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European Indices Trade Mostly Higher With Positive Sentiment Carries Over From Asia On Trade Hopes


  • European Indices advance buoyed by a second day of gains in Hong Kong and Japan, and strength in US futures
  • Continued volatility seen in the Turkish Lira on President Erdogen comments
  • UK Homebuilders trade under pressure following downbeat comments from BoE Carney on house prices if there is a no deal Brexit
  • Hurricane Florence makes landfall in North Carolina


  • China August Retail sales beats estimates, Industrial production comes in line


  • BOE Gov Carney warns Cabinet of consequences of a ‘no deal’ Brexit, says could be as dire as the 2008 financial crash; No deal could lead to 35% drop in house prices
  • Italy Dep Fin Min Castelli tell press that Universal income of €780/month to start beginning of 2019
  • Reportedly EU Commissioner Oettinger (Germany) would prefer a French person head up ECB after Draghi’s term ends
  • Lira declines as Turkey President Erdogen says his patience is up to a point on Central bank rates, with the rate hike quite high

Economic Data:

  • (SE) SWEDEN AUG CPI M/M: -0.2% V 0.0%E; Y/Y: 2.0% V 2.2%E
  • (EU) Euro Zone July Trade Balance (Seasonally Adj): €12.8B v €16.2Be; Trade Balance NSA (unadj): €17.6B v €22.5B prior
  • (NL) Netherlands July Retail Sales Y/Y: 2.4% v 4.0% prior
  • (FI) Finland Aug CPI M/M: 0.1% v -0.1% prior; Y/Y: 1.3% v 1.4% prior
  • (FI) Finland July GDP Indicator WDA Y/Y: 1.5% v 2.8% prior
  • (IN) India Aug Wholesale Prices (WPI) Y/Y: 4.5% v 4.6%e
  • (TR) Turkey July Current Account: -$1.8B v -$1.8Be
  • (IT) Italy July Final CPI (includes tobacco) M/M: 0.4% v 0.5% prelim; Y/Y: 1.6% v 1.7% prelim

Fixed Income Issuance:

  • Non seen



  • Indices [Stoxx50 +0.2% at 3,342, FTSE +0.1% at 7,290, DAX +0.4% at 12,105, CAC-40 +0.4% at 5,346; IBEX-35 +0.2% at 9,344, FTSE MIB +0.2% at 20,881, SMI -0.1% at 8,954, S&P 500 Futures +0.1%]
  • Market Focal Points/Key Themes: European indices open higher across the board and remained positive as the session wore on; Materials sector among best performing along with consumer discretionary; Financials among the underperformers; UK homebuilders under pressure following BOE’s Carney comments; Atlantia impacted after rumors JPMorgan mulling to withdraw from capital raise; Carige given 15 days to be compliant; upcoming events expected in the US session include Dave and Buster’s earnings


  • Consumer discretionary: Aryzta ARYN.CH -1.4% (agreement with lenders), Connect Group CNCT.UK -8.4% (trading update), Metro B4B.DE -1.1% (asset sale), Ryanair RYA.UK +1.5% (reaches agreement with Italian union), Solocal LOCAL.FR +4.0% (analyst action)
  • Financials: Investec INVP.UK +9.1% (demerger, trading update)
  • Healthcare: Bone Therapeutics BOTHE.BE +6.7% (study reaches primary endpoints)
  • Industrials: Image Scan Holdings IGE.UK -14.7% (trading update), Landi Renzo LR.IT +8.0% (results), Touax TOUP.FR +4.3% (results)
  • Technology: Dassault Systems DSY.FR +0.3% (to enter CAC-40), Rocket Internet RKET.DE -5.2% (analyst action), STMicroelectronics STM.FR +1.7% (analyst action)


  • (IT) Italy Dep Fin Min Castelli: citizen’s income to start Jan 1, 2019; to be €780M minimum – Italian press
  • (FR) ECB’s Villeroy (France): sees French economy catching up with euro area by 2020
  • (TR) Turkey President Erdogen: Lira decline proves economic assassination attempt; Central bank has made a very high rate increase, his patience is up to a point on Central bank rates


  • GBPUSD rises to 6 week high extending upon yesterdays gains following weaker US inflation figures yesterday and comments from BoE Carney noting a no-deal Brexit would probably see interest rates rise rather than fall.
  • USDTRY weakened following President Erdogen comments on currency decline, before fading the move as the pair trades just above 6.00

Fixed Income

  • Bund Futures trades at 159.36 down 11 ticks as the ECB lowers growth forecasts while confirming plans to end easy money. Resistance moves to 161.82 then 163. A downside break of 159.85 sees 158.69 initially.
  • Gilt futures trades at 121.47 down 25 ticks following the move in Treasuries. Continued support at 122.50, with a continued move higher targeting 123.93 then 124.00.
  • Friday ‘s liquidity report showed Thursday’s excess liquidity fell from €1.909T to €1.904T. Use of the marginal lending facility declined from €47M to €40M.
  • Corporate issuance saw 2 issuers raise $7B in the primary market. Lipper reports equity fund outflows of $1.8B

Looking Ahead

  • 06:00 (IE) Ireland July Trade Balance: No est v €4.1B prior
  • 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave Key Rate unchanged at 7.25%
  • 07:00 (IL) Israel Aug CPI M/M: 0.2%e v 0.0% prior; Y/Y: 1.3%e v 1.4% prior
  • 07:00 (BR) Brazil Sept FGV Inflation IGP-10 M/M: 0.8%e v 0.5% prior
  • 07:30 (IN) India Weekly Forex Reserves
  • 08:00 (PL) Poland Aug CPI Core M/M: 0.0%e v -0.1% prior; Y/Y: 0.8%e v 0.6% prior
  • 08:00 (BR) Brazil July IBGE Services Sector Volume Y/Y: No est v 0.9% prior
  • 08:00 (IS) Iceland Aug Unemployment Rate: No est v 2.2% prior
  • 08:15 (UK) Baltic Dry Bulk Index
  • 08:30 (US) Aug Import Price Index M/M: -0.2%e v 0.0% prior; Y/Y: 4.1%e v 4.8% prior; Import Price Index ex Petroleum M/M: -0.2%e v -0.1% prior
  • 08:30 (US) Aug Export Price Index M/M: 0.0%e v -0.5% prior; Y/Y: No est v 4.3% prior
  • 08:30 (US) Aug Advance Retail Sales M/M: 0.4%e v 0.5% prior; Retail Sales Ex Auto M/M: 0.5%e v 0.6% prior, Retail Sales Ex Auto and Gas: 0.5%e v 0.6% prior; , Retail Sales Control Group: 0.4%e v 0.5% prior
  • 09:00 (BE) Belgium July Trade Balance: No est v €0.6B prior
  • 09:15 (US) Aug Industrial Production M/M: 0.3%e v 0.1% prior; Capacity Utilization: 78.2%e v 78.1% prior, Manufacturing Production: 0.3%e v 0.3% prior
  • 10:00 (US) July Business Inventories: 0.6%e v 0.1% prior
  • 10:00 (US) Sept Preliminary University of Michigan Confidence: 96.6e v 96.2 prior
  • 11:00 (CO) Colombia July Industrial Production Y/Y: 3.0%e v 1.3% prior
  • 11:00 (CO) Colombia July Retail Sales Y/Y: 5.5%e v 6.3% prior
  • 13:00 (US) Weekly Baker Hughes Rig Count data
  • 21:30 (CN) China Aug New Home Prices M/M: No est v 1.2% prior
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