German ZEW Reading Reaches 6 Year Low On Trade War Concerns

Jul 10 18, 10:27 GMT

Notes/Observations

Asia:

China June CPI data comes in line, PPI rises to highest level in 7 months driven by the oil and gas production, coal mining, metals and chemicals processing and manufacturing sectors
China Ministry of Commerce (MOFCOM) announces measures to mitigate the impact of China-US trade frictions on companies

Europe:

UK PM May named Jeremy Hunt as new foreign secretary after Boris Johnson stepped down from his post. Matt Hancock replaces Hunt as health secretary.
UK first monthly estimate of GDP showed a rise of 0.3%, a fourth straight monthly increase, against a backdrop of economic uncertainty; Industrial and Manufacturing data miss forecasts
German ZEW Economic Sentiment and Current Conditions fall short of estimates marking the lowest reading since August 2012, with political uncertainty in particular, fears over an escalation of the international trade war dampening the economic outlook.

Economic Data:

(NO) NORWAY JUNE CPI M/M: 0.6% V 0.5%E; Y/Y: 2.6% V 2.4%E
(JP) JAPAN JUNE PRELIM MACHINE TOOL ORDERS Y/Y: 11.4% V 14.9% PRIOR
(FI) Finland May Industrial Production M/M: 0.9% v -1.7% prior; Y/Y: 3.5% v 3.9% prior
(DK) Denmark June CPI M/M: -0.1% v -0.1%e; Y/Y: 1.1% v 1.1%e
(FR) FRANCE MAY INDUSTRIAL PRODUCTION M/M: -0.2% V 0.7%E; Y/Y: 0.9% V 2.1%E
(FR) France May Manufacturing Production M/M: -0.6% v 0.3%e; Y/Y: 0.8% v 0.8%e
(HU) Hungary June CPI M/M: 0.3% v 0.3%e; Y/Y: 3.1% v 3.1%e
(HU) Hungary May Preliminary Trade Balance: €0.6B v €0.7Be
(IT) Italy May Industrial Production M/M: 0.7% v 0.8%e; Y/Y: 2.1% v +6.7% prior
(UK) MAY INDUSTRIAL PRODUCTION M/M: -0.4% V 0.5%E; Y/Y: +0.8% V 1.9%E
Manufacturing Production M/M: +0.4% v 0.7%e; Y/Y: +1.1% v 1.9%e
*(UK) MAY GDP M/M: 0.3% v 0.3%e (FIRST MONTHLY RELEASE); 3M/3M: 0.2% v 0.2%e
(UK) MAY VISIBLE TRADE BALANCE: -£12.4B V -£12.0BE
(DE) GERMANY JULY ZEW CURRENT SITUATION: 72.4 V 78.1E; EXPECTATIONS SURVEY: -24.7 V -18.9E
(EU) EURO ZONE JULY ZEW EXPECTATIONS SURVEY: -18.7 V -12.6 PRIOR

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 flat at 3,463, FTSE +0.1% at 7,693, DAX flat at 12,548, CAC-40 +0.3% at 5,415; IBEX-35 -0.3% at 9,901, FTSE MIB +0.2% at 22,072, SMI +0.1% at 8,770, S&P 500 Futures +0.1%]
Market Focal Points/Key Themes: European indices opened marginally higher but turned to mixed with slight downward bias as the session progressed; political considerations in the UK in focus; continuing high oil prices support energy sector; utilities worst performers; Nordex awarded biggest single contract in its history; upcoming earnings expected in the US session include Pepsico and AAR

Equities

Consumer discretionary: Ocado OCDO.UK -2.3% (earnings), Photo-Me PHTM.UK +7.0% (results), esco TSCO.UK -1.2% (exec change)
Energy: Nordex NDX1.DE +8.2% (order)
Financials: TP ICAP TCAP.UK -32.0% (outlook)
Industrials: Airbus AIR.FR +2.6% (analyst action), Arcadis ARCAD.NL -5.7% (strategic review)
Healthcare: Cambian CMBN.UK +28.3% (takeover offer), Softcat SCT.UK +8.4% (trading statement)

Currencies

The Norwegian crown rallied against the euro following hotter than expected CPI
GBP/USD fulls back from highs after weaker Industrial and Manufacturing production data. Having rebounded to a high of 1.3300 the pair dropped back over 50 pips after the weaker data with the day lows of 13224 the next target.

Fixed Income

(ES) Spain Debt Agency (Tesoro) sells total €4.74B vs. €4.0-5.0B indicated range in 6-month and 12-month Bills
Bund Futures trade 11 ticks lower at 162.46 following the move in Treasuries. Upside targets 163.25 followed by 163.85, while a return lower targets the 159.75 level.
Gilt futures trade at 122.98 lower by 26 ticks as UK cabinet exits weigh on sterling. Support continues stands at 121.75 then 120.25, with upside resistance at 123.85 then 124.25.
Tuesday’s liquidity report showed Monday’s excess liquidity fell from €1.879T to €1.878T. Use of the marginal lending facility rose from €50M to €26M.
Corporate issuance saw financial borrowers drive Monday’s issuance

Looking Ahead

07:00 (BR) Brazil Jun FGV Inflation IGP-DI M/M: 1.7%e v 1.6% prior; Y/Y: 8.1%e v 5.2% prior
08:05 (UK) Baltic Dry Bulk Index
08:30 (CL) Chile Jun Trade Balance: $B v $0.7Be
08:30 (CL) Chile Jun International Reserves: $B v $37.3B prior
09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%
09:00 (MX) Mexico Jun CPI M/M: +0.3%e v -0.2% prior; Y/Y: 4.6%e v 4.5% prior, CPI Core M/M: 0.2%e v 0.3% prior
15:00 (US) May Consumer Credit: $12.0Be v $9.3B prior
16:00 (US) Weekly Crop Progress Report