trichet's policies are correct for the economy at this time but further dialog between Ecofin and the ECB would bolster the relationship. ||(FR) French Econ Min Lagarde stated that French inflation may have peaked, however remains vigilant on curbing inflationary expectations. Finally noted that the economic forecast indicates future growth. || EU's Juncker noted that the Euro-Zone economic downturn could be much worse tan expected. Remarks were given during a radio interview. He added that it remained imperative to get inflation under control. He stated that he is cuurently neutral on any position regarding a US style stimulus package for the EuroZone adding that the EuroZone wouldl most likely avoid protracted recession. || (GE)German Finance Minister Steinbrueck also commented on the growth outlook. He stated that Germany was not in recession and reaffirmed the 2008 GDP view of 1.7%. However, Steinbrueck also noted that he did not imply that financial market crisis was near an end. Lastly he did not see a large impact of US GSE's on Europe. || (NO) Norway Central Bank Chief stated that its monetary policy stance needed to be on a tight stance for the time period, but sees inflation stabilizing around 2.5%||Asia Development Bank (ADB) Chief Kuroda lowered his outlook on the 2008 GDP forecast for developing Asian countries to 7.0% from prior estimate of 7.6%. He also did not expect currency crisis in South Korea and was not concerned about FX reserves. Japan's GDP was seen growing during the H2 of 2008.. Lastly noted that the political instability in Thailand would most likely will not impact Thai economy and markets.|| (IN) India Secretary Rastogi stated that India was considering raising export tax on iron ore to 20% from 15%. Added that he expected local steel prices to drop on falling global price

- In energy: Hurricane Ike moving West-NorthWest toward the Northwestern Gulf Coast of Texas as a Category 2 storm with Maximum sustained winds of 105 mph and minimum central pressure of 957 mb. The soterm was expected to strengthen before landfall.

- In currencies: The USD encountered a bit of retracement following the advances seen earlier in the week. EUR/USD moved back above the 1.41 handle while GBP/USD regained a foothold above 1.77. As slowing growth number continue to trickle out of the Euro Zone BNP analyst revised their ECB interest rate forecast and see a cut in March 2009 from a prior view of holding rates steady throughout the year.

·*** NOTES ***

- The session was marked by the 'relief' that perhaps Lehman Brothers [LEH] would be 'saved' as the US Government is to arrange of the company through a consortium of private firms. European equities took their cue from the strong close exhibited by the US equities on Thursday as LEH sale rumors circulated. The markets saw 'profit-taking' or at least a retracement of the weekly trend in equities, fixed-income, and commodities and in currencies. Overall some key psychology and technical levels remain intact despite the price action throughout the week. EUR/USD holding its 6-year uptrend line at the 1.38 level; EUR/JPY regaining a foothold above the 150.22 200 week moving avg. Oil holding the $100 per barrel and reformulated gasoline up 2% to 280.25 as Hurricane Ike makes its way towards the Texas gulf with the potential to become a powerful storm before landfall. With energy firmer in the session the fixed-income futures encountered a steady on decent volume ahead of the US PPI data and potential concerns over energy supplies post hurricane.

Looking Ahead

8:30 (US) Aug PPI MoM expected at -0.5% v 1.2% prior; YoY expected at 10.2% v 9.8% prior

8:30 (US) Aug PPI Ex Food- Energy MoM expected at 0.2% v 0.7% prior; YoY expected at 3.7% v 3.5% prior

8:30 (US) Aug Advanced retail Sales MoM expected at 0.2% v -0. 1% prior; Ex-Autos expected at -0.2% v 0.4% prior

8:30 (CA) Q2 Capacity Utilization rate expected at 78.8% v 79.8% prior

10:00 (US) Sept Preliminary Univ of Michigan: expecte at 64.0 v 63.0 prior

10:00 (US) Jul Business Inventories expected at 0.5% v 0.7% prior

Published on  Fri, Sep 12 2008, 12:22 GMT