HomeContributorsFundamental AnalysisRisk Aversion Sentiment Lingers Over Covid-19 Concerns But EU Equity Markets Off...

Risk Aversion Sentiment Lingers Over Covid-19 Concerns But EU Equity Markets Off Worst Levels

Notes/Observations

  • Risk aversion flows pick up over concerns about rising new cases of Covid-19 and the risk of another wave of infections

Asia:

  • China May Retail Sales missed expectations (YoY -2.8% v -2.3%e
  • China May Industrial Production missed expectations (YoY: 4.4% v 5.0%e)
  • China May Surveyed Jobless Rate: 5.9% v 5.9%e

Coronavirus:

  • Total global cases 7,900,924 (+5.3% vs. Friday); Total deaths: 433.1K, (+2.9% vs. Fri)
  • China Beijing reported 36 new cases on Sat, Jun 13th (all linked to the city’s biggest wholesale food market). Overall China reported its largest daily increase in cases since mid-April with 57 new infections
  • Tokyo reports almost 4 dozen new cases for its highest level since early May
  • Concerns over hotspots within US as Alabama, Florida and South Carolina reporting record new cases for 3rd day in a row over the weekend

Europe:

  • PM Johnson said to try to force the pace of Brexit talks by telling the EU that Britain will opt for no-deal unless there is a sign of agreement by the end of July. PM to stress that Europe has 6 weeks to seal an agreement with Britain or it will leave without an agreement
  • Fitch affirmed Spain sovereign rating at A-; outlook Stable – Fitch affirmed Germany sovereign rating at AAA; outlook Stable

Americas:

  • White House econ adviser Kudlow: US needs to stop providing the extra $600/week virus boost to unemployment and replace it with a smaller bonus for those returning to work

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 -1.31% at 349.42, FTSE -1.49% at 6,014.30, DAX -1.84% at 11,729.15, CAC-40 -1.68% at 4,758.15, IBEX-35 -1.96% at 7,150.00, FTSE MIB -1.34% at 18,634.50, SMI -0.19% at 9,777.41, S&P 500 Futures -2.05%]
  • Market Focal Points/Key Themes: European indices open down across the board but moderated losses slightly as the session wore on; risk sentiment impacted by increase in number of covid cases in US, China over weekend; all sectors in the red, lead by materials and consumer discretionary; ECB’s De Guindos said it was too early to discuss bad bank; Spanish government to present stimulus program for auto, tourism industries; AstraZeneca reaches agreement to supply 400M doses of eventual covid-19 vaccine; major pharmaceutical company CEOs presenting at EY conference; no major earnings expected in upcoming US session

Equities

  • Consumer discretionary: Bunzl [BNZL.UK] +5% (trading update), H&M [HMB.SE] -2% (earnings)
  • Energy: BP [BP.UK] -4 % (charges)

Speakers

  • German Economy Ministry Monthly Report: Domestic recovery began in May and continue slowly into second half and beyond. Deep recession bottomed out in April but reiterates stance that Q2 GDP contraction to be larger than Q1 reading
  • Italy PM Conte announced that companies and workers who had used up the first 14 weeks of unemployment pay could immediately request additional 4 weeks
  • Austria Fin Min Bluemel stated that its post-virus stimulus measures to exceed €14B
  • Japan Econ Min Nishimura: No change to plan on further reopening of economy from Fri, Jun 19th (**Reminder: Tokyo reports almost 4 dozen new cases for its highest level since early May)
  • South Korea govt could announce steps to curb housing prices on Thursday, Jun 18th
  • China Stats Bureau stated that external risks have clearly increased. Positive Q2 GDP data to depend on recovery in Jun period. CPI might fall later in 202
  • China said to have raised concerns over Japan’s supply chain subsidy
  • China govt to sell CNY1.0T in special bonds by the end of July to combat the impact of the coronavirus outbreak

Currencies/Fixed Income

  • USD began the session on firmer footing as safe-haven demand prompted flows into the greenback. Dealers cited concerns about rising new cases of Covid-19 and the risk of another wave of infections. China Beijing reported 36 new cases on Sat, Jun 13th (all linked to the city’s biggest wholesale food market); Tokyo reports over 4 dozen new cases for its highest level since early May ; hotspots within US as Alabama, Florida and South Carolina reported record new cases for 3rd day in a row over the weekend European equity markets were off their worst levels by mid-session and this helped the USD move off if best levels.
  • EUR/USD at 1.1255 (little changed)
  • USD/JPY at 107.30 (lower by 0.15)

