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European Market Update

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European bourses recover bulk of opening losses

Fri, Nov 27 2009, 11:15 GMT
by Trade The News Staff

TradeTheNews.com

European Market Update: European bourses recover bulk of opening losses; JPY currency softer on potential intervention threats

ECONOMIC DATA

- (BE) Belgium Nov CPI M/M: 0.3% v 0.1% prior; Y/Y: -0.1% v -1.0% prior

- (GE) German Oct Import Price Index M/M: 0.5% v 0.4%e; Y/Y: -8.1% v -7.8%e

- (FI) Finland Oct Preliminary Retail Sales: -1.2% v -0.5%e

- (FI) Finland Nov Business Confidence: -19.0 v -13.0; Consumer Confidence: 10.9 v 13.0e

- (FR) France Nov Consumer Confidence: -30 v -35e

(TT) Taiwan Oct Leading Indicator: 0.5% v 1.5% prior; Coincident Index: 2.1% v 1.5% prior

(SP) Spain Nov Preliminary CPI EU Harmonized Y/Y: 0.4% v 0.1%

- (SW) Sweden Q3 GDP Q/Q: 0.2% v 0.6%e; Y/Y: -5.0% v -5.0%e

- (SW) Sweden Oct Retail M/M: 1.5% v 0.5%e; Y/Y: 5.5% v 4.2%e

- (IT) Italy Oct Hourly Wages M/M: 0.2% v 0.2%e; Y/Y: 3.2% v 3.2%e

- (BR) Brazil Nov FGV Inflation M/M: 0.1% v 0.2%e; Y/Y: -1.6% v -1.5%e

- (EU) Euro-Zone Nov Business Climate: -1.59 v -1.65e; Consumer Confidence: -17 v -17e; Economic Confidence: 88.8 v 88.0e; Industrial Confidence: -19 v -19e; Services Confidence: -4 v -6e

- (IT) Sept Large Company Employer Y/Y: -2.0% v -1.9% prior

(SZ) Swiss Nov KOF Leading Indicator:1.62 v 1.78e

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- Equities: Equity markets in Europe open down over 1% as Dubai's unilateral demand for a debt repayment moratorium weighed upon sentiment throughout the Asian session. The indices recover the bulk of those initial losses as the DAX and CAC-40 briefly turned positive.

-Individual stocks: Carphone warehouse [CPW.UK] Reported H1 Net 20M compared to 43M estimates with revenues at 786M above the 716M consensus. Company maintained guidance for annualized synergies and noted that customer growth was ahead of expectations || Royal Bank of Scotland [RBS.UK] Signed agreement to enter Gov't Asset Purchase Scheme. To issue 35.5B of new capital to Treasury || Tata Motors [TTMT.IN] Reported Q2 Net profit INT217M compared to a loss INR9.4B y/y, Rev INR209B against INR228M y/y ||

- Speakers: BoE's Posen commented in a press interview that he believed UK economy had bottomed out. He saw substantial excess capacity || ECB's Nowotny stressed that the central bank remained independence and faced no political pressure on its monetary policy to allow inflation || Japan PM Hatoyama commented that it was desirable for stability in the currency markets. He would not comment on ways to curb Yen appreciation || BoE's Bean reiterated views from the recent UK inflation report. He noted that UK inflation would spike in spring and might hit 3%. He added that spare capacity would bring inflation back to the central bank target of 2.0%. He expressed disappointment over the Q3 GDP but commented that he would not be surprised with Q4 growth. Any UK recovery to be slow and protracted. UK needed to reduce debt to more sustainable levels||

India Central Bank's Subbarao reiterated that its economic recovery remained fragile and it was critical for India that world economy recovered for its exports. The RBI noted that India must return to the path of fiscal consolidations. || Japanese Gov't Official stated that it would decide on details of economic stimulus measures next week and noted that the measures might reflect impact of Yen appreciation || Bank of Italy Director General commented that he did not see any problems for Italy's banking system from Dubai World situation. || German DIW sees Q4 GDP Q/Q +0.8%

- Currencies: The dollar initially continued to benefit from the Dubai debt restructuring situation and advanced against the major European and commodity currencies on Friday. The situation prompted rumors ECB would hold an emergency meeting. However, as the European morning progressed the risk aversion sentiment was easing a bit which aided a modest rebound in European equities. Bank of Italy official noted the Italy's banking system would not have any problems for from Dubai World situation. The EUR/USD tested 1.4830 just ahead of the Session but managed to regain a foothold above 1.49 as the NY day approached

- The USD/JPY did test strengthened to a 14-year high in pre-Asia as it tested below the 85 handle . Dealers have noted that the political machines in MOF was not as competent as the previous ones in terms of handling the volatility in the currency markets and noted that they can little at this time untill the panic move subsided and Yen market returns to normality. The USD/JPY moved back above the 86 handle after Finance Minister Fujii commented that he was prepared to contact the U.S. and Europe officials to organize some sort of coordinated intervention. There was chatter that the BOJ 'checked rates' earlier today (seen as a closer step to currency intervention). USD/JPY was above the 86.50 area ahead of the NY morning.

-Energy/Commodities: Stop loss interest exacerbated both oil and gold ahead of the European morning. Jan crude tested below $72.50 before recovering back above $74.50 area. Spot gold tested $1,1140/oz. || Royal Dutch Shell [RDSA.UK] CEO: Further weakening of USD was a concern and not ideal for the economy || Russia announced that it would cut export tax for 13 Siberian Fields to zero, effective Dec 1st . it also noted that it would increased the tax on exports of crude oil by 17% to $271 per metric ton on the same day.

-Geo-Political: Reportedly Russia and US were unlikely to sign new nuclear weapons treaty by Dec 5th; talks to continue past deadline

Notes:

-- Germany and Spain, which confirms that inflation has bottomed

- Dubai debt situation illustrated that the market might been content to ignore macro malign investments and unsustainable levels of leverage across the globe

Looking Ahead:

-6:30 (CL) Chile Central Bank Minutes

-8:30 (CA) Canada Q3 Current Account -$13.4Be v -$11.2B prior

- 10:00 (MX) Mexico Central Bank Interest rate decision: Unanimous analyst estimate for the Overnight rate to remain unchanged at 4.50%

Published on  Fri, Nov 27 2009, 11:18 GMT