Notes/Observations
- Major European PMI Manufacturing data moved off the record low readings that were registered in April (Beats: France, Spain, Italy; Misses: Euro Zone, Germany, UK)
- China said to have halted some US agricultural imports due to rising tensions between the countries Session participation impacted by several European markets being closed for Whit Monday holiday, including Germany, Switzerland, Austria and Denmark
Asia:
- President Trump’s Friday response to China on HK didn’t seem to further worsen tensions; did not mention tariffs or trade deal.
- China May Manufacturing PMI (Govt official) registered its 3rd consecutive month in expansion (50.6 v 51.1e)
- China May Caixin PMI Manufacturing moved back into expansion for 1st time in 4 months (50.7 v 49.6e)
- South Korea will submit 3rd extra budget on June 4th to parliament
Coronavirus:
- Total global cases 6,166,978; Total deaths: 372K
Europe:
- Germany govt said to be putting together a stimulus package worth €75-80B
- EU Budget Commissioner Hahn said to call for a new tax on 70,000 large companies
- Senior EU Brexit adviser Stefaan De Rynck: No appetite on the EU side to revise the mandate on fisheries
- EU Brexit Negotiator Barnier said to accuse the PM Johnson of backtracking on commitments made in the political declaration. Warned there would not be an agreement at any cost
- S&P affirmed Ireland sovereign rating at AA-; outlook Stable
Americas:
- President Trump said to be planning to delay the next G-7 meeting until September, want to include South Korea, Russia, India and Australia. Added that G7 in current format had a very outdated set of countries
Mid-East/Energy:
- Russia said to have no objections to bringing forward OPEC+ meeting to Jun 4th from Jun 9-10th
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 closed, FTSE +1.0% at 6,138, DAX closed, CAC-40 +1.2% at 4,750 , IBEX-35 +1.5% at 7,199, FTSE MIB +0.7% at 18,328, SMI closed, S&P 500 Futures -0.2%]
- Market Focal Points/Key Themes: European indices open higher across the board and remained higher as the session progressed; several European markets closed for holiday, including Germany, Switzerland, Austria and Denmark; materials and financial sectors lead best performers; underperformers include health care sector; reportedly EU looking to tax ~70K large companies to pay for covid-19 stimulus; reportedly UK FinMin to publish extra budget; Austria FinMin remains opposed to EU recovery plan in current form; upcoming US session expected to be light on the earnings front, with Brink’s expected to report.
Equities
- Consumer discretionary: AB Foods ABF.UK +7.6% (Primark reopenning update), Europcar EUCAR.FR -4.4% (analyst action), Ted Baker TED.UK -8.6% (share placing, results)
- Financials: Cattolica di Assicurazioni CASS.IT -15.5% (regulator notice), MedioBanca MB.IT +7.6% (investor to raise stake)
- Healthcare: AstraZeneca AZN.UK +0.6% (US approval of Brilinta), Motif BIO MTFB.UK +25.9% (trading update)
- Materials: Petra Diamonds PDL.UK +13.2% (trading update)
- Technology: De la Rue DLAR.UK +39.9% (trading update)
- Telecom: MasMovil MAS.ES +21.6% (takeover offer), Nokia NOKIA.FI +2.8% (analyst action)
Speakers
- Sweden Central Bank (Riksbank) Dep Gov Breman said not to t rule out rate cuts in the future
- Poland Central Bank member Lon: weaker inflation data and stronger PLN currency behind recent rate cut
- South Africa Central bank (SARB) Gov Kganyago reiterated that inflation was not an immediate concern. To deploy tools as necessary to support the economy but added that QE was not appropriate at this time. he saw llimits on what central bank could do
- South Korea Finance Ministry unveiled a KRW76T ‘new deal’ plan to reshape economy as it cut its 2020 GDP and CPI outlook due to pandemic. Cut its 2020 GDP growth forecast from 2.4% to 0.1% and set 2021 GDP growth at 3.6%. MOF also cut 2020 CPI from 1.0% to 0.4% and set 2021 CPI at 1.2%
- Thailand PM Prayuth: Cabinet reshuffle is not necessary at this time (Note: comments after reports of resignation of 18 members of biggest political party in executive posts said to have occurred)
- China Foreign Ministry spokesperson Zhao Lijan: US was undermining bilateral relations and should correct its mistakes. Reiterated opposition of external interference in Hong Kong affairs. Threatening Chinese companies would undercut Sino-US ties and stressed that China would meet any US action with firm counterattacks
- China said to have halted some US agricultural imports due to rising tensions between the countries. Chinese govt officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans. China said to be evaluating the ongoing escalation of tensions with the US over Hong Kong
Currencies/Fixed Income
- USD was softer against the major pairs as last Friday’s response by President Trump’s to China on HK did not seem to further worsen tensions as it did not mention tariffs or trade deal. However, reports mid-session that Chinese govt officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans appeared to fan risk aversion concerns
- GBP/USD hit 3-week highs ahead of this week Brexit negotiations. Given the recent cold water on progress some traders were betting on a positive surprise as UK PM Johnson will go to Brussels to jump start the talks at a criterial junction.
- USD/JPY was lower by 0.3% to test below 107.50.
