- De-escalation in the U.S.-China trade war tries to aid risk appetite but weak China data revived concerns about the global growth outlook.
- German Q2 GDP contracts (as expected) while YoY readings beat expectations; door for a technical recession remains open; other regional GDP data best consensus in session (Czech, Hungary, Dutch)
- UK July inflation data unexpectedly accelerates; CPI remains at or above BOE target for the 4th straight month
- South Korea July Unemployment Rate: 4.0% v 4.0%e
- China July Industrial Production registers its slowest growth since Feb 2002 (Y/Y: 4.8% v 6.0%e)
- China July Retail Sales Y/Y: 7.6% v 8.6%e
- China July Surveyed Jobless Rate: 5.3% v 5.1% prior
- China PBoC set its yuan reference rate stronger for the 1st time in 10 sessions (7.0312 v 7.0326 prior)
- China Hong Kong Affairs Office strongly condemned violent protesters attack of mainland China journalist, tourist in Hong Kong Airport
- Hong Kong Airport obtained an injunction to prevent protesters from unlawfully obstructing airport operations
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- Italy Senate rejected The League’s call to hold a no-confidence debate ton Wed, Aug 14th; Senate to debate no-confidence motion in govt on a week later (Tues, Aug 20th)
- Weekly API Oil Inventories: Crude: +3.7M v -3.4M prior (1st build in 8 weeks)
- Indices [Stoxx600 -0.45% at 370.74, FTSE -0.28% at 7,229.55, DAX -0.73% at 11,665.14, CAC-40 -0.73% at 5,323.94, IBEX-35 -0.96% at 8,611.85, FTSE MIB -1.28% at 20,275.50, SMI -0.14% at 9,773.50, S&P 500 Futures -0.48%]
Market Focal Points/Key Themes:
- European Indices trade lower across the board after initial strength, tracking lower US futures, after higher Indices in Asia as weaker China Data and an expected GDP contraction in Germany weighed.
- On the corporate front shares of Prudential trades over 2% higher on a rise in first half profits; RWE trades firmer on stronger Revenues and profits; Nordex gains on record orders and raised capex, while Balfour Beatty trades sharply higher on better free cash flow and strong results marking the best day in almost 3 years.
- Other notable earnings related gainers include Avast, Semperit, Admiral Group and Strauman Holding among others.
- NNIT declines over 15% as the company reported a decline in profits and Revenue and cut Revenue forecasts; Gesco declines as net profit declines over 30% while Hoschschild Mining also declines lower Revenues and profits.
- Other decliners on earnings include Roularta, Awilco Drilling and Bilfinger among others.
- In other news Biom’Up rises on Hemoblast study, while Sports Direct declines as the companies auditor Grant Thornton to cease as auditor.
- Looking ahead notable earners include retailer Macy’s, Performance Food Group and Embraer among others.
- Consumer discretionary: Lookers [LOOK.UK] -1% (earnings), Sports Direct [SPD.UK] -6% (auditors ceased)
- Energy: Nordex [NDX1.DE] +10% (earnings), RWE [RWE.DE] +1.5% (earnings)
- Healthcare: Avast [AVST.UK] +9% (earnings; raises outlook), Astrazeneca [AZN.UK] +1% (trial met primary endpoint), Lundbeck [LUN.DK] +1.5% (earnings)
- Industrials: Balfour Beatty [BBY.UK] +8.5% (earnings), Leoni [LEO.DE] -1% (earnings)
- Technology: Avast [AVST.UK] +9% (earnings; raises outlook), Axel Springer [SPR.DE] -0.5% (earnings), Xeros Technology Group [XSG.UK] -16% (issues update)
- Germany Econ Ministry: Domestic economy remained robust, but outlook remained subdued for the time being. Trade conflicts has escalated further and prospects for orderly Brexit had not improved
- Spain Fin Min Calvino: Domestic economy is growing at a good pace. Maintaining its 2.2% growth forecast for 2019
- China to keep with plan for Sept trade talks with the US after tariff delay but its negotiators said not to be optimistic of any progress (**Reminder: On Aug 13th US announced next steps on proposed 10% tariff on China imports and would postpone tariffs on some items until Dec 15th (from Sept 1st))
Currencies/ Fixed Income
- Risk appetite found some fresh headwinds in the session despite the US decision on Tuesday to delay its next phase of tariffs by a few months. Dealers noted that the basic conflict between the US-China on trade still persisted. China to keep with plan for Sept trade talks with the US after tariff delay but the negotiators were said not to be optimistic of any progress being made. Poor Chinese Industrial and Retail Sales data for July also weighed upon sentiment
- USD/JPY moved off its Tuesday session highs and was softer by 0.3% in the EU session today. The pair locked within the 105-107 range until more certainty of global trade and growth risks are revealed.
