06.02.15 Friday Morning

Europe
Like much of the New Year, this week’s big news largely occurred in the Eurozone. The Greek-Euro tour has dominated column inches, as Syriza finance minister Yanis Varoufakis visited Geroge Osborne, Renzi/Paodan in Italy, and most importantly the ECB and Mario Draghi and German finance minister Wolfgang Schauble. The result of this tour was less than reassuring; after the Draghi meeting, the ECB announced the shock news that Greek bonds will no longer be accepted as collateral for bank loans from the country, whilst Schauble reiterated that there had been little agreement between him and his Greek counterpart. Things had looked good on Tuesday as Greece revealed a debt-swap plan instead of a haircut, but the Eurozone establishment still weren’t impressed, leading to the string of stagnant meeting that began to weigh on the markets.

This all in a week where the DAX hit new all-time highs following the rise of oil, the reveal of the debt-swap plan alongside strong services PMI and a GDP revision up to 1.3% for 2015. However, the Greek-debt-saga has provided the focus for investors, and will likely be the case for the next few weeks and months until it is resolved. Looking ahead, in terms of actual data the Eurozone only sees some industrial production figures, German CPI, and some preliminary GDP to distract it from the issues in Athens next week.

Commodities
Oil’s big rally at the start of the week came to define the start of February, as Brent Crude touched $58 per barrel before slipping, only to rebound back to $58 once again. It suffered under the 3rd high US crude oil inventories in a row, but its overall growth was responsibility for much of the bullish trading at the start of the week. Copper followed a similar, if slightly less robust, pattern as oil, and on this Friday is looking at its seventh day of gains. Gold, however, seems to have returned to familiar trappings of around $1265 per ounce, after testing the waters between $1280 and $1300 and finding that investors didn’t have the appetite for sustaining these prices. The mixture of a strong dollar and a regularly rebounding euro means the metal has struggled to hold onto any growth it has seen of late.

UK
The FTSE largely followed oil wherever it went in this first week of February, with strong services PMI helping the UK index on Monday. As its much maligned energy and mining sectors rallied, the FTSE was pushed to impressive heights; however, a slip in oil on Wednesday caused the index to suffer, and despite the regains in the commodity, investors have remained wary over the longevity of this rebound. This conspired against the FTSE and despite good news for BT, which confirmed its EE purchase, and Poundland, which announced its acquisition of the 99p Store, it had a very mixed end to the week. Next week sees manufacturing production, a NIESR GDP estimate, as well as an anticipated statement from BoE Governor Carney; however, the big news for the FTSE will be how well oil can perform.

US

The oil rally and good news from Twitter caused the US markets to have a strong start to the month, with the Dow Jones facing its best week in nearly 3 years. However, this fact obscures what has been another disappointing week of data that saw ISM manufacturing PMI fall, non-manufacturing stagnate, with the trade balance deficit growing alongside unemployment claims. However, this bad data was swept aside as the non-farm employment change once again beat expectations. It is a relatively sparse landscape of significant US data next week, with retail sales, more unemployment claims and a preliminary UoM consumer sentiment statement to look forward to; this latter figure will be important as it will provide another indicator of the feasibility of an interest rate hike.

Stock of the week: Afren PLC
To be frank, Afren has had a ridiculous week as it epitomised the word ‘volatility’. At some points up nearly 95% on Monday and Tuesday, it was on track to recover the big losses it had seen since last Tuesday. This was prompted by a delay in its debt-restructuring deadlines, and more time given to Seplat to make its takeover decision. The oil rally gave more fuel to investors to buy Afren; however, a slip in the commodity and a downgrading from the S&P caused the company to shed much of these gains come Friday.

(Source: IT-Finance.com)

Economic Diary, 9^th to 13^th February 2015

 

Monday 9^th February

5.00am – JPY Consumer Confidence

7.00am – EUR German Trade Balance

11.50pm – JPY Tertiary Industry Activity m/m

 

Tuesday 10^th February

1.30am – JPY CPI y/y

1.30am – JPY PPI y/y

Tentative – JPY Trade Balance

7.45am – EUR French Industrial Production m/m

9.30am – GBP Manufacturing Production m/m

3.00pm – GBP NIESR GDP Estimate

3.00pm – USD JOLTS Job Openings

 

Wednesday 11^th February

All Day – JPY Bank Holiday

Tentative – GBP 30-y Bond Auction

3.30pm – USD Crude Oil Inventories

11.50pm – JPY Core Machinery Orders m/m

 

Thursday 12^th February

10.30am – GBP BOE Gov Carney Speaks

10.30am – GBP BOE Inflation Report

1.30pm – USD Core Retail Sales m/m

1.30pm – USD Unemployment Claims

3.00pm – USD Business Inventories m/m

 

Friday 13^th February

6.30am – EUR French Prelim GDP q/q

7.00am – EUR German Prelim GDP q/q

7.45am – EUR French Prelim Non-Farm Payrolls q/q

9.00am – EUR Italian Prelim GDP q/q

10.00am – EUR Flash GDP q/q

3.00pm – USD Prelim UoM Consumer Sentiment

3.00pm – USD Mortgage Delinquencies

 

Earnings releases, 9^th to 13^th February 2015

 

Monday 9^th February

Gap Inc – January 2015 Corporate Sales Release

McDonald’s Corp – January 2015 Sales Release

Hasbro Inc – Q4 2014 Earnings Release

Premier Inc – Q2 2015 Earnings Release

 

Tuesday 10^th February

The Coca-Cola Co – Q4 2014 Earnings Release

Western Union Co – Q4 2014 Earnings Release

Bellway PLC – Trading Statement Release

 

Wednesday 11^th February

AOL Inc – Q4 2014 Earnings Release

PepsiCo Inc – Q4 2014 Earnings Release

Whole Foods Market Inc – Q1 2015 Earnings Release

Thomas Cook Group PLC – Q1 2014/15 Interim Management Statement Release

Tullow Oil PLC – Full Year 2014 Earnings Release

 

Thursday 12^th February

CBS Corporation – Q4 2014 Earnings Release

Credit Suisse Group – Q4 2014 Earnings Release

Groupon Inc – Q4 2014 Earnings Release

Kellogg Company – Q4 2014 Earnings Release

Kraft Foods Group – Q4 2014 Earnings Release

Manchester United Ltd – Q4 2014 Earnings Release

 

Friday 13^th February

Burger King Worldwide Inc – Q4 2014 Earnings Release