20.02.15 Friday Morning

Europe
Despite strong ZEW economic sentiment figures, and mixed services and manufacturing data for the region, once again the European markets have been dominated by the ongoing issues between Greece and the rest of the Eurozone. After Monday’s ‘deadline’ meeting failed to produce any kind of solution, there was big movement on Wednesday as reports suggested Greece were going to ask for a loan extension. This news was confirmed, as well as a potential €3.3 billion in emergency funds from the ECB, who want capital controls in the country. However, after Greece submitted a 6 month loan extension proposal on Thursday, one that was an effective continuation of the bailout programme but with some changes to austerity measure, Germany rejected the request claiming it was ‘insignificant’.

This afternoon sees another Eurogroup meeting aimed at resolving the Greek solution. After the hopes of Thursday things are looking less likely for a resolution today, and the markets have responded in kind. Next week looks set to continue this Greek saga as some scary deadlines begin to loom for Athens. The Eurozone also sees a statement from ECB President Draghi, final CPI figures for the region, alongside German retail figures, Ifo business climate data and unemployment change.

UK
UK inflation fell at the start of the week, but the FTSE reacted well after the CBI had pointed to this trend as the cornerstone of its raised growth forecast for the country. Yet the UK index was largely led by factors outside of its control this week, as the ongoing situation in Europe, be it Ukraine or Greece, combined with a scatty performance from oil and copper meant it had an inconsistent week, reflected in the unstable week for stocks like Premier Oil, Tullow Oil and Vedanta Resources. Next week sees the second estimate GDP, preliminary business investment, nationwide HPI and not much else. This sparse economic situation means that the FTSE is likely to be in thrall to the movements over in the Eurozone.

US
After having the day off on Monday due to Presidents’ Day, the US markets spent the week being disappointment by its data, despite circling record highs. Empire State manufacturing index, NAHB housing market index, building permits, PPI and industrial production all were worse than expected, whilst, Philly Fed manufacturing index saw its weakest figure in a year. The key issue next week will be Fed chair Janet Yellen’s statements; the most discussed issue in US economics at the moment surrounds raising interest rates, and Yellen’s comments are likely to shed some more light on the timetable for such a rise.

Commodities
Oil had a turbulent 7 days (even though at the end of 2014 it could have only hoped for a performance like it has had in the past fortnight), but looks set for another strong(ish) end to the week. Despite at one point sinking to $57 per barrel, Brent Crude keeps managing to crawl back to $60. This is yet another reassuring sign from the commodity; even when it has seen big intra-day falls, its resilience has allowed it to stall before these declines could become a sustained plunge.

Copper, like oil, spent the week flitting between losing and gains, normally circling back to $260 per pound, meaning the metal is fairly flat for the week. Gold has fallen to around $1206 per ounce, and has almost lost $100 in a month. Whilst it saw a minor recovery towards the end of the week, the precious metal is still in a dire situation given its spike post-ECB QE.

Stock of the week: Centrica PLC
Centrica, the owner of British Gas, announced that its full-year operating profits fell by 35% in 2014, cutting its full-year dividend to £0.135 from £0.17 for the previous 12 months. Unsurprisingly this caused a massive sell-off, with the stock falling nearly 9% from £2.81 to £2.57 in the space of a day.

(Source: IT-Finance.com)

Economic Diary, 23^rd to 27^th February 2015

 

Monday 23^rd February

9.00am – EUR German Ifo Business Climate

11.00am – GBP CBI Realised Sales

3.00pm – USD Existing Home Sales

 

Tuesday 24^th February

7.00am – EUR German Final GDP y/y

10.00am – EUR Final CPI y/y

2.00pm – EUR ECB President Draghi Speaks

3.00pm – USD CB Consumer Confidence

3.00pm – USD Fed Chair Yellen Testifies

 

Wednesday 25^th February

1.45am – CNY HSBC Flash Manufacturing PMI

9.30am – GBP BBA Mortgage Approvals

3.00pm – USD Fed Chair Yellen Testifies

3.00pm – USD New Home Sales

3.30pm – USD Crude Oil Inventories

4.30pm – EUR ECB President Draghi Speaks

 

Thursday 26^th February

7.00am – EUR Gfk German Consumer Climate

8.55am – EUR German Unemployment Change

9.00am – EUR M3 Money Supply y/y

9.00am – EUR Private Loans y/y

10.15am – EUR Targeted LTRO

1.30pm – USD CPI m/m

1.30pm – USD Core CPI m/m

1.30pm – USD Core Durable Goods Orders m/m

1.30pm – USD Unemployment Claims

6.00pm – USD Fed Member Lockhart Speaks

11.30pm – JPY Household Spending y/y

11.30pm – JPY Tokyo Core CPI y/y

11.50pm – JPY Prelim Industrial Production m/m

11.50pm – JPY Retail Sales y/y

 

Friday 27^th February

All Day – EUR German Prelim CPI m/m

7.45am – EUR French Consumer Spending m/m

9.30am – GBP Second Estimate GDP q/q

9.30am – GBP Prelim Business Investment q/q

1.30pm – USD Prelim GDP q/q

2.45pm – USD Chicago PMI

3.00pm – USD Pending Home Sales m/m

3.00pm – USD Revised UoM Consumer Sentiment

 

Earnings releases, 23^rd to 27^th February 2015

 

Monday 23^rd February

Associated British Foods PLC – Pre-close Trading Update

HSBC Holdings PLC – Full Year 2014 Earnings Release

BHP Billiton PLC – Half Year 2015 Earnings Release

DISH Network Corp – Q4 2014 Earnings Release

 

Tuesday 24^th February

Drax Group PLC – Full Year 2014 Earnings Release

Pall Corp – Q2 2015 Earnings Release

Domino’s Pizza Inc – Q4 2014 Earnings Release

DreamWorks Animation SKG Inc – Q4 2014 Earnings Release

Hewlett-Packard Co – Q1 2015 Earnings Release

 

Wednesday 25^th February

Brit PLC – Full Year 2014 Earnings Release

Barratt Developments PLC – Half Year 2014 Earnings Release

 

Thursday 26^th February

Royal Bank of Scotland PLC – Q4 2014 Earnings Release

Southwestern Energy Company – Q4 2014 Earning Release

Weight Watchers International Inc – Q4 2104 Earnings Release

 

Friday 27^th February

Lloyds Banking Group PLC – Q4 2014 Earnings Release