- GBP currency received a small boost after UK July inflation data unexpectedly accelerated. CPI remained at or above BOE target for the 4th straight month. GBP/USD at 1.2070 just ahead of mid-session.
- EUR/USD holding below the 1.12 level again despite some better EU data in the session. German Q2 GDP contracted (as expected) while YoY readings beat expectations. Dealers noted that the door for a technical recession remained open.
- (FI) Finland July CPI M/M: -0.3% v +0.1% prior; Y/Y: 0.8% v 1.0% prior
- (FI) Finland Jun GDP Indicator Y/Y: 2.2% v 0.8% prior
- (FI) Finland Jun Final Retail Sales Volume Y/Y: 4.7% v 4.4% prelim
- (FR) France Q2 ILO Unemployment Rate: 8.5% v 8.6%e; Mainland Unemployment Rate: 8.2% v 8.3%e; Mainland Unemployment Change: -66K v -28K prior
- (DE) Germany Q2 Preliminary GDP Q/Q: Q/Q: -0.1% v -0.1%e; Y/Y: 0.0% v -0.3%e; GDP WDA Y/Y: 0.4% v 0.1%e
- (RO) Romania Q2 Advance GDP Q/Q: 1.0% v 0.6%e; Y/Y: 4.4% v 4.2%e
- (NO) Norway Q2 Average Monthly Earnings Y/Y: 3.4% v 3.2% prior
- (DK) Denmark Q2 GDP Indicator Q/Q: 0.8% v 0.1% prior
- (IN) India July Wholesale Prices (WPI) Y/Y: 1.1% v 1.8%e
- (FR) France July Final CPI M/M: -0.2% v -0.2%e; Y/Y: 1.1% v 1.1%e; CPI Ex-Tobacco Index: 103.91 v 103.90e
- (FR) France July Final CPI EU Harmonized M/M: -0.2% v -0.2%e; Y/Y: 1.3% v 1.3%e
- (CZ) Czech Q2 Advance GDP Q/Q: 0.6% v 0.5%e; Y/Y: 2.7% v 2.6%e
- (HU) Hungary Q2 Preliminary GDP Q/Q: 1.1% v 0.6%e; Y/Y: 4.9% v 4.6%e
- (NL) Netherlands Q2 Preliminary GDP Q/Q: 0.5% v 0.3%e; Y/Y: 2.0% v 1.7% prior
- (NL) Netherlands Jun Trade Balance: €5.2B v €5.3B prior
- (SE) Sweden July CPI M/M: 0.4% v 0.3%e; Y/Y: 1.7% v 1.5%e; CPI Level: 335.80 v 335.39e
- (SE) Sweden July CPIF M/M: 0.4% v 0.3%e; Y/Y: 1.5% v 1.4%e
- (SE) Sweden July CPIF (ex-energy) M/M: 0.2% v 0.2%e; Y/Y: 1.7% v 1.8%e
- (PL) Poland Q2 Preliminary GDP Q/Q: 0.8% v 0.9%e; Y/Y: 4.4% v 4.5%e
- (PL) Poland July Final CPI M/M: 0.0% v 0.0% prelim; Y/Y: 2.9% v 2.9% prelim
- (UK) July CPI M/M: 0.0% v -0.1%e; Y/Y: 2.1% v 1.9%e; CPI Core Y/Y: 1.9% v 1.8%e; CPIH Y/Y: 2.0% v 1.8%e
- (UK) July RPI M/M: 0.0% v 0.0%e; Y/Y: 2.8% v 2.8%e; RPI ExiMortgage Interest Payments (RPIX) Y/Y: 2.7% v 2.7%e; Retail Price Index: 289.5 v 289.6e
