Notes/Observations
- China to impose retaliatory tariffs following the confirmation from the White House on tariffs worth $200B on China imports
- Indices reverse earlier losses to trade mostly higher across the board
Asia:
- White House confirms $200B worth of tariffs on China imports; US President Trump reiterates if China retaliates he will immediately pursue tariffs on $267B in Chinese imports
- (CN) China Commerce Ministry (MOFCOM) announces retaliatory tariffs noting that they had no choice but to retaliate. No details initially provided on details of tariffs
Europe:
- (IT) Italy Fin Min Tria: Brexit to open new scenario for European capital markets; Italy’s economy still growing but at lower pace
- Sweden Jobless Rate At 10-month High
Economic Data:
- (ES) Spain Q2 Labour Costs Y/Y: 0.7% v 0.7% prior (IT) Italy July Industrial Sales M/M: -1.0% v +1.7% prior; Y/Y: 2.9% v 5.0% prior
- (PL) Poland Aug Employment M/M: 0.0% v 0.0%e; Y/Y: 3.4% v 3.5%e
Fixed Income Issuance:
- (ES) Spain Debt Agency (Tesoro) sells €2.0B v €1.5-2..5B indicated range in 3-month and 9-month Bills
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx50 +0.5% at 3,363, FTSE +0.1% at 7,318, DAX +0.6% at 12,164, CAC-40 +0.6% at 5,383; IBEX-35 +0.4% at 9,446, FTSE MIB +0.2% at 21,148, SMI -0.3% at 8,908, S&P 500 Futures +0.2%]
- Market Focal Points/Key Themes: European indices open mixed with a downward bias, but later moved higher as the session progressed; markets little impacted after US imposes further tariffs on China as expected; automotive sector leads gains, with materials sector; consumer discretionary on the backfoot in early trading; Zalando issues profit warning dragging on luxury stocks including Hugo Boss; Oracle reported yesterday impacting tech stocks including SAP; Ferrari has capital markets day; upcoming earnings expected in the US session include AutoZone, General Mills and Cracker Barrel
Equities
- Consumer discretionary: Air France-KLM AF.FR +1.0% (analyst action), Ocado OCDO.UK +3.3% (results), Pandora PNDORA.DK 10.2% (rumor of potential interest from PE firm), Zalando ZAL.DE -13.4% (outlook)
- Financials: Jardine Lloyd Thompson JLT.UK +31.2% (to be acquired)
- Healthcare: Spire Healthcare SPI.UK -5.6% (results), Virbac VIRP.FR +11.8% (results)
- Industrials: Husqvarna HUSQB.SE -4.0% (outlook)
- Materials: RM2 International RM2.UK +54.6% (contract)
- Technology: Osram Licht OSR.DE +8.1% (outlook), SAP SAP.DE +0.2% (Oracle results)
Speakers
- (EU) EU’s Tusk: Need to reach common view on Brexit on Pol declaration
- (EU) ECB’s Villeroy (France): Making SRM operation should be top priority, common backstop for resolution fund is key
- (JP) Japan Chief Cabinet Secretary Suga: Will communicate with US and China on tariffs
- (UK) UK Brexit Minister Raab says already made major compromises, now ball is in EU’s court – German Press
- (SE) Sweden Central Bank (Riksbank) First Deputy Gov Af Jochnick: Reiterates Swedish economy is doing well
Currencies
- EURUSD trades little changed dipping below the the 1.17 level after hitting a high of 1.1718
- GBPUSD pulls back from recent 6 week highs as traders await the upcoming EU summit, having hit an intraday high of 1.3171. The Turkish Lira continues to weaken down over 0.7% continuing to fade the bigger than expected rate hike last week.
Fixed Income
- Bund Futures trades at 159.20 up 11 ticks as China/US trade conflict escalates. Resistance moves to 161.82 then 163. A downside break of 159.85 sees 158.69 initially.
- Gilt futures trades at 121.49 up 12 ticks following the move in Treasuries. Continued support at 122.50, with a continued move higher targeting 123.93 then 124.00.
- Tuesday ‘s liquidity report showed Monday’s excess liquidity fell from €1.986T to €1.881T. Use of the marginal lending facility rose from €74M to €93M.
- Corporate issuance saw 5 high grade issuers raise $11.9B in the primary market
Looking Ahead
- 05.30 (UK) Weekly John Lewis LFL sales data
- 07:00 (BR) Brazil Sept IGP-M Inflation (2nd Preview): No est v 0.7% prior
- 07:45 (US) Weekly Goldman Economist Chain Store Sales
- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave the Base rate unchanged at 0.90%
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (CA) Canada July Manufacturing Sales M/M: No est v 1.1% prior
- 08:55 (US) Weekly Redbook Sales
- 09:00 (EU) Weekly ECB Forex Reserves: € v € prior
- 10:00 (US) Sept NAHB Housing Market Index: No est v 67 prior
- 11:00 (CO) Colombia July Trade Balance: No est v -$0.7B prior
- 16:00 (US) July Total Net TIC Flows: No est v $114.5B prior; Net Long-term TIC Flows: No est v -$36.5B prior
- 16:30 (US) Weekly API Oil Inventories
