Notes/Observations
Asia:
- China Q2 GDP saw its slowest annual growth since 1992 (Q/Q: 1.6% v 1.5%e; Y/Y: 6.2% v 6.2%e
- China Jun data showing positive effects from stimulus measures; Jun Industrial Production handily beat expectations (YoY: 6.3% v 5.2%e; Retail Sales also handily beat expectations (YoY: 9.8% v 8.5%e)
- China National Bureau of Statistics (NBS) Official: China faced more external uncertainties and ‘instabilities, domestic economy faced ‘new’ downward pressure’
- China PBOC statement noted that it implemented its 3rd phase of cuts to Reserve Ratio Requirement (RRR) for county level rural commercial banks which released long term capital worth ~CNY100B (Note: RRR cuts previously announced on May 6th)
Europe/Mideast:
- Italy govt said to remain at risk of a September general election as tensions continue tol simmering within the coalition govt
- PM Candidate Johnson said to be prepared to negotiate a post Brexit trade deal with US as one of his first actions if elected
- Resolution Foundation (think tank): UK recession risk at highest level since 2007 based upon yield curve slope
- Turkey President Erdogan stated that would reduce interest rates significantly
Americas:
- US firms might receive permission to restart sales to Huawei in next 2 -4 weeks
Energy:
- Hurricane Barry downgraded over the weekend to a tropical depression, travelling North of Louisiana into Arkansas. Gulf of Mexico crude oil production cut by 70% (1.33M bpd) and natural gas output cut by 56% due to recent storm preparations in Gulf
- France/Germany/ UK joint statement reiterated commitment to 2015 nuclear deal but preoccupied by the risk that deal could fall apart. Deeply troubled by attacks witnessed in Persian Gulf and elsewhere and by the deterioration of security in the region. Time has come to act responsibly and look for ways to stop tensions increasing & resume dialogue
- Iran President Rouhani stated at was ready and willing to hold talks with the US if sanctions were lifted and US returned to the 2015 nuclear deal it left last year
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.03% at 386.74, FTSE -0.02% at 7,504.92, DAX +0.22% at 12,350.33, CAC-40 -0.12% at 5,565.99, IBEX-35 +0.04% at 9,297.00, FTSE MIB +0.09% at 22,202.50, SMI +0.03% at 9,765.50, S&P 500 Futures +0.13%]
- Market Focal Points/Key Themes: European Indices trade slightly higher across the board, continuing the positive momentum after a mainly lower sessions in Asia and higher US futures. The banks kick off the official start of earnings season today with Citigroup reporting. On the corporate front shares of retailer SportsDirect trades sharply lower after delaying earnings, while Poxel, Class Ohlson trade lower after earnings, with Axfood trading higher after a beat on both the top and bottom line. In other news Kcom Group shares rise once again as the battle for the company continued with Macquarie outbidding Superannuation to acquire the company; Galapagos gains more than 15% following an R&D collab with Gilead, while Micro Focus declines following sale of shares by some of its directors.
Equities
- Consumer discretionary: Anheuser-Busch [ABI.BE] -2% (cancels HK IPO), Sports Direct [SPD.UK] -12% (acquisition update; to delay results), Inwido [INWI.SE] -10% (earnings), Byggmax [BMAX.SE] -13% (acquisition)
- Healthcare: Galapagos [GLPG.BE] +16% (collaboration with Gilead), Poxel [POXEL.FR] -4% (earnings)
- Industrials: Antofagasta [ANTO.UK] +5% (Pakistan ordered to pay Barrick, Antofagasta compensation)
- Technology: IDEX ASA [IDEX.NO] +14% (acquisition)
Speakers
- Germany Economy Ministry Monthly Report: Growth seen weaker in Q2. Manufacturing remained sluggish and signs from services sector suggested thatt growth was weaker in quarter. Brexit and geopolitical tensions were considerable downside risks
- Spain Acting PM Sanchez: Pademos leader Iglesias may not support an investiture vote next week to install a Socialist government
- China PBOC Dep Gov Pan Gongsheng: Urges financial institutions to increase loans to poverty-stricken areas in education, medical and housing sectors
- Iran Nuclear Agency spokesperson reiterated that Iran was reducing its commitment under the nuclear deal so remaining signatories would fulfill their duties
- US President Trump reportedly considers removing Commerce Secretary Ross
Currencies/Fixed Income
- USD: The USD future index traded lower Friday as comments from Feds Evans’ dovish comments. To the upside we see the level in the 97.25 region and to the downside we look in the region of 95.50.
