UK/Euro Financial Market Daily Morning Briefing 11-03-2014

London open: Stocks edge higher ahead of UK data

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Europe open: Stocks rally after German exports and imports rise

- German trade surplus narrows
- UK industrial report out
- ECB urged to introduce QE
- European finance ministers resume talks

FTSE 100: 0.05%
DAX: 0.17%
CAC 40: 0.06%
FTSE MIB: 0.14%
IBEX 35: 0.01%
Stoxx 600: 0.21%

European stocks gained as official data today showed German exports and imports surged in January at the fastest pace in nearly two years.

Seasonally adjusted exports jumped 2.2%, well above the 1.5% forecast, the Federal Statistics Office revealed. Overseas shipments had fallen 1% in December.

Imports advanced 4.1% in January, compared to a drop of 1.4% the previous month and the consensus estimate of a 1.4% increase.

As a result, the seasonally-adjusted trade surplus narrowed to €17.2bn from a revised €18.3bn in December.

"Foreign demand is going well, this is a positive sign for economic growth in the first quarter," Reuters reported, citing Ralph Solveen, Economist at Commerzbank.

"The economy should grow by about 0.75%, not least because the construction sector will have benefited from a mild winter."

In the UK, a report at 9:30 GMT in London may show industrial production rose 3% in January from a year earlier, according economists' expectations. It would mark the largest year-on-year expansion since January 2011. Another report is projected to show manufacturing output climbed 3.3% year-on-year in January.

At 15:00 GMT, the National Institute of Economic and Social Research (NIESR) will release its gross domestic product (GDP) estimate for the UK in February.

DIW head urges ECB to inject QE

The European Central Bank (ECB) must act quickly and decisively to counter the threat of deflation "along the lines of the Federal Reserve," the head of Germany's Institute for Economic Research (DIW), Marcel Fratzcher, wrote in Die Welt.

Fratzcher has called for €60bn of bond purchases each month to halt the contraction of credit and avert a Japanese-style rut of deflation.

His remarks came after the ECB decided to hold fire on policy action last week despite the M3 money supply falling below zero over the last eight months and inflation dropping to 0.8%, well below the monetary authority's 2% target.

In other Eurozone news, European Union finance ministers will resume talks today as they try to break a deadlock on a law for failing banks in the euro-area.

Policymakers working on a compromise deal on the Single Resolution Mechanism and a common fund to cover the cost of saving or closing banks. ECB President Mario Draghi last week said there would be severe consequences for the euro-area and its banking union should they fail to reach a deal before May's parliament elections.

Geberit, Close Brothers

Geberit rallied after the maker of bathroom fittings and plumbing products said Christian Buhl will take over as Chief Executive from Albert Baehny at the beginning of 2015.

Close Brothers edged higher after the UK financial services company increased its interim payout to 16.5p, beating analysts' estimates.

African Barrick Gold slumped following reports that the company has started selling a 10% stake in its African unit.

The euro fell 0.13% to $1.3859.

Brent crude futures rose $0.277 to $108.380 per barrel, according to the ICE.

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US close: Stocks finish lower after China data, Plosser comments

- S&P 500 pulls back from record high
- China, Japan data weighs on sentiment
- Plosser assesses speed of tapering

Dow Jones: -0.21%
Nasdaq: -0.04%
S&P 500: -0.05%

US stocks finished Monday's session in the red, but managed to claw back losses made early on as investors digested weak economic data from China and comments from a member of the Federal Reserve.

The S&P 500 finished just 0.87 points, or 0.05%, lower at 1,877.17 as investors turned cautious after the index set another all-time high of 1,878.04 on Friday. The Dow Jones Industrial Average was 0.21% down at 16,418.68, while the Nasdaq lost 0.04% to end at 4,334.45.

Industrial stocks were among the worst performers on Wall Street after a surprise trade deficit in China and a sharper-than-expected slowdown in consumer price inflation. Meanwhile, in Japan, there were downward revisions to growth estimates for the fourth quarter, while the current account deficit surged to a record high.

