All eyes on Putin/Trump showdown

EU mid-market update: All eyes on Putin/Trump showdown; China warns foreign companies against stockpiling rare earths and magnets.

Notes/observations

- Europe is higher as bullish sentiment remains resilient. FTSE100 underperforms for second day in a row. USE futures were higher overnight but pared some of the gains in recent hour. Fed rate cut bets remain high despite hotter PPI.

- Several European markets are closed for Assumption Day, includes Cyprus, Greece, Italy, and Polan.

- All eyes are on Putin-Trump meeting in Alaska later, expected at 15:30 ET. Reminder than initially they will have 1 on 1 meeting, then followed by press conf in which reporters can ask both Trump and Putin questions.

- Putin’s Alaska summit with Trump will be his first one-on-one meeting with a US president on American soil since 2007, a symbolic re-entry that lets him project parity at home while ceding host advantage to Washington. Behind the optics, Moscow is pursuing layered demands (from Ukrainian territorial withdrawals, Donbas water supply, land corridor to Crimea to sanctions relief, NATO expansion, Arctic security and possible US investment) with the dropped FX-sale rule and potential “air-truce” signalling a bid to secure both an economic soft landing and time to improve its negotiating position.

- Complete peace deal on Ukraine seems impossible based on telegraphed expectations from officials, but analysts see business agreements as possible, potentially around energy/oil or FX.

- Tropical Storm Erin expected to become a large and formidable major hurricane later today; Also 50% chance of cyclone formation for another disturbance located over the western Gulf, heavy rainfall is possible along portions of northeastern Mexico and southern Texas over the next few days.

- Asia closed mixed with Hang Seng underperforming -1.0%. EU indices -0.1% to +1.2%. US futures -0.2% to +0.7%. Gold +0.2%, DXY -0.3%; Commodity: Brent -0.9%, WTI -1.0%; Crypto: BTC -2.2%, ETH -2.3%.

Asia

- Japan Q2 Preliminary GDP Q/Q: 0.3% v 0.1%e; GDP Annualized Q/Q: 1.0% v 0.4%e; fuels rate hike bets.

- China July New Home Prices M/M: No est v -0.3% prior; Used Home Prices M/M: No est v -0.6% prior.

- China July Retail Sales Y/Y: 3.7% v 4.6%e (slowest since Dec).

- China July Industrial Production Y/Y: 5.7% v 6.0%e (slowest pace since Nov 2024).

- China July YTD Fixed Urban Assets Y/Y: 1.6% v 2.7%e.

- China July Surveyed Jobless Rate: 5.2% v 5.1%e.

- China July YTD Property Investment Y/Y: -12.0% v -11.4%e.

- New Zealand July Manufacturing PMI: 52.8 v 48.8 prior (1st expansion in 3 months).

- New Zealand July Food Prices M/M: 0.7% v 1.2% prior.

- Japan Chief Trade Negotiator Akazawa: US Treasury Sec Bessent was not asking for BOJ to hike rate.

Trade

- White House trade adviser Navarro: The pharma tariffs will likely be under section 232.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.21% at 555.04, FTSE -0.12% at 9,166.01, DAX +0.34% at 24,450.73, CAC-40 +0.74% at 7,928.44, IBEX-35 +0.42% at 15,249.50, FTSE MIB +0.11% at 42,653.97, SMI +0.65% at 12,075.26, S&P 500 Futures +0.09%].

Market focal points/key themes: European indices open higher across the board and remained upbeat through the early part of the session; improved risk appetite attributed to positive signs from corporate earnings; Italy, Cyprus, Poland and Greece closed for holiday; among sectors leading to the upside are materials and industrials; lagging sectors include consumer discretionary and technology; focus on Trump-Putin meeting later in the day; no major earnings expected in the upcoming Americas session.

