European Market Update - Germany Confirms Q4 GDP Results

- The European indices are currently trading higher in the session after major players such as Nestle, Allianz, and Axa all reported positive earnings results ahead of the open.
- European government bonds are currently trading lower in the session on very little news. Over in Italy bonds are currently trading lower on fears that the resignation of Italy’s Prime Minister Prodi will lead to elections. Ahead of the 2016 bond auction in the UK gilts are trading lower in the session, giving back some of the gains made after the less hawkish than expected BOE minutes.
- German confirmed its Q4 GDP at 0.9% q/q and 3.7% y/y, reaching its highest y/y level since Q3 of 2000 driving by a boom in exports. German exports rose to their highest level since Q4 of 2000 despite Euro strength. Increased demand from outside of Germany prompted employers to boost spending and hiring levels, ultimately leading to strong economic growth.
- French business confidence unexpectedly rose to 107 in February, above estimates of 106 boosted by strong exports. According to some analysts the rise in consumer confidence may ease concerns that the French economy is falling behind the Germany economy after the Germany economy outpaced the French economy for the first time in eleven years during 2006.
- The Swiss employment rate rose by the most since September of 2001. While the employment level rose, the index of vacancies rose by 33% to 146.7 points, while the working population increased by 2.4% to 4.325M during the fourth-quarter.
- Riksbank’s Ingves said overnight that one more interest rate hike is likely with in the next six months. Ingves continued saying that economic prospects in Sweden look good, and that favorable supply conditions exist. Ingves noted that risks linked to house prices cannot be ignored.
- The ECB’s Papademos reiterated overnight that interest rates remain relatively low in the Euro Area, and that liquidity is ample. Papademos also said that oil prices, wages, and M3 continue to pose upside inflation risks, and reiterated that the ECB will act pre-emptively against inflation.
- Front month crude oil futures are currently trading slightly below the unchanged level in the session. In a quiet session on the energy front the UK’s Blair said that no one is preparing for military action against Iran. Additionally, the US’s Rice said that the international security council will be used to get Iran to halt its uranium enrichment program.