Notes/Observations
- European Indices reverse earlier losses to trade mainly higher after weakness in Asia
- President Trump could announce further $200B in tariffs on China as early as today
- Cable rises on optimism ahead of EU Summit later this week
Asia:
- Pres Trump reportedly told advisers to proceed with $200B tariffs on China; tariff level likely to be around 10%, below the 25% previously announced at time of initial announcement
- China official reportedly considering declining offer of talks noting they won’t negotiate with a gun to their head
Europe:
- British Chambers of Commerce (BCC) cuts 2018 UK GDP growth forecast to 1.1% vs 1.3% prior; Cuts 2019 GDP 1.4% to 1.3%
- Italy government is considering tax breaks for small Italian investors who buy domestic government bonds and keep them to maturity
- EU Brexit negotiator Barnier said to eye an Irish border plan to unlock Brexit talks; British rather than EU officials could take charge of checking NI-bound goods
- Riksbank minutes reveal members moving towards rate hike soon
Economic Data:
- (EU) EURO ZONE AUG FINAL CPI Y/Y: 2.0% V 2.0%E; CPI CORE Y/Y: 1.0% V 1.0%E
- (NO) Norway Aug Trade Balance (NOK): 31.8B v 24.5B prior
- (CZ) Czech Aug PPI Industrial M/M: +0.1% v -0.1%e; Y/Y: 3.3% v 3.1%e
- (AT) Austria Aug CPI M/M: 0.0% v -0.2% prior; Y/Y: 2.2% v 2.1% prior
- (TR) Turkey Jun Unemployment Rate: 10.2% v 9.7% prior
- (TR) Turkey July Industrial Production M/M: 3.5% v -1.0%e; Y/Y: 5.6% v 1.2%e
- (CZ) Czech July Export Price Index Y/Y: 1.8% v 0.5% prior; Import Price Index Y/Y: 2.5% v 0.7% prior
- (IT) Italy July Total Trade Balance: €5.7B v €5.2B prior; Trade Balance EU: €2.7B v €1.6B prior
Fixed Income Issuance:
- (NO) Norway sells NOK6.0B vs. NOK6.0B indicated in 6-month bills; Avg Yield: 0.89% v 0.72% prior; Bid-to-cover: 2.24x v 3.17x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx50 +0.1% at 3,348, FTSE -0.2% at 7,291, DAX -0.2% at 12,100, CAC-40 flat at 5,351; IBEX-35 +0.6% at 9,417, FTSE MIB +0.7% at 21,019, SMI -0.3% at 8,936, S&P 500 Futures -0.1%]
- Market Focal Points/Key Themes: European indices open broadly down, but reverse to trade slightly higher as the session wore on; risk sentiment off over trade concerns; US President Trump could announce additional $200B tariffs on Chinese goods as early as today; press reports of potential agreement on Irish border help assuage Brexit concerns; financial sector better performer, while technology leads to the downside; Ralley signs debt facility, supporting Casino shares; Chile closed for holiday; earnings expected in the upcoming US session include FedEx and Oracle, additionally master trust data; attention on upcoming interest rate decisions this week, including BOJ, RBA and SNB
Equities
- Consumer discretionary: Boohoo.com BOO.UK +0.9% (New CEO), Hennes & Mauritz HMB.SE +11.4% (quarterly sales, potential credit deal), Melia Hotels MEL.ES +0.1% (analyst action)
- Consumer staples: Dairy Crest DCG.UK +1.6% (trading update)
- Financials: Credit Suisse CSGN.CH -0.1% (Swiss regulator observation), Scor SCR.FR +1.2% (new offer)
- Healthcare: Argenx ARGX.BE +4.9% (study results), Realm Therapeutics RLM.UK -12.0% (potential sale of company), UCB UCB.BE -0.1% (analyst action)
- Industrials: Kongsberg Gruppen KOG.NO +1.5% (awarded order)
- Materials: Petra Diamonds PDL.UK +4.4% (results)
Speakers
- (UK) UK PM May: Thank Parliament will vote to support a possible Brexit deal
- (CN) China Foreign Ministry: If the US implements new tariffs, then China will take necessary response; Talks should take place on an equal footing
- (FR) France Pres Macron: It is indispensable to find accord for Brexit – Speaking alongside Austria’s Kurz
- (UK) Chancellor of the Exchequer Hammond (Fin Min): UK is fundamentally strong ahead of Brexit; No deal is unlikely but not impossible
Currencies
- GBPUSD rises above 1.31 once again on optimism ahead of the EU summit on Thursday up over 0.2%
- Emerging market currency’s trade under pressure once again on tariffs threats, with the USDTRY over 1.5% higher the USDINR over 0.8% higher as Government plans over the weekend to curb the fall fail to lift the rupee.
Fixed Income
- Bund Futures trades at 159.14 down 10 ticks as December Bund stays under pressure. Resistance moves to 161.82 then 163. A downside break of 159.85 sees 158.69 initially.
- Gilt futures trades at 121.53 down 2 ticks following the move in Treasuries. Continued support at 122.50, with a continued move higher targeting 123.93 then 124.00.
- Monday ‘s liquidity report showed Friday’s excess liquidity fell from €1.904T to €1.886T. Use of the marginal lending facility rose from €40M to €74M.
- Corporate issuance saw high grade issuers raise $33.4B in the primary market last week
Looking Ahead
- 06:00 (IL) Israel Q2 Current Account: No est v $1.9B prior
- 06:00 (IL) Israel Aug Trade Balance: No est v -$2.3B prior
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:30 (BR) Brazil July Economic Activity (monthly GDP) M/M: No est v 3.3% prior; Y/Y: No est v 1.8% prior
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (US) Sept Empire Manufacturing: No est v 25.6 prior
- 08:30 (CA) Canada July Int’l Securities Transactions (CAD): No est v 11.6B prior
- 09:00 (CA) Canada Aug Existing Home Sales M/M: No est v 1.9% prior
- 16:00 (US) Weekly Crop Progress Report