- (UK) July PPI Input M/M: 0.9% v 0.6%e; Y/Y: 1.3% v 0.3%e
- (UK) July PPI Output M/M: 0.3% v 0.1%e; Y/Y: 1.8% v 1.7%e
- (UK) July PPI Output Core M/M: 0.4% v 0.1%e; Y/Y: 2.0% v 1.7%e
- (UK) Jun House Price Index Y/Y: 0.9% v 1.0%e
- (IT) Italy Jun General Government Debt: €2.386T (record high) v €2.365T prior
- (PT) Portugal Q2 Preliminary GDP Q/Q: 0.5% v 0.4%e; Y/Y: 1.8% v 1.8% prior
- (EU) Euro Zone Q2 Preliminary GDP (2nd reading): Q/Q: 0.2% v 0.2%e; Y/Y: 1.1% v 1.1%e
- (EU) Euro Zone Q2 Preliminary Employment Q/Q: 0.2% v 0.4% prior; Y/Y: 1.1% v 1.3% prior
- (EU) Euro Zone Jun Industrial Production M/M: -1.6% v -1.5%e; Y/Y: -2.6% v -1.5%e
- (CY) Cyprus Q2 Preliminary GDP Y/Y: 3.2% v 3.2% prior
Fixed Income Issuance
- (DK) Denmark sold total DKK1.8B in 3-month bills; Avg Yield: -0.737% v -0.715% prior; bid-to-cover: 2.28x v 1.10x prior
- (IN) India sold total INR170B vs. INR170B indicated in 3-month, 6-month and 12-month bills
- (SE) Sweden sold SEK1.5 vs. SEK1.5B indicated in 0.75% 2029 bonds; Avg Yield: -0.2951% v +0.2520% prior; Bid-to-cover: 2.45x v 2.80x prior
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (IE) Ireland Jun Property Prices M/M: No est v 0.5% prior; Y/Y: No est v 2.8% prior
- 07:00 (US) MBA Mortgage Applications w/e Aug 9th: No est v 5.3% prior
- 07:00 (ZA) South Africa Jun Retail Sales M/M: -0.3%e v +0.1% prior; Y/Y: 2.0%e v 2.2% prior
- 07:00 (RU) Russia OFZ bonds auction
- 08:00 (IS) Iceland July Unemployment Rate: No est v 3.4% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) July Import Price Index M/M: -0.1%e v -0.9% prior; Y/Y: -2.0%e v -2.0% prior; Import Price Index (ex-petroleum) M/M: -0.1%e v -0.4% prior
- 08:30 (US) July Export Price Index M/M: -0.1%e v -0.7% prior; Y/Y: No est v -1.6% prior
- 10:30 (US) Weekly DOE Oil Inventories
- 11:00 (CO) Colombia Jun Manufacturing Production Y/Y: 2.2%e v 3.2% prior; Industrial Production Y/Y: No est v 2.1% prior
- 11:00 (CO) Colombia Jun Retail Sales Y/Y: 5.5%e v 8.2% prior
- 11:00 (CO) Colombia Jun Trade Balance: -$0.8Be v -$0.8B prior; Total Imports: $4.0Be v $4.8B prior
- (UR) Ukraine Q2 Preliminary GDP Q/Q: No est v 0.3% prior; Y/Y: 2.7%e v 2.5% prior