European Indices Trade Mixed Following A Slew Of Economic Data

Notes/Observations

• European Indices mixed, Bund futures, Gold and Oil all trading lower
• China Caixin Mfg PMI rises to a 7 month high; UK Q2 GDP revised slightly higher; Eurozone unemployment rate falls to 11 year low
• Oil weakens Saudi Arabia Crown Prince bin Salman prefers Non-military pressure on Iran

Asia:

• China Sep Caixin manufacturing PMI beat forecasts and marked the highest level since Feb 2018 and the second consecutive month of expansion
• China Sep NBS manufacturing PMI 49.8 V 49.6E (5th consecutive contraction); Non-Manufacturing: PMI: 53.7 v 53.9e; Composite: 53.1 v 53.0 prior
• US Treasury spokesperson Crowley: There is no truth to media reports US is planning to block China companies from IPOs in the US; Earlier there were reports the Nasdaq were making it more difficult for China companies to IPO by slowing down approval process and increasing restrictions
• New Zealand dollar fell as Sept ANZ Business Confidence records an 11 year low

Europe/Mideast:

• German state CPIs mixed, NRW Germany’s most populous state saw a decline in CPI, while Saxony saw a slight uptick m/m and a decline y/y.
• Italy CPI fell short of expectations, Spain CPI was mixed
• German retail sales rise in August helping ease some worries that slower manufacturing activity would affect the consumer
• Eurozone Unemployment rate surprises falling to an 11 year low

Brexit:

• Minister Gove: UK govt knows the outline of what it would like its Brexit deal to look like, deal would differ significantly from the one negotiated by former PM May – speaking at party’s annual conference
• (IR) Ireland Northern Ireland’s Democratic Unionist Party (DUP) leader Foster: Supports PM Johnson, but cannot accept leaving the EU on different terms to the rest of the country

Energy:

• Saudi Arabia Crown Prince bin Salman: Non-military pressure on Iran is favored; war with Iran would crash the world economy

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.02% at 391.74, FTSE -0.17% at 7,413.42, DAX +0.01% at 12,382.21, CAC-40 0.00% at 5,640.69, IBEX-35 +0.56% at 9,235.50, FTSE MIB -0.05% at 22,005.50, SMI -0.07% at 10,030.50, S&P 500 Futures +0.38%]

Market Focal Points/Key Themes:

Equities

• European Indices trade mixed in Monday’s session, following a load of economic data releases, weaker session in Asia and higher US futures amid US Treasury Dept denied over the weekend earlier report that US would be blocking or limiting China IPOs.
• On M&A front, Swedish Orphan Biovitrum trades higher 2.5% in Stockholm after acquisition of US-listed Dova Pharmaceuticals in $915M deal. Kloeckner in Germany erases almost all earlier losses being attributed to press report that company no longer interested in merger with Thyssenkrupp.
• On the corporate front shares of Ferrexpo in UK refutes media chatter regarding wrongdoings of its CEO and majority shareholder, but trades down 1.5% on LSE. Swiss bank Credit Suisse also reportedly takes actions in relation to internal investigation of scandal to see if its head of wealth management was going to poach employees or clients.
• In other news, French utility giant EDF announces to close one of its plant with govt compensation and trades higher 2.5% in Paris.

Looking ahead

• notable earners include Thor Industries and Cal-Maine Foods.
• Utilities: EDF [EDF.FR] +2.5% (to close plant)
• Energy: Royal Dutch Shell [RDSA.NL] +0.5% (Q3 outlook)
• Financials: Credit Suisse [CSGN.CH] +1% (investigation)
• Healthcare: Evotec [EVT.DE] +1.5% (collaboration)
• Industrials: Kloeckner [KCO.DE] -1% (no merger with Thyssenkrupp), Deutz [DEZ.DE] +2% (JV)
• Materials: Ferrexpo [FXPO.UK] -1.5% (refutes allegations)

Speakers

• (EU) ECB’s Draghi: all instruments from interest rates to asset purchases and forward guidance are ready to be calibrated; we are symmetric in pursuing inflation target
• (US) Fed Evans (dove, voter): we are never going to have completely still rates; what Fed has done so far might be more sufficient
• (UK) Chancellor of the Exchequer Javid (Fin Min): claims against PM Johnson as mayor should be looked at; govt very focused on leaving EU with a deal by Oct 31; Plans not to ask for extension
• (CN) China Foreign Ministry Spokesman Geng Shuang: reiterates trade, financial cooperation with US has mutual benefit

Currencies/ Fixed Income

• USD: The US dollar index traded slightly lower after prior days breaking monthly levels and approaching 2 year high of 99.37. We have a week full of economic data as well as many speakers that could increase volatility this week and potentially set a new 2 year high.
• EUR/USD: The Euro is trading slightly lower today after German state CPI data coming in slightly lower as well as Mario Draghi Mario Draghi commenting on monetary policy. Levels to the downside are the 1.09 handle and to the upside in the 1.096 region.
• GBP/USD: The cable is trading higher today after trading lower for the last 3 days. Today the UK Conservative party are having their party conference as well as well as the UK releasing an inline final GDP which could see volatility increase in the near term. Levels to the upside are seen all the way at the 1.25 handle and to the down side are in the 1.22 region.

