European markets subdued as Indian stocks surge on business tax cut

Notes/Observations

- India Sensex surges 6% on corporate tax cut for manufacturing companies

- Markets trade mixed, while gold and oil trade higher

 

Asia:

- There has been renewed speculation about possible interim trade deal between the US and China, low-level trade talks due to conclude later today

- India proposes corporate tax rates for domestic manufacturing companies: effective tax rate for local companies to be cut to ~25.2% [from 30%]

- Japan CPI comes in line with forecasts but marks lowest level in two years

- Australian markets rise on expectations that the RBA to cut rates earlier then previously forecast

- India-US reportedly working toward trade deal before Modi-Trump meeting

 

Europe/Mideast:

- Swedish Riksbank Dep Gov Jansson sees inflation looking low in the short term, while reiterating he was doubtful of the rate path

 

Brexit:

- Cable maintains gains after yesterday’s comments from EU’s Juncker demonstrating willingness to get a deal done.

- Ireland Foreign Minister Coveney reiterated wanting a Brexit deal but that there is still a wide gap between the EU and UK in talks

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.13% at 392.32, FTSE -0.20% at 7,341.95, DAX -0.22% at 12,430.28, CAC-40 -0.05% at 5,656.29, IBEX-35 +0.19% at 9,153.25, FTSE MIB +0.24% at 22,181.50, SMI +0.07% at 10,071.50, S&P 500 Futures +0.09%]

 

Market Focal Points/Key Themes:

Equities

European Indices trade higher today following a higher session in Asia and slightly higher US Index futures amid India proposed corporate tax cuts.
On M&A front, Danish lender Sydbank rises sharply in Copenhagen on press speculation regarding potential merger with Spar Nord Bank. StatPro Group in the UK announced to be acquired by Confluence and trade up 52%.
On the earnings front shares of Investec fell 6% on LSE following profit warning in its trading update, while Rolls Royce also trade lower on update regarding further Trent 1000 delays. Thomas Cook confirms recapitalization plans in statement and fell sharply again. Shares of Keller Group also trade lower following trading update and CEO succession.
Elsewhere, healthcare firm Lundbeck rises almost 2% after study results with Japan’s Takeda.
Looking ahead no notable earners expected.

- Consumer discretionary: Thomas Cook [TCG.UK] -22% (confirms recapitalization)

- Financials: Investec [INVP.UK] -6% (trading update), StatPro Group [SOG.UK] +52% (to be acquired), Sydbank [SYDB.DK] +10% (potential merger)

- Healthcare: Lundbeck [LUN.DK] +2% (study update)

- Industrials: Rolls Royce [RR.UK] -3% (update on Trent 1000), Signify [LIGHT.NL] -7% (stake)

- Technology: Keller Group [KLR.UK] -6% (trading update; CEO to step down)

 

Speakers

(SE) Sweden Central Bank (Riksbank) Dep Gov Jansson (dissenter): seeing risks from Brexit, trade dispute

(IE) Ireland Foreign Min Coveney: reiterates Ireland and EU want to get a Brexit deal, but it is still a wide gap between two sides

(KR) North Korea Chief Negotiator: welcomes US President Trump's remarks that he would seek new approach

(PH) Philippines Economic Chief Pernia: Q3 GDP growth may hit 6-7% y/y

(IN) India PM Modi: corporate tax cut to give stimulus to make in India

(IN) India Central Bank (RBI) Gov Das: can not go down on interest rates as low like in advanced economies; No specific view on real interest rate in economy

 

Currencies/ Fixed Income

USD index: The USD index sold off yesterday as China and the US entered further meetings on a trade deal. The index broke the weekly low of 98.20 as it approaches the 98.00 handle. Volatility could pick up towards the close as traders put on or take off positions before the weekend in wake of any comments out of either side.

EUR/USD: The Euro traded sideway over the yesterday and so far today as the market continues to wait for clarity for the UK and EU over Brexit.

GBP/USD: Cable maintains gains seen yester after Juncker made comments that they are prepared to get rid of the Irish Backstop as long as their objectives are met. This sent the cable trading above 1.25 handle and breaking the 1.2525 level.

 

Economic Data

(FI) Finland July Current Account: €0.1B v €0.8B prior

(JP) Japan Aug Nationwide Dept Store Sales: 2.3% v -2.9% prior; Tokyo Dept Stores Sales: 4.7% v -2.7% prior

(DK) Denmark Sept Consumer Confidence: 4.3 v 6.3 prior

(NL) Netherlands Aug House Price Index MoM: 0.1% v 1.1% prior; Y/Y: 5.7% v 7.0% prior

(DE) Germany Aug PPI M/M: -0.5% v -0.2%e; Y/Y: 0.3% v 0.6%e

(HU) Hungary Q2 Current Account: -€0.1B v +€0.1B

(FR) France Q2 Final Wages Q/Q: 0.5% v 0.5%e

(TR) Turkey Sept Consumer Confidence: 55.8 v 58.3 prior

(MY) Malaysia end-Sept Foreign Reserves: $103.5B v $103.5B prior

(JP) Japan Aug Convenience Store Sales Y/Y: 0.8% v -2.5% prior

(TW) Taiwan Aug Export Orders Y/Y: -8.3% v -2.6%e

(PL) Poland Aug Retail Sales M/M: -0.4% v -0.1%e; Y/Y: 6.0% v 6.5%e

(RU) Russia Narrow Money Supply w/e Sept 13th (RUB): 10.66T v 10.56T prior

(GR) Greece July Current Account: €1.3B v €0.9B prior

(HK) Hong Kong Aug CPI: Y/Y: 3.5% v 3.1%e

 

Looking Ahead

06:00 (IE) Ireland Aug PPI M/M: No est v -0.7% prior; Y/Y: No est v -5.9% prior

07:00 (MX) Mexico Q2 Aggregate Supply and Demand: -1.0%e v +1.4% prior

07:30 (IN) India Weekly Forex Reserve w/e Sept 13th: No est v $429.6B prior

08:00 (UK) Daily Baltic Dry Bulk Index

08:30 (CA) Canada July Retail Sales M/M: 0.6%e v 0.0% prior; Retail Sales (ex-auto) M/M: 0.3%e v 0.9% prior

09:00 (BE) Belgium Sept Consumer Confidence Index: No est v -9 prior

10:00 (EU) Euro Zone Sept Advance Consumer Confidence: -7.0e v -7.1 prior

12:00 (US) Fed Reports Q2 Financial Accounts: Household Change in Net Worth: No est v $4.691T prior