Economic Data
- (RU) Russia May PMI Manufacturing: 36.2 v 37.5e (13th month of contraction)
- (AU) Australia May Commodity Index: 103.9 v 105.6 prior
- (SE) Sweden May PMI Manufacturing: 39.2 v 40.7e (3rd straight contraction)
- (PL) Poland May PMI Manufacturing: 40.6 v 35.4e (19th month of contraction)
- (TR) Turkey May PMI Manufacturing: 40.9 v 33.4 prior (3rd straight contraction)
- (ES) Spain May PMI Manufacturing: 38.3 v 37.8e (3rd straight contraction)
- (CZ) Czech Republic May PMI Manufacturing: 39.6 v 38.5e (18th month of contraction)
- (TH) Thailand May Business Sentiment Index: 34.4 v 32.6 prior
- (IT) Italy May Manufacturing PMI: 45.4 v 36.8e (19th month of contraction)
- (FR) France May Final PMI Manufacturing: 40.6 v 40.3e (confirms 4th straight contraction)
- (DE) Germany May Final PMI Manufacturing: 36.6 v 36.8e (confirms 17th straight contraction)
- (EU) Euro Zone May Final PMI Manufacturing: 39.4 v 39.5e (confirms 16th straight month of contraction)
- (GR) Greece May Manufacturing PMI: 41.1 v 29.5 prior (3rd straight contraction)
- UK) May Final PMI Manufacturing 40.7v 40.8e (confirms 3rd straight contraction)
- (HK) Hong Kong Apr Retail Sales Value Y/Y: -36.1% v -37.0%e; Retail Sales Volume Y/Y: -37.5% v -38.0%e
- (ZA) South Africa May Manufacturing PMI: 50.2 v 46.5e (1st expansion in 13 months)
Fixed Income Issuance
- None seen
Looking Ahead
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.5-2.5B in 6-month bills
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (PT) Portugal Apr Industrial Production M/M: No est v -8.3% prior; Y/Y: No est v -7.2% prior – 06:00 (IL) Israel to sell Bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (CZ) Czech Apr Budget Balance (CZK): B v –93.8B prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (ES) Spain Debt Agency (Tesoro) announcement of size on upcoming 2023, 2025, 2030 and 2035 bond issuance
- (ZA) South Africa May Naamsa Vehicle Sales Y/Y: -86.3%e v -98.4% prior
- 08:30 (CA) Canada Apr MLI Leading Indicator M/M: % v -1.7% prior
- 08:30 (CL) Chile Apr Economic Activity Index (Monthly GDP) M/M: -9.0%e v -5.7% prior; Y/Y: -11.0%e v -3.5% prior
- Economic Activity (ex-mining) Y/Y: No est v -4.0% prior
- 09:00 (BR) Brazil May PMI Manufacturing: No est v 36.0 prior
- 09:30 (CA) Canada May Manufacturing PMI: No est v 33.0 prior
- 09:45 (US) May Final Markit PMI Manufacturing 40.0e v 39.8 prelim
- 09:45 (EU) ECB weekly QE bond buying update
- 10:00 (US) Apr Construction Spending M/M: -6.0%e v +0.9% prior
- 10:00 (US) May ISM Manufacturing: 43.7e v 41.5 prior; Prices paid: 40.0e v 35.3 prior
- 10:00 (MX) Mexico Apr Total Remittances: $2.6Be v $4.0B prior
- 10:00 (MX) Mexico Central Bank Economist Survey
- 10:30 (MX) Mexico May PMI Manufacturing: No est v 35.0 prior
- 11:00 (CO) Colombia Apr PMI Manufacturing: No est v 27.6 prior
- 11:00 (CO) Colombia Mar Exports: $2.0Be v $2.4B prior
- 11:30 (US) Treasury to sell 13-week and 26-week bills
- 12:00 (IT) Italy May New Car Registration Y/Y: No est v -97.6% prior
- 13:00 (MX) Mexico Apr IMEF Manufacturing Index: 41.1ev 40.5 prior; Non-Manufacturing Index: 36.9e v 35.5 prior
- 14:00 (BR) Brazil May Trade Balance: $4.6Be v $6.7B prior; Total Exports: $18.3Bev $18.3B prior; Total Imports: $14.0Be v $11.6B prior
- 14:00 (CO) Colombia Central Bank May Minutes
- (IT) Italy budget balance No est v -€17.9B
- 16:00 (US) Weekly Crop Progress Report
- 18:45 (NZ) New Zealand Apr Building Permits M/M: No est v -21.3% prior
- 18:45 (NZ) New Zealand Q1 Terms of Trade Index Q/Q: 1.5%e v 2.6% prior
- 19:00 (KR) South Korea Q1 Final GDP Q/Q: -1.4%e -1.4% prelim; Y/Y: 1.3%e 1.3% prelim
- 19:00 (KR) South Korea May CPI M/M: -0.2%e v -0.6% prior; Y/Y: -0.2%e v +0.1% prior
- CPI Core Y/Y: 0.3%e v 0.3% prior
- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 92.7 prior
- 19:50 (JP) Japan End-May Monetary Base: No est v ¥529.2T prior
- 20:01 (IE) Ireland May Manufacturing PMI: No est v 36.0 prior
- 20:30 (ID) Indonesia May PMI Manufacturing: No est v 27.5 prior
- 21:30 (AU) Australia Q1 Current Account (A$): 6.3Be v 1.0B prior; Net Exports of GDP: 0.3%e v 0.1% prior
- 23:30 (HK) Hong Kong to sell 3-month and 6-month bills
- 23:35 (JP) Japan to sell 10-year JGB bonds
