Market Comment
US indices were mixed on Wednesday. Shares in the Automobiles & Components, Semiconductors & Semiconductor Equipment and Media sectors traded higher while shares in the Household & Personal Products, Food, Beverage & Tobacco and Energy sectors were under pressure. The S&P 500 (1819.26) remains above its 20d moving average (1801.2 - negative slope) and its 50d moving average (1809.8 - flat slope).
European markets are expected to open on a negative note.
European markets are expected to open on a negative note.
Foreign Exchange
US Dollar was mixed against most of its major counterparts on Wednesday. On the US economic data front, MBA Mortgage applications for the week ended February 7th fell 2% (+0.4% prior).
The Euro was under pressure against its major counterparts. Benoit Coeure, Member of the Executive Board of the ECB said the ECB is considering negative deposit rate "very seriously". In Europe, in eurozone, industrial production declined by a seasonally adjusted 0.7% in December, compared to expectations for a 0.3% drop. Industrial production in November was revised to a 1.6% gain, from a previously reported increase of 1.8%.
The Euro was under pressure against its major counterparts. Benoit Coeure, Member of the Executive Board of the ECB said the ECB is considering negative deposit rate "very seriously". In Europe, in eurozone, industrial production declined by a seasonally adjusted 0.7% in December, compared to expectations for a 0.3% drop. Industrial production in November was revised to a 1.6% gain, from a previously reported increase of 1.8%.
Commodities
After the close of Wall Street, WTI Crude Future (MAR 14) was about flat to $100.25. The contract was above its 20D MA (@ $95.67) and above its 50D MA (@ $96.35). The US Department of Energy reported that, for the week ended 7 February, crude oil inventories increased 3267k barrels compared to the previous week.
Gold was about flat to $1291.3. The precious metal was above its 20D MA (@ $1259) and above its 50D MA (@ $1239).
Copper Future (MAR 14) on Comex was up 4c to 325.5c/lb. The contract was below its 20D MA (@ 330.62c) and below its 50D MA (@ 326.76c). In Europe, the London Metal Exchange reported its copper inventories decreased 1775 tons to 302050 tons.
Gold was about flat to $1291.3. The precious metal was above its 20D MA (@ $1259) and above its 50D MA (@ $1239).
Copper Future (MAR 14) on Comex was up 4c to 325.5c/lb. The contract was below its 20D MA (@ 330.62c) and below its 50D MA (@ 326.76c). In Europe, the London Metal Exchange reported its copper inventories decreased 1775 tons to 302050 tons.
UK Market News
UK: The Royal Institution of Chartered Surveyors House Price Balance eased to +53 in January (vs +58 expected) from +56 in December.
Rolls-Royce Holdings posted FY13 profit before tax down 36% YoY to £1.8B, adding: "The order book increased 19%, to £71.6B, up 16% excluding Tognum. (...) Underlying revenue increased 27% to £15.5B, including £2.6B in revenue from Tognum. (...) Underlying profit before tax increased 23% to £1.8B, including a £180M increase from Tognum. (...) The order book of more than £71B provides good visibility of income streams for many years to come, and gives us the confidence to increase the dividend by 13% to 22p. (...) For the full year 2014, we expect underlying Group revenue and profit to be flat. This reflects a 15-20% decline in Defence revenue, the consequence of well-publicised cuts in defence spending among major customers, and completion of the delivery phase of two major export programmes. Additionally, Marine will generate lower revenue in 2013, driven by Offshore. We expect growth to resume in 2015."
European Markets
ECB: Monthly Bulletin, 10 a.m. CET
Commerzbank swung to a 4Q net income of E64M from a net loss of E726M in the previous year and to a FY13 net income of E78M from a net loss of E47M. The Bank proposed no dividend. It pointed out: "The loan loss provisions increased as expected to E1,747M (2012: E1,660M). (...) In the Core Bank an operating profit of E1.8B was attained in a challenging environment in 2013 (2012: E2.5B). The downturn was due not only to the weaker market environment, but above all to the increase in loan loss provisions at Mittelstandsbank. (...) The risk-weighted assets were further reduced by 8.4% to E191B (2012: E208B). The total assets declined year-on-year by 13.6% to E550B (2012: E636B), and thus for the first time since 2006 were again lower than E600B. (...) The Common Equity Tier 1 ratio taking into account the transitional regulations of Basel 3 was 11.6% as of the end of December (previous year: 10.2%). With the full application of Basel 3 the Common Equity Tier 1 ratio as of the end of December would have been 9.0%, following on from 7.6% at the end of 2012." On the outlook the Bank said: "Commerzbank will further increase the business volume in the Core Bank in 2014. The revenues will still probably be impacted as a consequence of the low interest-rate environment and the low level of investment activity on the part of companies, however. In 2014, the loan loss provisions should be lower than the overall figure for 2013. (...) We now intend to increase our Common Equity Tier 1 ratio to more than 10% by 2016 - namely with the full application of Basel 3."
Commerzbank swung to a 4Q net income of E64M from a net loss of E726M in the previous year and to a FY13 net income of E78M from a net loss of E47M. The Bank proposed no dividend. It pointed out: "The loan loss provisions increased as expected to E1,747M (2012: E1,660M). (...) In the Core Bank an operating profit of E1.8B was attained in a challenging environment in 2013 (2012: E2.5B). The downturn was due not only to the weaker market environment, but above all to the increase in loan loss provisions at Mittelstandsbank. (...) The risk-weighted assets were further reduced by 8.4% to E191B (2012: E208B). The total assets declined year-on-year by 13.6% to E550B (2012: E636B), and thus for the first time since 2006 were again lower than E600B. (...) The Common Equity Tier 1 ratio taking into account the transitional regulations of Basel 3 was 11.6% as of the end of December (previous year: 10.2%). With the full application of Basel 3 the Common Equity Tier 1 ratio as of the end of December would have been 9.0%, following on from 7.6% at the end of 2012." On the outlook the Bank said: "Commerzbank will further increase the business volume in the Core Bank in 2014. The revenues will still probably be impacted as a consequence of the low interest-rate environment and the low level of investment activity on the part of companies, however. In 2014, the loan loss provisions should be lower than the overall figure for 2013. (...) We now intend to increase our Common Equity Tier 1 ratio to more than 10% by 2016 - namely with the full application of Basel 3."
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