Indices closed flat in Europe with moves kept subdued on the session. Tech and Retail saw some support on the day, up 60bps each, with Travel and Utilities somewhat offered. Volume was off slightly with a fairly even split of names up vs down. Markets seemingly were waiting for the US’ Powell to make comments with indices in the States rallying today on headlines from the luncheon.
Comments from Italy were encouraging with PM Conte noting no final decision has been made on the deficit with a new deficit target being reviewed.
Continental again skidded lower, down 4.3%, after their CFO said conditions remain tough citing the European emission testing change and weakness in the Chinese market.
Shares in Tenaris fell 7% with their chairman and largest holder being indicted on bribery charges.
Post the close the Bank of England noted a disruptive Brexit could lead to a 15% drop in the Pound with a disorderly divorce leading to a 25% drop. They provided varying degrees of weakness to GDP based on the final deal and how “Close” the UK comes to the current economic relationship to the EU under a Brexit deal. In a worst case deal they see GDP down 8% short team with unemployment to 7.5% and house prices down 30%. The Pound only pulled back slightly on the headlines before rebounding fairly quickly with Powell’s comments out just after.
Tonight, retail trade data is due in Japan as well as in SK. Confidence readings are due in the EU with Mortgage approvals due in the UK. CPI and employment readings are expected in Germany.