Notes/Observations
- EU is considering talks on a tariff-cutting deal between the world’s big car exporters to prevent an all-out trade war with the US
- China (responds to US) to implement tariffs on $34B worth of US goods from midnight July 6th
- US Markets closed for July 4th Holidays
Asia:
- China June Caixin PMI beats forecasts, records highest reading since Feb
- India Cabinet approves minimum support price for farm output
- China said to be pressuring the EU to issue a ‘strong’ joint statement against US President Trump’s trade policies at the upcoming Sino-European summit
Europe:
- Post Brexit-Document showed customs system could take up to 5-years
- Team England’s World Cup (round of 16) win bodes well for UK retailers; bringing a big boost in sales (electronics & alcohol)
- EU is said to consider talks on tariff cutting deal between car exporters to prevent an all-out trade war with the US
- European Services PMIs mixed, Spain and France missing, Italy Germany and UK beats
Economic Data:
- (IE) Ireland Jun Services PMI: 59.5 v 59.3 prior (5-month high)
- (IN) India Jun Services PMI: 52.6 v 49.6 prior (highest reading since Jun 2017)
- (RU) Russia Jun Services PMI: 52.3 v 54.6e (29th month of expansion and lowest reading since May 2016)
- (SE) Sweden Jun Services PMI: 59.8 v 57.0 prior – (CZ) Czech May Retail Sales Y/Y: 2.1% v 3.5%e
- (ES) Spain Jun Services PMI: 55.4 V 56.2E (55th month of expansion, lowest reading since Dec 2017)
- (IT) Italy Jun Services PMI: 54.3 V 53.3E (24th month of expansion)
- (FR) France Jun Final Services PMI: 55.9 V 56.4E (confirms 24th month of expansion)
- *(DE) Germany Jun Final Services PMI: 54.5 V 53.9E (confirms 60th month of expansion)
- (EU) Euro Zone Jun Final Services PMI : 55.2 V 55.0E (confirms 60th month of expansion)
- (UK) JUN SERVICES PMI: 55.1 V 54.0E (23rd month of expansion and a 9-month high)
- (UK) Jun Official Reserves Changes: $0.7B v $0.5B prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx50 +0.1% at 3,411, FTSE -0.2% at 7,582, DAX -0.2% at 12,331, CAC-40 +0.1% at 5,320; IBEX-35 +0.5% at 9,705, FTSE MIB -0.1% at 21,738, SMI 0.04% at 8,656, S&P 500 Futures closed]
- Market Focal Points/Key Themes: European stocks open broadly lower but reversed trend as the session progressed to trade mixed; trade war concerns making their way back to the fore in terms of risk assessment; with light corporate news attention on macro data; technology leads to the upside; telecom sector underperforming; US closed for holiday
Equities
- Consumer discretionary: Danone BN.FR +0.6% (analyst action), Sainsbury SBRY.UK +1.4% (results)
- Energy: Fred Olsen Energy FOE.NO -19.1% (stops servicing debt)
- Financials: Danske Bank DANSKE.DK -3.0% (accusation of money laundering at unit)
- Industrials: BAM Groep BAMNB.NL -3.9% (outlook), Mersen MRN.FR +1.3% (analyst action), PSA UG.FR – 0.4% (press reports of asset sale consideration)
- Materials: Vicat VCT.FR +3.3% (analyst action)
- Telecom: Altice ATC.NL -3.5% (Drahi not planning to sell SFR)
Speakers
- (DE) German Chancellor Merkel: Reiterates US had a trade surplus if services are included
- (SE) Sweden Central Bank (Riksbank) Dep Gov Skingsley: Reiterates that October could see the central bank’s first hike in 7-years
- Russian Economy Minister: Sees 2018 GDP 1.9%, 2019 1.4%
- (PL) Poland Central Bank Gov Glapinski; Reiterates Polish inflation remains at moderate level; forecasts show it staying near goal
Currencies
- EUR/SEK (Swedish krona) initially rallied as Riksbank’s Skingsley keeps hawkish tone
- GBP/USD trades marginally higher on the back of stronger Services PMI data out of the UK. Cable sits in the middle of the days range in a relatively quiet session.
Fixed Income
- Bund Futures trade 3 ticks lower at 162.69 on stronger than expected German and Euro Zone service PMI data. Upside targets 163.25 followed by 163.85, while a return lower targets the 159.75 level.
- Gilt futures trade at 123.21 lower 21 ticks following better than expected UK Services PMI data. Support continues stands at 121.75 then 120.25, with upside resistance at 123.85 then 124.25.
- Wednesday’s liquidity report showed Tuesday’s excess liquidity rose from €1.844T to €1.847T. Use of the marginal lending facility stayed steady at €0M.
- Corporate issuance saw no deals priced in the primary market
Looking Ahead
- 07:00 (US) MBA Mortgage Applications w/e Jun 29th: No est v -4.9% prior
- 07:30 (TR) Turkey Jun Effective Exchange Rate(REER): No est v 77.85 prior
- 08:00 (BR) Brazil May Industrial Production M/M: No est v 0.8% prior; Y/Y: No est v 8.9% prior
- 08:00 (HU) Hungary Central Bank (MNB) Jun Minutes
- 08:05 (UK) Baltic Dry Bulk Index
- 09:00 (BR) Brazil Jun Services PMI: No est v 49.5 prior; Composite PMI: No est v 49.7 prior