Economic Data

• (UK) Q2 FINAL GDP Q/Q: -0.2% V -0.2%E; Y/Y: 1.3% V 1.2%E
• (UK) AUG NET CONSUMER CREDIT: £0.9B V £0.9BE; NET LENDING: £3.9B V £4.2BE
• (UK) AUG MORTGAGE APPROVALS: 65.5K V 66.5KE
• (DE) GERMANY AUG RETAIL SALES M/M: 0.5% V 0.5%E; Y/Y: 3.2% V 2.9%E
• (DE) GERMANY SEPT CPI NORTH RHINE WESTPHALIA M/M: -0.1% V 0.0% PRIOR; Y/Y: 1.3% V 1.5% PRIOR
• (DE) GERMANY SEPT CPI SAXONY M/M: -0.1% V -0.2% PRIOR; Y/Y: 1.0% V 1.4% PRIOR
• (DE) GERMANY SEPT UNEMPLOYMENT CHANGE: -10.0K V +5.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
• (ES) SPAIN SEPT PRELIMINARY CPI M/M: 0.0% V -0.1% PRIOR; Y/Y: 0.1% V 0.2%E
• (IT) ITALY AUG PRELIMINARY UNEMPLOYMENT RATE: 9.5% V 9.9%E
• (EU) EURO ZONE AUG UNEMPLOYMENT RATE: 7.4% V 7.5%E (lowest reading since May 2008)
• (IT) ITALY SEPT PRELIMINARY CPI M/M: -0.5% V -0.3%E; Y/Y: 0.4% V 0.6%E
• (UK) Aug M4 Money Supply M/M: 0.4% v 0.7% prior; Y/Y: 3.2% v 2.7% prior
• (UK) Q2 Current Account: -£18.2B v -£19.0Be
• (DE) Germany Sept CPI Hesse M/M: 0.0% v -0.1% prior; Y/Y: 1.2% v 1.3% prior
• (DE) Germany Sept CPI Bavaria M/M: 0.0% v -0.1% prior; Y/Y: 1.3% v 1.4% prior
• (DE) Germany Sept CPI Brandenburg M/M: -0.1% v -0.2% prior; Y/Y: 1.3% v 1.4% prior
• (DE) Germany Sept CPI Baden Wuerttemberg M/M: +0.1% v -0.2% prior; Y/Y: 1.2% v 1.5% prior
• (CH) Swiss Aug KOF Leading Indicator: 93.2 v 96.2e
• (CH) Swiss Weekly Total Sight Deposits (CHF): 592.2B v 592.1B prior
• (PT) Portugal Sept Preliminary CPI M/M: +1.1 % v -0.1% prior; Y/Y: -0.1% v -0.1% prior
• (GR) Greece July Retail Sales Value Y/Y: -3.0% v +2.3% prior; Retail Sales Volume Y/Y: +2.7% v +2.3% prior

Fixed Income Issuance

• None seen

Looking Ahead

• 06:00 (PT) Portugal Aug Industrial Production M/M: No est v 3.5% prior; Y/Y: No est v -3.5% prior
• 06:00 (PT) Portugal Aug Retail Sales M/M: No est v 0.0% prior; Y/Y: No est v 4.7% prior
• 07:00 (MX) Mexico July Mexico Gold Production: NO est v 6.8K kilograms; Silver Production” No est v 298.4K Kilograms; Copper Production: No est v 44.5K tons
• 07:00 (ES) Spain Aug YTD Budget Balance: No est v -€13.9B prior
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 08:00 (DE) Germany Sept Preliminary CPI M/M: 0.0%e v -0.2% prior; Y/Y: 1.3%e v 1.4% prior
• 08:00 (DE) Germany Sept Preliminary CPI EU Harmonized M/M: 0.0%e v -0.1% prior; Y/Y: 1.0%e v 1.0% prior
• 08:00 (ZA) South Africa Aug Budget Balance (ZAR): -48.8Be v -99.1B prior
• 08:00 (ZA) South Africa Aug Trade Balance (ZAR): 1.2Be v-2.9B prior
• 08:00 (CL) Chile Aug Unemployment Rate: 7.2%e v 7.2% prior
• 08:00 (CL) Chile Aug Industrial Production Y/Y: 2.0%e v 2.6% prior; Manufacturing Production Y/Y: -2.3%e v 5.7% prior; Total Copper Production: No est v 490.4K tons prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (CA) Canada Aug Industrial Product Price M/M: -0.5%e v -0.3% prior; Raw Materials Price Index M/M: -1.5%e v 1.2% prior
• 09:00 (RU) Russia Q2 Final Current Account Balance: No est v $12.1B prior
• 09:30 (BR) Brazil Aug Primary Budget Balance (BRL): -15.5Be v -2.8B prior; Nominal Budget Balance: -51.1Be v -30.3B prior; Net Debt to GDP Ratio: 56.0%e v 55.8% prior
• 09:45 (US) Sept Chicago Purchasing Manufacturing Index (PMI): 50.0e v 50.4 prior
• 10:00 (MX) Mexico Aug Net Outstanding Loans (MXN): No est v 4.627T prior
• 10:30 (US) Sept Dallas Fed Manufacturing Activity: 1.0e v 2.7 prior
• 11:00 (CO) Colombia Aug National Unemployment Rate: No est v 10.7% prior; Urban Unemployment Rate: 10.3%e v 10.3% prior
• 12:00 (US) USDA Quarterly Crop Report
• 16:00 (US) Weekly Crop Report