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François Hollande, French president, during the 9th stage of the 100th Tour de France (Bagneres-de-Bigorre), July 07, 2013
UK-listed Greencore: Positive Q1 update from M&S;
Liam Igoe of Goodbody comments -- "M&S reported an improvement in its food
sales in its Q1 to end June this morning. Lfl sales for foods were up +1.8%
compared with +0.6% in the previous quarter. Total UK food sales increased by
4.5%. In what was described as “another excellent quarter” Greencore said its
sales were well ahead of the market.
The comments set a positive backdrop for
Greencore’s Uniq business, which is a key supplier into M&S. While we are
assuming overall flat underlying sales in the UK for FY13 we do expect that its
M&S business will see growth (3%). The current good summer weather will also be
a positive factor for sales of convenience foods."
Éanna Black, Investec Bank Ireland, said
"Yesterday the U.S. 10 year yield sank back
to 2.66% from Fridays post US employment data high of 2.75%, and the dollar
followed it lower against the Euro;
On the back of this retracemenent in key US
rates and the ECB’s Draghi reiterating just how challenging the European
economy is risk assets were supported, as European equities outperformed
On news that coalition had been salvaged in
Portugal, Portuguese 10 year bonds rallied 20 basis points to close below 7%
for the first time in almost a week;
In Emerging markets the Central Bank of
Turkey spent almost 2% of their reserves in attempting and succeeding to
stem the Lira’s slide against the US dollar. They used 2.25 billion U.S
dollars, which paints a picture of how difficult Emerging Markets currencies
will find it as US yields continue to rise and support Dollar strength."
Irish Financials – AIB set to close DB
pension scheme: "The Irish Labour Court yesterday
endorsed Allied Irish Banks' (AIB) plan to close its defined benefit plan for
future accrual from December 31 and transfer beneficiaries to a defined
contribution scheme. The Labour Court has also recommended that staff work
longer hours, with a one-off payment equivalent to 4% of salary to those below
manager grade to be offered as compensation. According to press reports this
morning, AIB could save up to €200m a year under the proposed arrangement.
AIB's fellow 'pillar bank', Bank of Ireland (BKIR), is currently engaged in
discussions with stakeholders over its defined benefit pension schemes, which
had a deficit of €1.2bn at end-2012. Under Basel III, BKIR must deduct its
€1.2bn pension deficit (which equates to circa 2.0% of risk weighted assets)
from core tier 1 capital. With the group weighing up its options ahead of a
likely refinancing of €1.8bn of government-owned preference shares before they
step up by 25% at end-March 2014, any material benefit to BKIR from
restructuring its pension arrangements would have a profound impact on the
arithmetic around a refinancing. In particular, a substantial reduction in the
deficit may give the bank additional scope to minimise the equity component of
any potential capital raise to refinance the preference shares."
Economic View: Further signs of recovery in UK; Juliet Tennent of
Goodbody comments - - "The RICS House Price Survey for June, released this
morning, rose to 21%, its highest level since January 2010 and well ahead of
expectations of a modest increase to 8%. This underlines the stronger trend in
property market indicators, which has been in train throughout the second
quarter of 2013. Encouragingly, the new buyers’ enquires (38) and the new
instructions (12) sub-indices continued to show strength, with the former rising
to its highest level since August 2009. Thus the underlying supply demand
dynamics remain positive ahead of the summer with the Funding for Lending Scheme
and the Help to Buy schemes both lending support.
The BRC retail sales monitor was also firm in
June with lfl sales values rising by 1.4%yoy, boosted by sales of clothes and
shoes. While this is a slower rate than that seen in May (+1.8% yoy) it
represents a solid performance from retailing in the month.
Further confirmation that the UK economy is
gathering momentum is evident in both the June’s RICS and BRC, indicating that
Q2 GDP growth will be better than that seen in the first quarter.
