Market movers today
The first information about euro area inflation in August is due for release today with the German and Spanish figures. In both countries, inflation should be above 1.5% and not far from the ECB’s 2% target . However, the French and Italian figures are closer to 1.0%, and the underlying price pressure remains weak across the euro area, meaning the ECB is likely to stay patient, particularly in light of the stronger euro.
The euro area economic confidence figures will also be in focus. Consumer sentiment has improved on the positive employment situation and on the past year’s high real wage growth. Looking ahead, the stronger euro should be a headwind to industrial confidence over time.
In the US, ADP employment is due for release ahead of the employment report on Friday. The latest ADP report showed job growth of 178,000 while the employment report had stronger growth of 209,000. That said, main focus is on the unemployment rate and particularly wage growth as these are more important for the Fed. The second GDP estimate for Q2 is also due for release but we expect no significant revisions in the figure.
Norwegian retail sales data is the highlight in Scandi markets today. Please see the Scandi section on page 2 for further details.
Selected market news
Focus on missile launch aftermath as North Korea says more to come. The UN Security Council held an emergency meeting yesterday, condemning the four recent missile launches. It demanded that Pyongyang halt its weapons programme, but held back on any threat of new sanctions. Meanwhile, President Trump said that ‘all options are on the table’ for dealing with North Korea. This morning, the North Korean state news agency quoted Kim Jong-un for saying that the launch on Tuesday was to counter the annual large-scale US and South Korean military exercises, which began earlier this month. Furthermore, Kim said the test firing of a missile over Japan was a ‘meaningful prelude’ to containing Guam and that he would continue to watch the US response before deciding on further action. Furthermore, the North Korean leader said that more such launches with the Pacific as target were needed.
Asian equities higher as investors shrug off geopolitical concerns. Following losses on Tuesday, particularly in Japanese equities, Asian stocks are generally higher this morning as investors do not seem alarmed by the post -missile launch reactions from the UN, the US and North Korea.
UK seeks more negotiating rounds on divorce settlement . Yesterday, the EU’s chief negotiat or Michel Barnier urged to UK to start ‘negotiating seriously’, as the October deadline for securing the country’s exitterms from the EU looks increasingly unattainable. According to Bloomberg, with only two more negotiating rounds left , the May administ ration is now seeking to squeeze in more sessions. Sterling was weaker and UK yields lower yesterday.