Economic Data

  • (NL) Netherlands Apr Trade Balance: €3.5B v €6.2B prior
  • (FI) Finland Apr Final Retail Sales Volume Y/Y: -0.6%e v -0.5% prelim
  • (FI) Finland May CPI M/M: 0.0% v -0.3% prior; Y/Y: -0.2% v -0.3% prior
  • (NO) Norway May Trade Balance (NOK): -1.2B v +3.6B prior
  • (DK) Denmark May PPI M/M: -0.6% v -0.9% prior; Y/Y: -5.6% v -5.4% prior
  • (CH) Swiss May Producer & Import Prices M/M: -0.5% v -1.3% prior; Y/Y: -4.5% v -4.0% prior
  • (IN) India May Wholesale Prices (WPI) Y/Y: -3.2% v -1.2%e
  • (CH) Swiss Weekly Total Sight Deposits (CHF): 679.5B v 680.1B prior; Domestic Sight Deposits: 600.3B v 594.5B prior
  • (PL) Poland May Final CPI M/M: -0.2% v -0.2% prelim; Y/Y: 2.9% v 2.9% prelim
  • (CZ) Czech Mar Current Account (CZK): -9.2B v -21.1Be
  • (TR) Turkey May Central Gov’t Budget Balance (TRY): -17.3B v -43.2B prior
  • (IT) Italy May Final CPI M/M: -0.2% v -0.1% prelim; Y/Y: -0.2% v -0.1% prelim; CPI Index Ex Tobacco: 102.3 v 102.4e
  • (IT) Italy May Final CPI EU Harmonized M/M: -0.3% v -0.2% prelim; Y/Y: -0.3% v -0.2% prelim
  • (IT) Italy Apr General Government Debt: €2.467T v €2.431T prior (record high)
  • (EU) Euro Zone Apr Trade Balance (seasonally adjusted): €1.2B v €25.5B prior; Trade balance NSA (unadj): €2.9B v €28.2B prior

Fixed Income Issuance

  • (NO) Norway solds NOK6.0B vs. NOK6.0B indicated in 12-month Bills; Avg Yield: 0.10% v 0.46% prior; Bid-to-cover: 2.18x v 2.57x prior
  • (SK) Slovakia Debt Agency (Ardal) sold total in €959M in 2024 and 2027 Bonds

Looking Ahead

  • 05:30 (DE) Germany to sell €4.0B in 6-month Bubills
  • 05:30 (NL) Netherlands Debt Agency (DSTA) to sell 3-month, 6-month and 9-month Bills
  • 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
  • 06:00 (IT) Ireland Apr Trade Balance: No est v €9.0B prior
  • 06:00 (IL) Israel to sell 2022, 2025, 2030 and 2037 Bonds
  • 06:00 (RO) Romania to sell RON500M in 3.65% 2025 Bonds
  • 06:00 (RO) Romania to sell RON500M in 4% 2022 Bonds
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
  • 07:25 (BR Brazil Central Bank Weekly Economists Survey)
  • 08:00 (PL) Poland Apr Current Account Balance: €1.3Be v €2.4B prior; Trade Balance: -€0.4Be v -€0.1B prior; Exports: €13.6Be v €18.8B prior; Imports: €14.6Be v €18.8B prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (ES) Spain Debt Agency (Tesoro) announcement of size on upcoming 2023, 2025, 2030 and 2035 bond issuance
  • 08:30 (US) June Empire Manufacturing: -30.0e v -48.5 prior
  • 08:30 (CA) Canada Apr Manufacturing Sales M/M: -20.0%e v-9.2% prior
  • 08:30 (UK) PM Johnson call with EU’s Von der Layen
  • 08:50 (FR) France Debt Agency (AFT) to sell €6.9-8.5B in 3-month, 6-month and 12-month bills (4 tranches)
  • 09:00 (CA) Canada Apr Existing Home Sales M/M: No est v -56.8% prior
  • 09:35 (SE) Sweden Central Bank (Riksbank) Breman
  • 09:45 (HU) Hungary Central Bank Gov Matolcsy
  • 09:45 (EU) ECB weekly QE bond buying update
  • 11:00 (US) Fed’s Kaplan
  • 11:30 (IL) Israel May CPI M/M: +0.1%e v -0.3% prior; Y/Y: -1.2%e v -0.6% prior
  • 11:30 (US) Treasury to sell 13-week and 26-week bills
  • 12:30 (US) Fed’s Daly
  • 16:00 (US) Apr Net Long-term TIC Flows: No est v -$112.6B prior; Total Net TIC Flows: No est v $349.9B prior
  • 16:00 (US) Weekly Crop Progress Report
  • 17:00 (NZ) New Zealand Q2 Consumer Confidence: No eet v 104.2 prior
  • 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 97.0 prior
  • 21:30 (AU) Reserve Bank of Australia (RBA) Jun Meeting minutes
  • 21:30 (AU) Australia Q1 House Price Index Q/Q: 2.5%e v 3.9% prior; Y/Y: 8.1%e v 2.5% prior
  • 23:00 (TH) Thailand to sell combined THB100B in 3-month and 6-month bills
  • 23:30 (HK) Hong Kong to sell 3-month and 6-month bills
  • (JP) Bank of Japan (BOJ) Interest Rate decision: Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at -0.10%; Expected to maintain its policy framework of “QQE with Yield Control” around 0.00%
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