- EUR: Friday the Euro traded slightly higher as it approaches the 1.13 handle, if we get a break there we will look to 1.1380. To the downside we would look for a break of the 1.12 handle. Looking forward the Euro zone is quite light on the data front.
- GBP: The cable traded slightly higher as the next potential level to the uposide is in the region of 1.128. The next level to the upside would be 120 pips away in the region of 1.272. The week is full of economic data in the UK with CPI, Jobs and Retail sales.
Economic Data
- (PE) Peru May Economic Activity Index (Monthly GDP) Y/Y: 0.6% v 0.0% prior
- (PE) Peru Jun Unemployment Rate: 6.3% v 6.7% prior
- (SE) Sweden Jun PES Unemployment Rate: 3.6%t v 3.4% prior
- (NL) Netherlands May Trade Balance: €5.6B v €4.1B prior
- (NL) Netherlands May Retail Sales Y/Y: 4.4% v 4.6% prior
- (FI) Finland Jun CPI M/M: +0.1% v -0.2% prior; Y/Y: 1.0% v 1.2% prior
- (FI) Finland May Current Account Balance: +€0.3B v -€4.2B prior
- (FI) Finland May Final Retail Sales Volume Y/Y: 0.0% v -0.3% prelim
- (DK) Denmark Jun PPI M/M: -0.8% v -0.4% prior; Y/Y: -2.5% v -0.4% prior
- (CH) Swiss Jun Producer & Import Prices M/M: -0.5% v 0.0% prior; Y/Y: -1.4% v -0.8% prior
- (IN) India Wholesale Prices (WPI) Y/Y: 2.0% v 2.3%e
- (CH) Swiss Weekly Total Sight Deposits (CHF): 479.0B v 479.0B prior; Domestic Sight Deposits: 480.1B v 476.1B prior
- (PL) Poland Jun Final CPI M/M: 0.3% v 0.3% prelim; Y/Y: 2.6% v 2.6% prelim
- (CZ) Czech May Current Account Balance (CZK): +11.3B v -0.8Be
- (IT) Italy May General Government Debt: €2.365T v €2.373T prior (moved off record highs)
Fixed Income Issuance
- None seen
Looking Ahead
- (NG) Nigeria Jun CPI Y/Y: 11.3%e v 11.4% prior
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (IE) Ireland May Trade Balance: No est v €5.4B prior
- 06:45 (US) Daily Libor Fixing
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (IN) India Jun Trade Balance: -$15.0Be v -$15.4B prior; Exports Y/Y: No est v 3.9% prior; Imports Y/Y: No est v 4.3% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) July Empire Manufacturing: +2.0%e v -8.6 prior
- 09:00 (FR) France Debt Agency (AFT) to sell combined €3.8-5.0B in 3-month, 6-month and 12-month Bills
- 09:00 (CA) Canada Jun Existing Home Sales M/M: No est v 1.9% prior
- 09:00 (BE) Belgium May Trade Balance: No est v -€1.3B prior – 09:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 11:00 (CO) Colombia May Manufacturing Production Y/Y: No est v -1.3% prior
- 11:00 (CO) Colombia May Retail Sales Y/Y: No est v 4.0% prior
- 11:30 (IL) Israel Jun CPI M/M: No est v 0.7% prior; Y/Y: No est v 1.5% prior
- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
- 15:00 (AR) Argentina May Capacity Utilization: No est v 61.6% prior