Gaming Irish betting bill due to be discussed today: Gavin Kelleher and
Rachael Cairns comment - - "According to the Irish Times this morning, the Irish
betting amendment bill is due to be discussed today by the government, which
could see it given the go-ahead to publish. This bill includes the introduction
of a 1% turnover tax on betting online and 15% commission tax on exchanges. It
will then go to the EU Commission for approval (which can take up to three
months) and then be signed into law later this year.
We have already included the Irish betting tax in
our forecasts for Paddy Power for the six months in H213 (€2.9m) and so the
delay will be a marginal positive. In terms of Betfair, we have c. £1m included
for the Irish betting tax for FY14."
Little room for complacency heading into
Budget 2014: Conall Mac Coille, chief economist at
Davy, comments - - "DAVY VIEW: Stock indices closed up Monday. The Euro Stoxx
rose 2.1% and S&P500 0.5%. The euro pared back previous losses against the
dollar and is currently trading at just under $1.29. This morning, we have
published a review of the outlook for the public finances. With six months of
the budget year completed, the government has a safety buffer worth around
€800m, or 0.5% of GDP, to hit its 7.4% of GDP deficit target. However, with the
medium-term budgetary projections still assuming a robust pick-up in economic
growth, downside risks from the euro-area mean that there is little room for
complacency heading into the Budget for 2014.
Stock indices closed up Monday on optimism on the growth outlook, but amidst
thin trading. The Euro Stoxx 50 closed up 2.1% and the S&P 500 0.5%. The euro
pared back some of its previous losses against the dollar and is currently
trading at just under $1.29, up from lows close to $1.282. Similarly, US
10-treasury yields retreated through the day from a peak of 2.75% to close to
This morning, we have published a review of Ireland’s public finances, following
the publication of the April Stability Programme update, and with the exchequer
returns for the first half of the year complete. In the first six months of
2013, the government has built up a safety buffer of close to €800m, or 0.5% of
GDP, to ensure it meets its deficit target of 7.4% of GDP. However, an
additional element of uncertainty surrounds this year’s out-turn as the full
costs of liquidating IBRC have yet to be determined.
As in previous years, conservative assumptions on items such as ELG fees and
Central Bank surplus income explain the strong revenue performance relative to
the Budget projections, rather than unexpected buoyancy in taxes. This means
that there is little room for complacency heading into the Budget for 2014.
The medium-term projections still rely on a
robust pick-up in economic growth. The possibility of delayed euro-area recovery
still represents a substantial downside risk to the government’s plan to reduce
the deficit below 3% of GDP by 2015. Moreover, the key safety valve within the
budgetary arithmetic, ELG fees, has now been removed following the end of the
In New York Monday, the Dow rose 89 points or 0.59% to 15,225.
The S&P 500 gained 0.53%; the Nasdaq added 0.16%.
The MSCI Asia Pacific Index
rebounded Tuesday with a gain of 1.6%
The Japanese Nikkei 225
rose 2.58%; China's Shanghai Composite added 0.37%;
Korea's Kospi index advanced 0.74%; Australia's S&P/ASX 200 added
in Mumbai, the Bombay Stock Exchange the S&P BSE India Sensex Index climbed 0.59%.
Bloomberg reports that
for the first year since the futures were created, Brent crude is poised to
overtake West Texas Intermediate (WTI) oil as the world’s most-traded commodity.
in Brent jumped 14% to average 567,000 contracts in the year to November 20
compared with all of 2011, while WTI fell 17% to 575,000, according to data from
the ICE Futures Europe exchange in London and New York Mercantile Exchange
compiled by Bloomberg. The number of Brent futures changing hands has exceeded
those for WTI every month from April through October, the
longest streak since at least 1995.
Brent, produced in the North
Sea, is gaining favour among traders because of its role as the benchmark for
energy prices from Saudi Arabia to Russia. Prices have climbed 34% in the past
two years, reflecting everything from war in Libya to the embargo on Iran. WTI,
the main grade in the US, has risen 9% as the nation, which prohibits crude
exports, has struggled to clear a glut at Cushing, Oklahoma, the delivery point
for Nymex futures.