EU Market Update: Major European PMI Survey again disapponts



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Article content EU Market Update: Major European PMI Survey again disapponts

23.06.2014 11:36 Monday
- China Jun HSBC/Markit Flash Manufacturing PMI: 50.8 vs. 49.7e (highest since Nov 2013, first expansion in 6 months); Chinese equities fall over seasonally concerns that short-term rates could pop up on money demand
- Major European PMI data undershooting market expectations

***Economic Data***
- (SG) Singapore May CPI M/M: 0.5% v 0.6%e; Y/Y: 2.7% v 2.6%e
- (JP) Japan May Supermarket Sales: -2.2% v -5.4% prior
- (FR) France Jun Preliminary Manufacturing PMI: 47.8 v 49.5e; Services PMI: 48.2 v 49.4e; Composite PMI: 48.0 v 49.3e
- (CH) Swiss May M3 Money Supply Y/Y: 7.6% v 8.0% prior
- (EU) ECB €5M borrowed in overnight loan facility vs. €2.0M prior; €26.5B parked in deposit facility vs. €22.7B prior - Daily Eurosystem Liquidity Conditions
- (CH) SNB: Swiss sight deposits for week ended Jun 20th (CHF): 301.4B v 300.8B prior
- (DE) Germany Jun Preliminary Manufacturing PMI: 52.4 v 52.5e; Services PMI: 54.8 v 55.8e; Composite PMI: 52.8 v 55.5e
- (TW) Taiwan May Industrial Production Y/Y: 5.2% v 2.7%e; Commercial Sales Y/Y: % v 3.8%e
- (EU) Euro Zone Jun Preliminary Manufacturing PMI: 51.9 v 52.2e; Services PMI: 52.8 v 53.3e; Composite PMI: 52.8 v 53.4e
- (HK) Hong Kong May CPI Composite Y/Y: 3.7% v 3.8%e
- (IL) Israel May Leading 'S' Indicator M/M: 0.2% v 0.1% prior

Fixed Income:
- None seen

Indices [Stoxx50 -0.7%, FTSE 100 -0.4% at 6,800, DAX -0.8% at 9,911, CAC-40 -0.7% at 4,509, IBEX-35 -0.3% at 11,116, FTSE MIB -1.4% at 21,689, SMI -0.6% at 8,649, S&P 500 Futures flat at 1,953]

- Market Focal Points/Key Themes: European equity markets trade lower amid weakness in Hong Kong as dealers assess PMI data from Europe (France and Germany) and China, FTSE MIB underperforms as Banca Monte Paschi continues to decline, UK homebuilders decline amid speculation related to measures for property market, UK-listed miners supported by China PMI data, High oil prices weigh on airlines, Hong Kong Hang Seng underperforms in Asia

By Sector
- Consumer Discretionary [DIA DIA.ES +3% (agreement with Carrefour)]
- Financials [Cenkos Securities CNKS.UK +5% (upbeat outlook)]
- Consumer Staples [WM Morrisons MRW.UK -0.5% (price cuts)]
- Industrials [Siemens SIE.DE -0.8% (Alstom rejected bid)]
- Stoxx50 Sectors [Industrials -0.8%, Consumer Cyclical -0.7%, Consumer Non-Cyclical -0.7%, Basic Materials -0.7%,
- Telecom -0.6%, Utilities -0.5%, Financials -0.4%; Energy flat]

- BOE Credit Conditions Survey noted that Lenders expect maximum mortgage loan to value unchanged in Q3, expected maximum loan to income to decline in Q3. It added that Q2 mortgage demand rose significantly while availability rose slightly q/q. Some lenders believe mortgage market review might cut approvals.
- BOJ Gov Kuroda reiterated to achieve 2% inflation as soon as possible and that BOJ would not hesitate to make policy adjustments. Easing was having the intended effect
- South Africa AMCU union official: platinum workers could be back at work by Wed, June 25th
- EU: Complete preparation for signing of Ukraine association agreement for this week
- Turkey Econ Min Zeybekci stated that the Govt was expecting the Turkish central bank to cut interest rates at its policy meeting on Tuesday, Jun 24th
- Thailand Central Bank cut its 2014 Export Growth outlook from 4.5% to 3.0%. it forecasted economic recovery in 2014 and that GDP growth of 1.5% was not worrisome
- Philippines Econ Planning Sec Balisacan forecasted GDP growth in coming quarters (Q2-Q4) in excess of 6.5% and it it could spur increase for US dollars
- Canada Fin Min Oliver stated that it did not see inflation as a coming problem with it being around 2% level. Interest rate shock was unlikely and not the biggest threat to markets

Currencies/Fixed Income:
- FX markets remain locked in tight ranges with dealers hoping for signs that volatility would pick up. The EUR/USD was still contained within recent weekly ranges but softer in today's session following the weaker PMI surveys out of Europe.
- The GBP/USD was under minor profit-taking after failing to close above the pivotal 1.7050 weekly chart point.
- Dealers were pondering why Chinese equity markets under-performed despite the better Chinese PMI data. The best excuse was the lag was over seasonally concerns that short-term rates could pop up on money demand (as they did a year ago).

Political/In the Papers:
-Alstom [ALO.FR]: GE confirms Alstom board chooses GE offer; French govt to acquire 20% stake in Alstom from Bouygues
-BNP [BNP.FR]: Said to have reached a settlement with US regulators; agreed to broad terms of $8-9B - financial press
- (UR) Ukraine formally declares unilateral ceasefire in eastern Ukraine, to last through June 27th
-(IQ) Iraq's ISIS militants said to have expanded and reinforced their territory in the west of the country after having overrun a border post with Syria - financial press

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (EU) EU Foreign Ministers hold meeting in Luxembourg
- (FI) Finland Parliament scheduled to vote on New Prime Minister
- 05:30 (BE) Belgium Debt Agency to sell combined €1.8-2.3B in 2024, 2028 and 2045 OLO Bonds
- 05:30 (DE) Germany to Sell €2.0B in 12-month BuBills
- 06:00 (IL) Israel May Unemployment Rate: No est v 5.6% prior
- 06:00 (IL) Israel to sell 2016, 2019, 2023 and 2024 bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (RO) Romania to sell RON200M in Bonds
- 07:30 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (EU) ECB's Mersch (Luxembourg) in Poland
- 08:15 Baltic Dry Bulk Index
- 08:30 (US) May Chicago Fed National Activity Index: +0.20e v -0.32 prior
- 08:50 (FR) France Debt Agency (AFT) to sell combined €6.3-7.5B in 3-month, 6-month and 12-month Bills
- 09:00 (IL) Israel Central Bank Interest Rate decision: Expected to leave Base Rate unchanged at 0.75%
- 09:00 (MX) Mexico May Unemployment Rate NSA: 4.8%e v 4.8% prior; Unemployment Rate (Seasonally Adj): 4.8%e v 4.9% prior
- 09:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 09:45 (US) Jun Preliminary Markit Manufacturing PMI: 56.0e v 56.4 prior
- 10:00 (US) May Existing Home Sales: 4.74Me v 4.65M prior
- 11:00 (US) Fed to purchase $1.50-2.0B in Notes
- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
- 11:30 (AT) ECB's Nowotny (Austria) in Vienna
- 15:00 (AR) Argentina Q1 Current Account Balance: -$3.7Be v -$1.7B prior
- 15:00 (AR) Argentina Q1 GDP Y/Y: 0.5%e v 1.4% prior
- 16:00 (US) Crop Condition Report