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04.03.15
Currency news: Asian cuts continue
Today’s Treasury Events
Currency thought of the day: Bank of Canada expected to hold rates for now
09:00
EC Services PMI
Economics: Strong Exchequer performance continues into February
15:00
BoC announcement
15:00
ISM manufacturing
Equities: Ryanair – Reports February traffic statistics
Upcoming Equity Events
Equities: Aryzta – Greggs reports a strong FY14, further progress flagged
05.03
Grafton FY Results
05.03
AIB FY Results
05.03
ICG FY Results
Equities: Food sector – Milk prices rise again
1m chg %
1m chg %
ECB rate
0.05
0.00
EUR/USD
1.1135
ISEQ
5,907
5.43
UK Base rate
0.50
0.00
EUR/GBP
0.7250
EUROSTOXX
3,563
4.32
US Fed Funds
0.25
0.00
EUR/AUD
1.4232
FSTE 100
6,902
0.62
LIBOR GBP 3M
0.56
-0.33
EUR/CAD
1.3931
S&P 500
2,108
3.25
LIBOR USD 3M
0.26
3.51
EUR/CHF
1.0716
Top 5 Irish Equities
EURIBOR 3M
0.04
-29.09
EUR/JPY
133.2600
1203.85
-5.15
EUR/NZD
1.4731
60.62
11.93
EUR/ZAR
13.1387
2.74
2.55
GBP/USD
1.5358
Bank of Ireland
265.25
2.55
GBP/EUR
1.3793
Smurfit Kappa Group
Brent oil ($)
Natural Gas ($)
Copper ($)
Last
Last
Last
Gold ($)
FX rates
Indices
Rates and Commodites
Last
1m chg %
CRH PLC
24.37
10.23
Ryanair Holdings PLC
10.07
5.47
Kerry Group PLC
63.45
-1.32
0.34
17.99
24.28
11.92
Daily Deposit Rates
EUR
1 Month Notice
0.10%
1 Month
0.01%
3 Months
0.05%
6 Months
0.15%
12 Months
0.40%
1 Month Notice
0.8%
1 Month
0.40%
3 Months
0.60%
6 Months
0.80%
12 Months
1.20%
1 Month Notice
0.25%
1 Month
0.10%
3 Months
0.20%
6 Months
0.40%
12 Months
0.60%
GBP
USD
Currency
Q1'15
Q2'15
Q3'15
Q4'15
Support
Resistance
EUR/USD
1.1800
1.1500
1.1200
1.1500
1.1150
1.1210
EUR/GBP
0.7700
0.7700
0.7600
0.7500
0.7230
0.7295
Contact Details:
Economics +353 1 421 0496 Currency +353 1 421 0091 Equities +353 1 421 0463 www.investec.ie [email protected]
To view the full range of Investec Research & Insights, go to www.investec.ie/research
Wednesday, 04 March 2015
Currency news: Asian cuts continue
RBI surprises with a cut: Overnight, rolling interest rate cuts due to the impact of falling headline inflation data continues
to be the main theme. After the Peoples Bank of China's surprise rate cut over the weekend, the Reserve Bank of India
surprised markets earlier today with an unscheduled cut to its key lending rate for the second time this year. Of course
with the US looking on course for a potential mid-year rate increase, interest rate policy divergence continues to keep the
US dollar strong across the board.
UK PMIs: The UK Construction PMI reading beat expectations yesterday, edging back above 60 to see UK PMIs beat
expectations for a second day in a row heading into today's Service PMI reading. Despite the better forward looking
release, for the second day in a row, sterling failed to make any further headway yesterday. We think the Service PMI
number later this morning may buck that trend today with the Service sector being such a large part of the UK economy a
very strong print could push the pound to new multi-year highs against the single currency.
Up today: This morning we round off the PMI run with the Eurozone and UK Service PMI releases, followed by Eurozone
Retail Sales at 10:00. In the afternoon US ADP employment is in the spotlight, followed by US ISM non-Manufacturing,
weekly oil inventories, while the Fed's forward looking Beige book will be out after London hours.
Currency thought of the day: Bank of Canada expected to hold rates for now
As one of the most affected by the recent fall in energy prices, the Bank of Canada’s (BoC) reaction has been amongst
the most widely watched and speculated upon since the turn of the year. Despite (Core) inflation remaining close to its 2%
target rate, the BoC cut rates in January to 0.75% to pre-empt the effects of falling oil prices on inflation and GDP growth.
The move was unexpected, and weakened the CAD to post financial lows against the dollar as many market participants
interpreted this as the beginning of a rate cutting cycle.
BoC governor Stephen Poloz, speaking in late in February brought dovish speculation to a halt with a relatively hawkish
speech in which he suggested that the rate cut in January was not the start of a string of cuts but more an insurance policy
against the threat of falling inflation. As a result, the consensus expectation is for no change from the Bank of Canada.
There are, however, calls from some quarters that a 25bps cut will not be sufficient for Canada to stem the tide of low
inflation given its reliance on drilling and energy industries, so further policy action from the BoC remains a possibility.
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Contact Details:
Economics +353 1 421 0496 Currency +353 1 421 0091 Equities +353 1 421 0463 www.investec.ie [email protected]
To view the full range of Investec Research & Insights, go to www.investec.ie/research
Wednesday, 04 March 2015
Economics: Strong Exchequer performance continues into February
Exchequer Returns released last night by the Department of Finance show the strong start to the year for the public
finances continued into February. The Exchequer deficit for the first two months of the year stands at €205m compared to
a deficit of €1.7bn for the same period in 2014 and a target of -€1.04bn.
