Notes/Observations
European Indices rise on easing Geo-Political tensions between the US and North Korea
China warns US there is no future in a trade war
Overnight
Asia:
Japan GDP rises at fastest pace in over 2 years with Domestic demand accounting for 1.3 percentage points.
US Trade representatives to investigate whether Chinese trade practices force US firms operating in China to turn over intellectual property
China Industrial production and Retail Sales falls short of expectations, with crackdown on property speculation and rising debt levels started to filter through
PBOC strengthened the yuan to the strongest setting since September 2016.
Europe:
UK Brexit Minister Davis urges talks with the EU to move onto next phase, beyond starter issues. Emphasizes the need to discuss bigger issues around the future of UK-EU partnership.
Eurozone Industrial production falls more than expectations. Only Energy showed a positive reading.
Banca Monte dei Paschi reports over a €3B loss as expected after intervention by the state. Italy now hows over 52% stake.
Americas:
Overnight Fed’s Kashkari (Vote) noted the weak CPI readings in the US is another reason to holding off rate hikes.
Economic Calendar
(EU) EURO ZONE JUN INDUSTRIAL PRODUCTION M/M: -0.6% V -0.5%E; Y/Y: 2.6% V 2.8%E
(NL) Netherlands Jun Retail sales y/y: 4.7% v 5.8% prior
(IN) INDIA JULY WHOLESALE PRICES
(WPI) Y/Y: 1.9% V 1.4%E
(CH) SNB Total Sight Deposits for week ending Aug 11th
(CHF): 578.9B v 578.6B prior
(SE) Sweden Jun Household Consumption M/M: 0.0% v 0.3% prior; Y/Y: 2.4% v 2.8% prior
(CZ) Czech Jun Current Account
(CZK): -14.5B v -3.0Be
Fixed Income Issuance:
Non seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 1.1% at 3,441, FTSE +0.6% at 7,347, DAX +1.1% at 12,141, CAC-40 +1.0% at 5,110, IBEX-35 +1.2% at 10,409, FTSE MIB +0.9% at 21,556, SMI +1.2% at 8,995, S&P 500 Futures +0.6%]
Market Focal Points/Key Themes: European stocks open slightly higher and gain substantially as the session progressed; easing geopolitical concerns help support risk sentiment; all sectors moving higher, lead by financials; automakers also outperforming; oil price dipped, but didn’t drag on energy stocks enough to pull them negative; tomorrow sees several European markets closed due to holiday; upcoming earnings in the US session include Sysco and Canadian Solar.
Equities
Consumer discretionary: Danone BN.FR +1.5% (bid speculation), Berentzen BEZ.DE -12.2% (results)
Materials: Wienerberger WIE.AT +3.2% (analyst action)
Industrials: SMT Scharf S4A.DE +1.9% (results), Hamburger Hafen HHFA.DE +2.7% (earnings), Gesco GSC1.DE +2.8% (earnings)
Financials: Deutsche Pfandbriefbank PBB.DE +4.58% (results), Talanx TLX.DE +1.6% (earnings)
Technology: Rocket Internet RKET.DE +5.8% (buyback)
Telecom: Telit Communications TCM.UK +13.7% (confirms CEO departure)
Healthcare: UDG Healthcare UDG.UK -2.8% (analyst action)
Energy: RWE RWE.DE +1.6% (earnings)
Speakers
(CN) China Foreign Ministry: No future in a China/US trade war
Currencies
The USD gains ground this morning as GBPUSD drops back below 1.30, while the EURUSD approaches the 1.17 handle coming off the 1.1840 high. Continued downside targets 1.1750. Overall Equity strength has helped the USDYEN firmer, rebounding over 100 pips from Friday lows.
Fixed Income
Bund futures trades at 163.96 down 61 ticks, after breaking below key support at the 164.01 level. Downside targets 163.75 followed by 162.56. To the upside the 165.00 to 165.20 remains key resistance.
Gilt futures trades at 127.70 down 17 ticks, steadily flattened over last week. A resumption to the upside could eye 128.25 then 128.75. A move back below 126.51 targets 125.97
Monday’s liquidity report showed Friday’s use of the marginal lending facility rose to €189M from €116M prior.
Corporate issuance saw $43B last week with talk that this week could see between $30B coming to market, as we enter the back half of earning season.
Looking Ahead
06:00 (PL) Poland Q2 Labour Costs
07:25 (BR) Brazil Weekly Economist Survey
07:30 (TR) Turkey TCMB Survey of Expecations
08:00 (PL) Poland July CPI Core M/M: 0.0%e v 0.0% prior; Y/Y: 0.8%e v 0.8% prior
08:00 (IN) India July CPI Y/Y: 2.0%e v 1.5% prior
08:30 (CA) Canada July Teranet/National Bank HPI M/M: No est v 2.6% prior; Y/Y: No est v 14.2% prior
09:00 (BE) Belgium trade balance
