European Market Update

Daily Forex Fundamentals | Written by Trade The News | Aug 14 08 10:13 GMT |

European GDP data suggests signs of potential recession ECONOMIC DATA (GE) German July Final CPI M/M: 0.6% v 0.6%e; Y/Y: 3.3% v 3.3%e (GE) German July Final CPI EU Harmonized M/M: 0.7% v 0.6%e; Y/Y: 3.5% v 3.4%e (GE) German Q2 Preliminary GDP Q/Q: -0.5% v -0.8%e, Y/Y: 1.7% v 1.6%e (FR) French Q2 Preliminary Wages Q/Q: 0.9% v 0.7%e (FR) French Q2 Preliminary GDP Q/Q: -0.3% v 0.1%e; Y/Y: 1.1% v 1.7%e (FR) French Q2 Non-Farm payrolls Q/Q: -0.1% v 0.2%e (SP) Spain Q2 Preliminary GDP Q/Q: % v 0.1%; Y/Y: % v 1.8%e (CZ) Czech Jul PPI M/M: % v 0.3%e; Y/Y: % v 5.5%e (CZ) Czech Q2 Preliminary Y/Y: % v 5.0%e (CZ) Czech Jun Retail Sales Y/Y: % v 2.5%e (HU) Hungary Q2 Preliminary Y/Y: % v 1.9%e (NE) Dutch Q2 Preliminary GDP Q/Q: % v 0.1%e; Y/Y: % v 3.3%e (SW) Swedish Industrial Production M/M: 0.6% v -0.3%e, Y/Y: -1.5% v -1.0%e (SW) Swedish Industrial Orders M/M: 4.7% v 5.3% prior, Y/Y: 1.6% v -3.7% prior (SW) Swedish Jul Avg House Prices (SEK) 1.865M v 1.884M prior (EU) ECB Monthly Report for August reiterates Trichet's Aug 7th press conference views. Lower GDP outlook and hawkish on inflation (EU) Euro-Zone Jul CPI M/M: -0.2% v -0.1%e, Y/Y: 4.0% v 4.1%; Core CPI Y/Y: 1.7% v 1.8%e (EU) Euro-Zone Q2 Preliminary GDP Q/Q: -0.2% v -0.2%e; Y/Y: 1.5% v 1.5%e (UK) Sold £925M 1.125% 2037 I/L Gilts with average yield of 0.519% and Bid-to-cover of 1.52x v 1.1x US July foreclosure M/M: +8%; Y/Y: + 55%; Bank repossessions Y/Y: +184% - RealtyTrac SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM In equities: German builder Hochtief [HOT.GE] Reported Q2 Net €47M v €43Me; Pretax €188.9M v €172.3Me; Rev €5.26B v €4.48Be; Sees order intake in line with 2007. Company rising demand for construction and mining work in Australia and Asia; RWE [RWE.GE] Reported H1 Net €1.16B v €1.99Be, EBITDA €4.63B v €4.62Be, Rev €24.7B v €22.5Be; Reaffirmed FY08 targets; InBev [INB.BE] Reported Q2 Net €542M v €490Me, Rev €3.71B v €3.72B y/y; Results seen in line. Earnings helped by a lower tax rate.; Salzgitter [SZG.GE] Reported H1 Net €436.9M v €398.7M y/y; Rev €6.23B v €4.7B y/y; Company Guideed FY08 Pretax "over" €1.0B; Tui Travel [TT.UK] Reported Q3 Underlying Profit £65.4M; Rev £3.62B v £3.32B y/y; Reaffirms FY08 targets, Sees strong demand for holiday packages; Tui [TUI1.GE] TUI1.GE: Reported Q2 Net Loss -€55.6M v -€74Me; EBITA €71M v €31M y/y; Rev €4.58B v €3.72B y/y; Logica [LOG.UK] Reported H1 Net £5.2M v £72.9Me; Adj Op Profit £118M v £114.5Me; Rev £1.77B v £1.68Be, Reaffirms FY08 Rev growth of 4% y/; SAS [SAS.SW] Reported Q2 Net loss -SEK411M v -SEK538Me; Rev SEK17.7B v SEK16.29B y/y; SAS stated that it saw economic Growth Significantly Lower In FY08 Than FY07; British Land [BLND.UK] Reported Q1 Net -£565M v -£502Me, Pretax £74M v £71.3Me, NAV1,212p (-10% y/y). Company stated occupancy is beginning to reflect economic slowdown and stated that investment markets are thin, nervous and negative. Swiss Life [SLHN.SZ] purchased Maschmeyer;s 26.74% stake in MLP [MLP.GE] for $456M. MLP added that Swiss Life would not increase the stake without its approval. Elsewhere on the macro economic front: China PBoC stated that it has created a new FX rate department to set and implement FX rate policy. Department to manage domestic FX supply and demand. German Economy Minister Glos reaffirmed German 2008 GDP growth at 1.7% y/y. Added that although Q2 GDP was weak, he did not see signs of a major economic downturn India PM provided details of higher pay plan for government workers. The Higher pay plan will be given with effect from Jan 1, 2006 with 60% of salary arrears to be paid in FY10 and 40% of wage arrears to be paid in FY09. India stated that the higher pay plan will cost INR178B annually Reportedly a fresh round of explosions were seen in and around town of Gori in Georgia. In currencies, there was little reaction in the price action during the session EUR/USD hovering around the 1.49 level. Dealers continue to note of possible sovereign bids under the 1.4870 area, but add that Euro sell stops are building below 1.4830 area. The GBP/USD recovered from it Asian session lows of 1.8619 to retest the 1.87 level. NOTES The European session was marked by progression of GDP data, highlighted by the German GDP. The Q2 German GDP fell 0.5% Q/Q to register its first contraction in 4 years. Several factors were attributed to the negative GDP from the stronger euro and slower global growth, which have dampened demand for German exports coupled with higher inflation which has eroded domestic spending. Q1 revised down from 1.5% to 1.3%. However, markets remains steady throughout the session noting that the German data was not as bad as some had hoped or perhaps feared. Earlier in the week it was rumored that German GDP could register a -1.5% reading. European stocks were in positive territory for the first time in 3 days aided by stocks in the oil and commodity sectors. Looking ahead: The US CPI and claims data will highlight the NY morning and global demand concerns will assess emerging market handling of growth with Brazil Jun Retail Sales data . There are two central bank rate decision expected during the US morning. (SA) S.Africa Central bank is expected to leave interest rates unchanged at 12.00%; while Turkey Central bank is expected to leave its base rate unchanged at 16.75%. For Corporate earnings Walmart [WMT], Estee Lauder [EL] and JM Smucker [SJM] are expected to report before the NY equity market opens. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. 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