Tax receipts were +15.9% y/y at €6.7bn (eight of the ten headings were ahead of year-earlier levels, while tax receipts
were €345m or 5.4% above profile) and non-tax receipts were +20.1% y/y at €316m (mainly due to higher dividends
related to asset disposals in the Semi-State sector), producing a 16.1% y/y increase in total revenue. Underlying current
expenditure was -3.4% y/y at €7.8bn (total current expenditure was 1.0% below profile). The underlying surplus on the
capital account widened to €565m from €342m a year earlier (chiefly due to the repayment of loans to the SIF that have
no impact on the general government balance).
With total receipts (5.5% ahead of profile) surprising to the upside and total expenditure coming in 2.9% below
expectations, Ireland looks on course to exceed fiscal targets yet again, but we do note the potential for the purse strings
to be loosened ahead of a General Election which we see coming in late January / early February 2016.
Philip O’Sullivan │Chief Economist │ +353 1 421 0496 │ [email protected]
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Contact Details:
Economics +353 1 421 0496 Currency +353 1 421 0091 Equities +353 1 421 0463 www.investec.ie [email protected]
To view the full range of Investec Research & Insights, go to www.investec.ie/research
Wednesday, 04 March 2015
Equities: Ryanair – Reports February traffic statistics
This morning Ryanair has released its February traffic performance with growth in passengers of 1.3m in the period
representing a 29% increase yoy to 5.8m and load factors (LF) of 89% +11pts. February’s LF performance builds upon the
impressive numbers witnessed in January (LF83%, +12pts yoy) and represents a continuation of the step change in
utilisation at the carrier. We view this morning’s traffic data as highlighting the continued benefits of the strategic changes
recently undertaken by management.
Separately, the carrier has launched its new Customer Charter and unveiled a further wave of product and brand
improvements as part of its ‘Always Getting Better’ programme. The airline’s Customer Charter is described by Michael
O’Leary as “a series of promises” signed by himself and the Ryanair team – promises “which we will live by”. The airline
promises the lowest fares, the best choice of destinations and to make the travel experience an enjoyable one for its
passengers. Ryanair will continue to refresh its brand and product offering in 2015 with the planned roll out of new cabin
interiors, cabin crew uniforms and an inflight menu boasting an increasingly healthy product range. Other improvements
include reducing airport check-in fees from €70 to €40, allowing customers to cancel tickets within 24 hours of booking for
a fee of €15 and a new ‘Hold a Fare’ feature allowing passengers to hold fares for 24 hours for a fee of €5.
Overall, we see the latest raft of changes from Ryanair as narrowing the product perception gap that has historically
existed in the marketplace. In doing so Ryanair increases its addressable market, places increased competitive pressure
on competitors and facilitates traffic and share growth.
Robert Murphy, CFA │ Research Analyst │ +353 1 421 0464 │ [email protected]
Equities: Aryzta – Greggs reports a strong FY14, further progress flagged
Greggs this morning issued a solid set of FY14 numbers following its trading update in mid-December. It reported adjusted
EPS of 43.4p from operating profit of £58.1m and revenue of £804m. Own shop LFL revenue was up 4.5% over the year
(+4.2% at update on 14 December) as the company’s focus on the food-to-go market accelerated growth. Looking
forward, in qualitative guidance management notes that low cost inflation and rising consumer disposable income are
positives but cautions that the company’s significant on-going programme of change will temper profit growth. Greggs has
made a strong start to 2015 with LFL sales in the eight weeks to the end of February up 6.3%, but against a weathereffected comparative period. Management is looking for “further progress in the year ahead” and a “year of good growth”.
Although providing little read through for Aryzta given that business momentum will largely be due to Greggs internal
improvements in product and service offering, it does give comfort that consumer spend in the UK ready-to-go food sector
is continuing to grow.
Ian Hunter │Research Analyst │ +353 1 421 0466 │ [email protected]
Equities: Food sector – Milk prices rise again
For the fifth time in 2015 and sixth time in a row, the GlobalDairyTrade (GDT) milk auction has recorded a price increase up 1.1% to $3,374 per metric tonne. This is the first time prices have risen in six consecutive auctions since between late
December 2012 and mid-April 2013. Since early December 2014, milk prices have risen 34.3% from a low of $2,513 per
tonne and are now trading up towards the 5.5 year average of $3,632/tonne, signalling that global milk prices are
recovering, driven to some extent by the drought conditions in New Zealand and California (leading milk producing state in
the US). While the price rise is positive for producers, over time it could squeeze milk processors such as Kerry and
Glanbia as the currently highly competitive food retail environment could leave little opportunity to pass through increasing
input costs.
Ian Hunter │Research Analyst │ +353 1 421 0466 │ [email protected]
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Contact Details:
Economics +353 1 421 0496 Currency +353 1 421 0091 Equities +353 1 421 0463 www.investec.ie [email protected]
To view the full range of Investec Research & Insights, go to www.investec.ie/research
Wednesday, 04 March 2015
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Contact Details:
Economics +353 1 421 0496 Currency +353 1 421 0091 Equities +353 1 421 0463 www.investec.ie [email protected]
To view the full range of Investec Research & Insights, go to www.investec.ie/research