EUROPEAN EQUITY OPEN: Relief in wake of US regulatory response to SVB, while HSBC will buy SVB UK; thin docket today ahead of big macro week

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  OVERNIGHT: Over the weekend, US regulators announced measures to backstop the fallout from SVB's collapse, helping soothe some fears on financial stability, and helping to support US equity futures (our recap is here). Overnight, APAC stocks were mixed with financials hit amid the fallout from the SVB collapse and subsequent failure of Signature Bank; shares in Hong Kong were particularly boosted by strength in the tech industry, after China President Xi advocated strengthening science and technology, while China also reported stronger-than-expected loans and financing data, while surprisingly retaining Yi Gang at the head of the PBoC (see our APAC wrap here).


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  EUROPEAN OPEN: European equities start the week with a moderately downside bias. The main story is HSBC's (HSBA LN) acquisition of Silicon Valley Bank UK Limited for GBP 1, where assets and liabilities of the parent companies were excluded from the transaction, and deposits will be protected, with no taxpayer support. HSBC said customers will be able to access their deposits and banking services as normal from today. The Stateside and now UK regulatory response has been soothing some fears over the health of the banking system. It appears that the US stocks are seeing greater relief than European counterparts due to the fact that the potential exposure was greater there, but also because this may dovishly change the Fed hikes calculus, with some suggesting that the Fed may even hold off a rate hike on March 22nd due to the financial stability concerns. The data docket is thin today, but comments around financial stability will be in vogue; the week ahead is packed full of key macro events, which we highlight below.

DAY AHEAD:

• Our full interactive calendar can be accessed here; a pdf version can be accessed here.


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  EUROPEAN DATA/SPEAKERS: It is a thin data docket for the day. No major data is scheduled for release in Europe. BoE’s Dhingra will deliver some remarks after the European close. Eurogroup finance ministers are also meeting today, and commentary around financial stability risks will be in focus. On the supply front, Netherlands will auction EUR 1.5-2.0bln of 2027 DSLs.


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  NORTH AMERICAN DATA/SPEAKERS: February’s employment trends data, and the NY Fed’s monthly survey of consumer expectations will be released.


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  WEEK AHEAD: The week ahead has key macro implications, with the release of many inflation metrics out of the US (Monday sees the release of NY Fed’s consumer inflation expectations survey, Tuesday sees the release of the key CPI data, Wednesday sees the release of PPI data, and on Friday, University of Michigan’s survey contains inflation expectations), while the US will also release retail sales data on Wednesday. While these may be crucial in shaping the Fed’s policy response at its March 22nd FOMC, it is worth noting that some strategists have been suggesting that the significance of the data has been lessened given the jitters around financial stability; Goldman Sachs, for instance, no longer expects the Fed to hike rates at the March meeting, but still expects rate rises in May, June and July. Elsewhere, ECB, China activity data, some UK data are the highlights for the week; our week ahead briefing can be accessed here.

STOCK NEWS:

• Our full European equity specific briefings for March 13th can be accessed here and here.


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  CONSUMER CYCLICALS: Stellantis (STLAM IM/STLAP FP) reportedly in talks to bring new EV production to Spain. Deliveroo (ROO LN) upgraded at Bernstein.


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  CONSUMER STAPLES: Tesco (TSCO LN) reportedly tells suppliers they will have to pay a fulfilment fee when the Tesco sells their products online. JPMorgan Chase downgrades British American Tobacco (BATS LN), upgrades Bunzl (BNZL LN).


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  ENERGY: Borders to Coast and UK Universities pension schemes are to vote against the renewal of top officials at the BP (BP/ LN) and Shell (SHEL LN) AGMs unless pledges to tackle carbon emissions are improved.


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  FINANCIALS: US authorities including the Fed announced actions to increase confidence in the banking system after the collapse of Silicon Valley Bank (SIVB) and Signature Bank (SBNY). Silicon Valley Bank's UK subsidiary has been sold to HSBC (HSBC LN), and depositors will be fully protected. Credit Suisse (CSGN SW) said FINMA has concluded its review, does not see any reason to open regulatory proceedings after Chair's recent interviews. Direct Line Insurance (DLG LN) profit slipped 95% in 2022.


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  HEALTH CARE: Sanofi (SAN FP) to acquire Provention Bio (PRVB) for USD 25.00/shr (vs. Friday's USD 6.70 close) for a total USD 2.9bln. Novartis (NOVN SW) launched new share buyback programme of up to CHF 10bln.


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  INDUSTRIALS: German airline passengers facing severe disruptions on Monday amid planned strike action. Deutsche Post (DPW GY) secured wage deal with the Verdi union, covering 160k workers. Fincantieri (FCT IM) CEO makes positive remarks around pivot from oil to wind farms. Bauer (B5A GY) CEO resigned.


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  MATERIALS: Agrofert is to win unconditional EU antitrust approval for its purchase of OMV's (OMV AT) Borealis' nitrogen business unit. K+S (SDF GY) initiated with Buy at Jefferies. Yara International (YAR NO) initiated with Underperform at Jefferies.


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  TECH: SAP (SAP GY) to sell all 423mln shares in Qualtrics International (XM) for approximately USD 7.7bln. Of note for chipmakers, US poised to further tighten US chipmaking exports to China. Logitech (LOGN SW) downgraded at Credit Suisse.


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  UTILITIES: Under reforms to be announced in the Budget on Wednesday, customers who use prepayment meters will no longer be charged more for their gas and electricity.

13 Mar 2023 - 08:10- EquitiesData- Source: Newsquawk