Ongoing concerns about geopolitical tensions in Ukraine were also acting as a backdrop for markets today ahead of a referendum in Crimea later this week on whether or not the region should join Russia. The US estimates that Russia currently has 20,000 troops deployed in Crimea, whose presence continues to draw criticism from Western leaders.

Taper speculation ramps up after Plosser comments

Charles Plosser from the Philadelphia Fed said that the central bank may have to pick up the pace of tapering in light of an "improving economy".

Speaking in Paris, he said: "Reducing the pace of asset purchases in measured steps is moving in the right direction, but the pace may leave us well behind the curve if the economy continues to play out according to the FOMC forecasts."

However, according to other reports, Plosser also said that the bar for a change in the current rate of tapering is "pretty high".

McDonalds in focus after February sales dip

Global same-store sales at fast-food giant McDonald's declined by 0.3% in February, with a 1.4% drop in US sales and a 2.6% fall in Asia Pacific, Middle East and Africa offsetting a 0.6% increase in Europe. The company said that "challenging industry dynamics" and the poor weather were to blame for the fall in domestic sales, causing the stock to slip slightly.

Mining stocks were performing poorly on Monday on concerns over economic growth in China. Cliffs Natural Resources fell after cautious comments from Axiom Capital Management, while Barrick Gold and Freeport-McMoRan Copper and Gold also finished lower.

Food group Chiquita Brands surged after the company announced a merger deal with UK-listed fruit supplier Fyffes worth $1.07bn.

Bed Bath & Beyond was in focus after lowering its earnings per share guidance for the fourth quarter after the recent bad weather.

Aerospace firm Boeing declined after one of its 777-200 planes flying from Kuala Lumper to Beijing disappeared this weekend with 239 passengers and crew on board. The search is still underway for the aircraft.

Regado Biosciences Inc. advanced after saying the US Food and Drug Administration has designated its REG1 anticoagulant drug for fast-track development.


S&P 500 - Risers
Alexion Pharmaceuticals Inc. (ALXN) $180.00 +7.11%
FMC Corp. (FMC) $83.10 +6.72%
Sears Holdings Corp. (SHLD) $47.97 +6.01%
Facebook Inc. (FB) $72.03 +3.19%
Biogen Idec Inc. (BIIB) $338.00 +2.81%
Archer-Daniels-Midland Co. (ADM) $42.45 +2.71%
Amgen Inc. (AMGN) $125.40 +2.57%
Southwest Airlines Co. (LUV) $23.60 +2.16%
Range Resources Corp. (RRC) $86.76 +1.97%
Gannett Co. Inc. (GCI) $29.44 +1.90%

S&P 500 - Fallers
Cognizant Technology Solutions Corp. (CTSH) $52.90 -50.66%
Cliffs Natural Resources Inc. (CLF) $17.95 -3.75%
Peabody Energy Corp. (BTU) $16.08 -3.65%
D. R. Horton Inc. (DHI) $22.77 -2.98%
Adt Corp (ADT) $29.98 -2.82%
Mylan Inc. (MYL) $53.41 -2.64%
Akamai Technologies Inc. (AKAM) $59.39 -2.64%
Omnicom Group Inc. (OMC) $73.57 -2.56%
Freeport-McMoRan Copper & Gold Inc. (FCX) $31.38 -2.52%
Wynn Resorts Ltd. (WYNN) $240.57 -2.47%

Dow Jones I.A - Risers
Intel Corp. (INTC) $24.84 +0.81%
Chevron Corp. (CVX) $115.84 +0.66%
Unitedhealth Group Inc. (UNH) $77.88 +0.62%
Exxon Mobil Corp. (XOM) $95.50 +0.54%
Coca-Cola Co. (KO) $38.65 +0.26%
Procter & Gamble Co. (PG) $78.53 +0.19%
E.I. du Pont de Nemours and Co. (DD) $67.35 +0.16%
Johnson & Johnson (JNJ) $93.45 +0.14%

