EU Market Update: UK House Prices move above 2007 peak levels



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Article content EU Market Update: UK House Prices move above 2007 peak levels

02.07.2014 11:27 Wednesday
- Quiet European session with focus eyeing data and events from the US; particularly the ADP employment report
- Australia May Trade Balance registers it second consecutive deficit and its largest since Nov 2012 as both exports and import slump (-A$1.9B v -A$0.2Be)
- UK house price data surpasses 2007 peak

***Key Economic Data in session***
- (UK) Jun Nationwide House Price M/M: 1.0% v 0.5%e; Y/Y: 11.8% v 11.2%e
- (ES) Spain Jun Net Unemployment M/M: -122.7K v -150.1Ke; fifth straight month of improvement
- (EU) ECB €141M borrowed in overnight loan facility vs. €3.1B prior; €23.4B parked in deposit facility vs. €28.6B prior - Daily Eurosystem Liquidity Conditions
- (BR) Brazil Jun FIPE CPI (Sao Paulo) M/M: 0.0% v 0.0%e
- (UK) Jun Construction PMI: 62.6 v 59.8e; 14th month of expansion and highest since Feb
- (EU) Euro Zone May PPI M/M: -0.1% v 0.0%e; Y/Y: -1.0% v -1.0%e

Fixed Income:
- (PT) Portugal Debt Agency (IGCP) opened book to sell 10-year USD-denominated bond; guidance seen at +265bps over Treasuries; Order book seen over €2.0B
- (ID) Indonesia to sell Euro-denominated 7-year bond; guidance seen at +225bps over mid-swaps
- (IN) India sold total INR150B in 3-month and 6-month Bills
- (EU) ECB allotted $0.0M in 7-day USD Liquidity Tender at fixed 0.60% vs. $0.0M prior
- (SE) Sweden sold total SEK15B in 3-month and 6-month Bills

Indices [Stoxx50 +0.2%, FTSE 100 +0.1% at 6,811, DAX +0.3% at 9,929, CAC-40 +0.1% at 4,464, IBEX-35 flat at 11,013, FTSE MIB +0.7% at 21,723, SMI +0.2% at 8,623, S&P 500 Futures +0.1% at 1,967]

- Market Focal Points/Key Themes: European equity markets open mixed following gains seen on Tuesday's session, New IPO NN Group (ING unit) rises over 5% in first day of trading, Portugal Telecom continues to decline (Espirito Santo is a large shareholder), Online video firm Blinkx down sharply on profit warning, UK homebuilder Persimmon flat despite 33% rise in H1 sales, Automakers supported by US auto sales, Comments from France's Orange weigh on telecom sector, Upcoming US ADP employment data

By Sector
- Consumer Discretionary [Mothercare MTC.UK +8% (takeover offer), Johnson Service Group +4% (raised outlook); Lufthansa LHA.DE -2% (broker commentary)]
- Consumer Staples [CHR Hansen CHR.DK +3% (9-month results rose)]
- Telecom [KPN KPN.NL +2% (speculated approval of E-Plus transaction); Orange ORA.FR -2% (declined to participate in industry consolidation)]
- Technology [Alcatel-Lucent ALU.FR +4% (broker commentary), Blinkx BLNX.UK -40% (profit warning)]
- Stoxx50 sectors [Utilities +0.9%, Consumer Cyclical +0.5%, Industrials +0.2%, Basic Materials +0.2%, Technology flat, Financials flat, Energy flat; Telecom -0.4%, Consumer Non-Cyclical -0.1%]

- France PM Valls reiterated the view that Euro was 'overvalued' and that the ECB needed to do more on euro. Overvaluation was a negative for industry and growth
- German cabinet approved 2015 budget with no new borrowing (as expected)

Currencies/Fixed Income:
- Quiet FX session with the USD consolidating recent losses with risk appetite being supported by renewed growth optimism
- The GBP/USD hit fresh 6-year highs above 1.7170 after UK Jun PMI Construction data beat expectations and came in at a 4-month high. The Sterling currency was also supported after UK housing prices surpassed their 2007 peak
- AUD/USD took a tumble during the Asian session after weak Australian trade data would likely weaken GDP growth via a bigger deduction of net exports.

Political/In the Papers:
- (AR) S&P places Argentina long-term Foreign Currency credit rating outlook on Watch Negative projecting a 50-50 chance of being lowered to Selective Default, after the sovereign missed its scheduled payment
- (RU) Russia Central Bank (CBR) Gov Nabiullina: Russia and China near Ruble, Yuan swap agreement; Aims to boost bilateral trade
- JPMorgan CEO Dimon revealed he has been diagnosed with "curable" throat cancer.
- US State Dept and Congress held talks about increasing its planned shipments of Lockheed Hellfire missiles to Iraq to 4,000 from 500 purchased.

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (PL) Poland Central Bank Interest Rate Decision: Expected to leave Base Rate unchanged at 2.50%
- (IR) Iran and P5+1 hold nuclear talks in Vienna
- (RU) Russia to sell RUB10B in May 2019 OFZ bonds
- 05:30 (DE) Germany to sell €4.0B in 0.5% 2019 BOBL
- 06:00 (IE) Ireland Jun Live Register Monthly Change: No est v -1.6K prior; Unemployment Rate: No est v 11.8% prior; Live Register Level: No est v 391.8 prior
- 06:00 (ZA) South Africa Q2 BER Consumer Confidence: -5e v -6 prior
- 06:30 (DE) German Fin Min Schaeuble on Federal Budget plans
- 06:45 (US) Daily Libor Fixing
- 07:00 (UK) PM Cameron weekly question time in House of Commons
- 07:00 (US) MBA Mortgage Applications w/e Jun 27th: No est v -1.0% prior
- 07:30 (US) Jun Challenger Job Cuts: No est v 53.0K prior; Y/Y: No est v 45.5% prior
- 07:30 (US) July RBC Consumer Outlook Index: No est v 51 prior
- 08:00 (BR) Brazil May Industrial Production M/M: -0.6%e v -0.3% prior; Y/Y: -3.4%e v -5.8% prior
- 08:15 (US) Baltic Dry Bulk Index
- 08:15 (US) Jun ADP Employment Change: +205Ke v +179K prior
- 09:00 (EU) Nato Sec Gen Rasmussen in Berlin
- 09:30 (SG) Singapore Jun Purchasing Managers Index: 51.0e v 50.8 prior; Electronics Sector Index: 50.5e v 50.4 prior
- 09:30 (CA) Canada Jun RBC Canadian Manufacturing PMI: No est v 52.2 prior
- 09:45 (US) Jun ISM New York: No est v 55.3 prior
- 10:00 (US) May Factory Orders: -0.3%e v +0.7% prior
- 10:00 (DK) Denmark Jun Foreign Reserves (DKK): 437.0Be v 436.7 prior
- 10:00 (PL) Poland Central Bank post rate decision press conference
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month Bills
- 11:00 (US) Fed Chair Yellen gives IMF lecture in Washington DC
- 12:00 (UK) BOE's Haldane participates as panelist
- 21:00 (AU) RBA's Stevens speech in Hobart
- 21:00 (CN) China Jun Non-manufacturing PMI: No est v 55.5 prior
- 21:30 (AU) Australia May Retail Sales M/M: 0.0%e v 0.2% prior
- 21:35 (JP) Japan Jun Services PMI: No est v 49.3 prior
- 21:45 (CN) China Jun HSBC China Services PMI: No est v 50.7 prior; Composite PMI: No est v 50.2 prior