13.02.15 Friday Morning

Europe
Once more the Eurozone was the focus, as the first half of the week was based around waiting for the Eurogroup meeting on Wednesday, with contradictory rumours playing havoc with the markets. The meeting turned out to be a damp squib, with reports that a statement hinting at a Greek debt bridge was nixed by Alexis Tsipras at the last moment due to the lack of compromise on the other side. This put a dampener on the markets; however, the announcement of a ceasefire, to begin on Sunday, between forces in Ukraine spurred the DAX to close at all-time highs. This positivity continued onto Friday morning, as Germany smashed GDP expectations, reaching 0.7% instead of the 0.3% forecast, hitting 1.6% overall for 2014.

The big focus for next week will be the fallout of the EU summit, and more importantly attempts to resolve the Greek-debt issue by the self-imposed dead line of Monday. So far there has been painfully little progress in reaching any kind of agreement between Greece and its creditors, and the markets may suffer next week if this trend continues. There will also be the German and region-wide ZEW economic sentiment and ECOFIN meetings alongside the ECB monetary policy meeting account and manufacturing and services PMI.

Commodities
Oil has had a rollercoaster of a week that looks set to end on a high note. After opening the week at $59 per barrel, Brent Crude kept slipping, reaching $56 per barrel by Wednesday. However, 5% gains on Thursday saw it climb back to $59, and on Friday morning it tentatively crossed the $60 mark for the first time in 2015. Weathering another high US crude oil inventories, and coming out the other side to make gains, is another reflection of the commodity’s growing resilience. Of course, oil will have another crude inventories to suffer next week, but it has dealt with them admirably in the past few weeks.

Copper spent the week testing its support and resistance levels of $256 and $258 respectively, before a strong earnings release from Rio Tinto led the mining sector higher, pushing the metal to close at over $260 per pound for the first time in over four weeks. Whilst its gains haven’t been as explosive as oil, copper has slowly been regaining the ground it last in the New Year, and with multiple mining stocks announcing earnings next week, will go through another test of resilience as February continues.

Gold, as has been the trend of late, was damaged first by a strong dollar, caused by a weaker euro at the start of the week, and then by a stronger euro after the Ukraine ceasefire news. This meant that the metal fell from $1236 per ounce to $1226, a dismal price considering the post-ECB QE prices it reached earlier in 2015.

UK
The FTSE spent the start of the week following oil around like a lost puppy, rising and falling alongside the commodity whilst stagnation in the Eurozone on exacerbated the issue. However, Thursday’s inflation report from Mark Carney buoyed the index as the Bank of England governor hinted at raising interest rates in 2016 caused the FTSE to grow further into the green following the ceasefire news. Strong earnings from Rio Tinto and a rally by Coca-Cola HBC helped things further, and by Friday, with the continued rallies of copper and oil, the FTSE was in a much healthier position than at the start of the week.

Next week the FTSE will have to brave CPI data, with inflation a continual hot topic for the UK at the moment, alongside the average earning index figures, and retail sales. All three have been troublesome in recent times, so it will be interesting to see how the FTSE reacts to these releases.

US
It was a very quiet start to the week for the US markets, as they largely looked to Europe for guidance. There was a flurry of key earnings releases, with Coca-Cola rising due to the fact it didn’t do as badly as analysts though it would, whilst PepsiCo outshone its main rival and Apple kept hitting new highs. Thursday saw weak unemployment figures and retails sales, but the Dow Jones ignored this news to focus on the ceasefire agreement, leading the index to reach its 2015 highs by close. Next week is busier for the US, despite Presidents’ Day on Monday, with the NAHB housing market index, building permits and PPI all to be released throughout the week.

Stock of the week: Tesla Motors Inc
Tesla had a woeful Q$ 2014 earnings release, as EPS fell $0.13, revenues missed analyst forecasts and it fell short on the deliveries guidance it had reported. However, all this bad news paled in comparison to the fact that the company only sold 120 cars in China in January, an embarrassing slip in an area ripe for growth. Elon Musk came under harsh criticism for this quarter, and share prices fell around 6% as the week went on to see Tesla trade at $202.68 from around $216.

(Source: IT-Finance.com)

Economic Diary, 16^th to 20^th February 2015

 

Monday 16^th February

All Day – Eurogroup Meetings

All Day – USD Bank Holiday

 

Tuesday 17^th February

9.30am – GBP CPI y/y

9.30am – GBP PPI Input m/m

9.30am – GBP RPI y/y

10.00am – EUR German ZEW Economic Sentiment

10.00am – EUR ZEW Economic Sentiment

1.30pm – USDEmpire State Manufacturing Index

3.00pm – USD NAHB Housing Market Index

 

Wednesday 18^th February

9.30am – GBP Average Earnings Index 3m/y

9.30am – GBP Claimant Count Change

9.30am – GBP MPC Official Bank Rate Votes

9.30am – GBP Unemployment Rate

1.30pm – USD Building Permits

1.30pm – USD PPI m/m

2.15pm – USD Industrial Production

3.30pm – USD Crude Oil Inventories

 

Thursday 19^th February

All Day – CNY Bank Holiday

9.00am – EUR ECB Monetary Policy Meetings Accounts

11.00am – GBP CBI Industrial Order Expectations

1.30pm – USD Unemployment Claims

3.00pm – USD Philly Fed Manufacturing Index

 

Friday 20^th February

All Day – CNY Bank Holiday

8.00am – EUR French Flash Manufacturing PMI

8.00am – EUR French Flash Services PMI

8.30am – EUR German Flash Manufacturing PMI

8.30am – EUR German Flash Services PMI

9.00am – EUR Flash Manufacturing PMI

9.00am – EUR Flash Services PMI

9.30am – GBP Retail Sales m/m

9.30am – GBP Public Sector Net Borrowing

2.45pm – USD Flash Manufacturing PMI

 

Earnings releases, 16^th to 20^th February 2015

 

Monday 16^th February

Acacia Mining PLC – Full Year 2014 Earnings Release

Fidessa Group PLC – Full Year 2014 Earnings Release

 

Tuesday 17^th February

John Wood Group PLC – Full Year 2014 Earnings Release

Pendragon PLC – Full Year 2014 Earnings Release

Goodyear Tire & Rubber Co – Q4 2014 Earnings Release

Medtronic Inc – Q3 2015 Earnings Release

 

Wednesday 18^th February

Virgin America Inc – Q4 2014 Earnings Release

Hilton Worldwide Holdings Inc – Q4 2014 Earnings Release

 

Thursday 19^th February

Pan American Silver Co – Q4 2014 Earnings Release

Petra Diamonds Ltd – Q4 2014 Earnings Release

Rexam PLC – Q4 2104 Earnings Release

Wal-Mart Stores Inc – Full Year/Q4 2014 Earnings Release

 

Friday 20^th February

Standard Life PLC – Q4 2014 Earnings Release

Stillwater Mining Company – Q4 2014 Earnings Release