European Indices Plunge On China Woes

Notes/Observations

• Risk aversion globally as China worries persist; Evergrande falls to 11 year lows.
• Tensions grow between France and Australia following cancelled submarine deal.

Asia

• China, Japan, South Korea and Taiwan closed for holiday.
• (HK) Macau official: want to hear gaming industry views on diversification; Stay open to opinions on license terms, local ownership.
• (IR) IAEA chief Grossi: North Korea’s nuclear program is going full steam ahead.

Europe

• (IT) Italy PM Draghi govt reportedly targets growth >10% for 2-year period 2021-2022.
• (UK) UK govt reportedly considers offering state-backed loans to energy firms amid gas prices surge.
• (DE) German weak-ahead baseload power price at €144.0/MWh +8.7% d/d.
• (UK) UK meat industry said to have warned about carbon dioxide (CO2) shortage; some meat firms have 5 days of available CO2 supply – press.
• EU Parliament Trade Committee Chair notes it will be more complicated to conclude EU-Australia trade agreement on the back drop of Australia’s submarine deal with the US-UK angering France.

Americas

• (US) Reportedly Senator Manchin (D-WV) considers the Congress should take a strategic pause until 2022 before voting on Pres Biden’s $3.5T social-spending package.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -1.67% at 454.14, FTSE -1.27% at 6,875.05, DAX -1.96% at 15,186.95, CAC-40 -1.91% at 6,444.91, IBEX-35 -1.84% at 8,599.50, FTSE MIB -2.07% at 25,178.00, SMI -1.40% at 11,768.70, S&P 500 Futures -1.08%].
• Market Focal Points/Key Themes: European indices open down across the board and move further into the red as the session progressed; risk sentiment impacted by concerns over housing market in China; less negative sectors include consumer discretionary and health care; sectors leading to the downside include materials and financials; reportedly Sainsbury’s looking to fend off takeover; no major earnings expected during the upcoming US session.

Equities

• Consumer discretionary: Lufthansa [LHA.DE] +2% (capital raise).
• Financials: Prudential [PRU.UK] -7% (capital raise in HK).
• Healthcare: AstraZeneca [AZN.UK] +3% (trial data), Santhera Pharmaceuticals [SANN.CH] -18% (earnings; funding).
• Technology: Zoo Digital [ZOO.UK] +3% (trading update).
• Utilities: SSE [SSE.UK] -1% (refutes media rumors on breakup of company).

Speakers

• (UK) Business Sec Sharma: UK govt is currently confident there is no risk to the gas supply to consumers – weekend press interview.
• (EU) EU Economic Commissioner Gentiloni (Italy): Not in Ireland to pressure on tax rate.
• (UK) Business Sec Sharma: UK govt is currently confident there is no risk to the gas supply to consumers.
• (EU) EU Parliament Trade Committee Chair: It will be much more complicated now to conclude EU-Australia trade agreement.
• (EU) EU Parliament Trade Committee Chair: It will be much more complicated now to conclude EU-Australia trade agreement.
• (CZ) Czech Central Bank Dep Gov Nidetzky: 100bps Czech hikes are possible by end-2021.

Currencies/Fixed Income

• Overall dollar strength puts most pairs under pressure with demand for safe havens. EUR/USD just above the 1700 handle, just ~30pips over the year’s low.
• Turkish Lira (TRY) falls past 8.72 per US dollar (USD) level, lowest since July 2021.

Economic data

• (DE) Germany Aug PPI M/M: 1.5% v 0.8%e; Y/Y: 12.0% v 11.1%e.
• (HU) Hungary Q2 Current Account: -€0.8B v -€0.5Be.
• (PL) Poland Aug PPI M/M: 0.6% v 0.7%e; Y/Y: 9.5% v 9.3%e.
• (PL) Poland Aug Sold Industrial Output M/M: -2.5% v -1.1%e; Y/Y: 13.2% v 14.6%e.
• (CH) Swiss weekly Total Sight Deposits (CHF): 714.7B v 714.8B prior.
• (ES) Spain July Trade Balance: -€1.6B v -€1.0B prior.
• (HK) Hong Kong Aug CPI Composite Y/Y: 1.6% v 1.6%e.

Fixed income Issuance

• (PH) Philippines sells total PHP15.0B vs. PHP15.0B indicated in 3-month, 6-month and 12-month bills.
• (EU) European Investment Bank (EIB) to sell PLN-denominated 3.0% May 2024 bonds; guidance seen +20bps to Polish Treasuries.

Looking Ahead

• 06:00 (IE) Ireland July Trade Balance: No est v €4.7B prior.
• 07:00 (MX) Mexico Q2 Aggregate Supply and Demand: No est v -2.9% prior.
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 07:30 (CL) Chile Central Bank Traders Survey.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (CA) Canada Aug Teranet/House Price Index M/M: No est v 2.0% prior; Y/Y: No est v 17.8% prior; HPI Index: No est v 281.67 prior.
• 08:30 (UR) Ukraine Q2 Final GDP Q/Q: No est v -0.8% prelim; Y/Y: No est v 5.4% prelim.
• 10:00 (US) Sept NAHB Housing Market Index: 74e v 75 prior.
• 16:00 (US) Weekly Crop Progress Report.
• 17:00 (NZ) New Zealand Q3 Consumer Confidence: No est v 107.1 prior.
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 103.1 prior.
• 21:30 (AU) RBA Sept Minutes.
• 23:00 (NZ) New Zealand Aug Credit Card Spending M/M: No est v -0.6% prior; Y/Y: No est v 6.9% prior.

Speakers/events

• 07:00 (SE) Sweden Parliament debates budget proposal.
• 21:30 (AU) RBA Sept Minutes.
• (CA) Canada Federal Election.

Fixed Income

• 01:00 (KR) Bank of Korea (BOK) sell KRW in 3-month Monetary Stabilization Bonds (MSB Bonds; Avg Yield % v % prior.
• 01:00 (PH) Philippines to sell combined PHP in 3-month, 6-month and 12-month bills.
• 05:00 (EU) Daily Euribor Fixing.
• 05:00 (SK) Slovakia Debt Agency (Ardal) to sell 2030, 2036 and 2047 Bonds.
• 05:30 ((DE) Germany to sell 6-month and 12-month Bubills.
• 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 (IL) Israel to sell bonds.
• 06:00 (RO) Romania to sell RON300M in 4.15% Jan 2028 Bonds.
• 07:00 (TR) Turkey to sell Bonds (2 tranches).
• 06:45 (US) Daily Libor Fixing.
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
• 09:00 (FR) France Debt Agency (AFT) to sell €B in 3-month, 6-month and 12-month bills.
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
• 23:00 (TH) Thailand Central Bank to sell THB55B in 3-month bills.
• 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills.
• 22:30 (JP) Japan to sell 6-Month Bills.