Dow Jones I.A - Fallers
Boeing Co. (BA) $126.89 -1.28%
International Machines Corp. (IBM) $186.39 -0.69%
Nike Inc. (NKE) $78.98 -0.60%
United Technologies Corp. (UTX) $117.77 -0.46%
Home Depot Inc. (HD) $82.18 -0.45%
Goldman Sachs Group Inc. (GS) $173.51 -0.43%
3M Co. (MMM) $133.56 -0.41%
General Electric Co. (GE) $26.04 -0.34%
JP Morgan Chase & Co. (JPM) $59.20 -0.34%
McDonald's Corp. (MCD) $95.20 -0.31%

Nasdaq 100 - Risers
Alexion Pharmaceuticals Inc. (ALXN) $180.00 +7.11%
Facebook Inc. (FB) $72.03 +3.19%
Biogen Idec Inc. (BIIB) $338.00 +2.81%
Catamaran Corp (CTRX) $45.53 +2.64%
Verisk Analytics Inc. (VRSK) $63.85 +2.59%
Amgen Inc. (AMGN) $125.40 +2.57%
Micron Technology Inc. (MU) $24.85 +1.76%
Seagate Technology Plc (STX) $50.14 +1.72%
Staples Inc. (SPLS) $11.63 +1.31%
Charter Communications Inc. (CHTR) $128.54 +1.21%

Nasdaq 100 - Fallers
Cognizant Technology Solutions Corp. (CTSH) $52.90 -50.66%
Group Plc ADS (VOD) $38.13 -4.51%
Tesla Motors Inc (TSLA) $238.84 -2.99%
Mylan Inc. (MYL) $53.41 -2.64%
Akamai Technologies Inc. (AKAM) $59.39 -2.64%
Wynn Resorts Ltd. (WYNN) $240.57 -2.47%
F5 Networks Inc. (FFIV) $111.97 -2.45%
Nxp Semiconductors Nv (NXPI) $57.14 -2.42%
Dish Corp. (DISH) $60.96 -2.17%
Autodesk Inc. (ADSK) $52.59 -1.90%

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Tuesday newspaper round-up: ECB, ONS, Poundland

The European Central Bank must act quickly and decisively to counter the threat of deflation "along the lines of the Federal Reserve," the head of Germany's DIW research institute, Marcel Fratzcher, wrote in Die Welt, according to The Daily Telegraph. That marks a radical shift in thinking among the German policy elites. Fratzcher underlined the negative impact which rising real interest rates, as inflation falls back, can have on businesses and the risk of the periphery falling into a debt traps.

The Office for National Statistics has delayed the release of its market sensitive trade figures, which were due out on Wednesday, after identifying an issue with one of its sources. That follows two statements, on Monday, regarding errors in its data on zero-hours contracts, which it told users to treat with "due caution", The Times reports.

Recession darling Poundland's initial public offering is set to price on Wednesday close to or at the top of the 250p to 300p range recommended by its advisers. In the process it will create another set of millionaires from its 155 managers, who together own 25% of the firm which may be worth £190m, The Guardian writes.

Global fund manager Fidelity International's Chief Investment Officer, Dominic Rossi, is disappointed by Barclays' decision to increase its bonus awards despite having reported a 26% fall in in adjusted pre-tax profits, landing the lender in a "public relations mess". "We are disappointed that the distributions between employees and shareholders did not favour shareholders more," Rossi said, The Times says.

The City set another record last year. Despite the European Union's cap on bonuses London bankers received the biggest bonuses globally, after they increased by 49% on 2012's levels. They were larger than those on Wall Street and Hong Kong, where they rose by 47%, and Sidney, which saw an increase of 45%. However, according to a survey from eFinancialCareers a deeper look into the numbers shows an increasing and ruthless "priority" being put on rewarding top performers, The Daily Mail reports.

For the first time since 2008 all nine industrial sectors of the economy expect to increase staff numbers, Manpower's employment outlook survey revealed. That comes as a result of the recent winter floods, which will see the construction industry carry out a hiring spree. Employment in the sector was one of the hardest hit by the recession. The utilities sector and agriculture are also expected to benefit, the consultancy said, according to The Daily Telegraph.

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