Equities

- Consumer discretionary: LVMH [MC.FR] +0.5% (China retail sales), Pandora [PNDORA.DK] -13.5% (earnings; July trends) - Consumer staples: Schouw [SCHO.DK] -7.5% (earnings).

- Industrials: ThyssenKrupp [TKA.DE] -3.5% (CEO does not rule out state stake in warship unit TKMS, but this is not planned at the moment), Rolls-Royce [RR.UK] -2.0% (Russia and Iran reportedly in talks to build small nuclear power plants), NKT [NKT.DK] +7.5% (earnings; raised outlook; CFO to resign), Maersk [MAERSKB.DK] -1.5% (analyst downgrade).

- Technology: ASML [ASML.NL] -1.5% (Applied Materials earnings).

Speakers

- Czech Central Bank (CNB) July Minutes noted that rate setters called for flexible policy stance.

- Japan Chief Trade Negotiator Akazawa noted that companies were already impacted by US tariffs; no positive impact in short term.

- Japan lawmaker Azumi noted that several parties wanted a Q&A session with PM Ishiba. Want govt to release data on tariff impact in mid-Sept.

- China Commerce Ministry (MOFCOM) stated it had filed a WTO lawsuit on Canada over steel import restrictions.

- Russia and Iran reportedly in talks to build small nuclear power plants

Currencies/fixed income

- USD was on softer footing ahead of key US data and Trump-Putim meeting.

- EUR/USD edging back towards the 1.17 area as Fed rate cut expectations remain high.

- USD/JPY fell to test the 147 level as stronger Japanese GDP data kept the door open for more BOJ rate hikes.

- 10-year German Bund yield at 2.73% and 10-year Gilt yield at 4.64%. 10-year Treasury yield: 4.28%.

Economic data

- (DK) Denmark July PPI M/M: 1.5% v -0.2% prior; Y/Y: 9.8% v 8.4% prior.

- (NO) Norway Q2 Average Monthly Earnings Y/Y: 5.3% v 5.2% prior.

- (NO) Norway July Trade Balance (NOK): 54.0 v 46.2B prior.

- (CH) Swiss Q2 Preliminary GDP (Sports Adj) Q/Q: +0.1% v -0.1%e.

- (TR) Turkey Central Bank (TCMB) July Inflation Expectation Survey: Expected Inflation Next 12 Months: 22.8% v 23.4% prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 86.4K v 81.9K tons prior.

- (TH) Thailand May Foreign Reserves w/e Aug 8th: $265.6B v $263.9B prior.

- (RU) Russia Narrow Money Supply w/e Aug 8th (RUB): 18.64T v 18.48T prior.

- (TR) Turkey July Central Gov't Budget Balance (TRY): -23.9B v -330.2B prior.

- (HK) Hong Kong Q2 Final GDP Q/Q: 0.4%e v 0.4% advance; Y/Y: 3.1%e v 3.1% advance.

- TW) Taiwan Q2 Preliminary GDP Y/Y: 8.0%e v 8.0% prior.

- (CA) Canada July Existing Home Sales M/M: 3.8% v 2.8% prior.

Fixed income issuance

- None seen.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2038, 2046 and 2058 Bonds.

- 06:00 (IE) Ireland Jun Trade Balance: No est v €12.3B prior.

- 06:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£1.0B, £2.0B and £3.0B respectively).

- 07:00 (IL) Israel July CPI M/M: 0.4%e v 0.3% prior; Y/Y: 3.1%e v 3.3% prior.

- 07:30 (IN) India Forex Reserve w/e Aug 8th: No est v $B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Aug Empire Manufacturing: 0.0e v +5.5 prior- 08:30 (US) July Advance Retail Sales M/M: 0.6%e v 0.6% prior; Retail Sales (ex-auto) M/M: 0.3%e v 0.5% prior; Retail Sales (ex-auto/gas) M/M: 0.3%e v 0.6% prior; Retail Sales (control group) M/M: 0.4%e v 0.5% prior.

- 08:30 (US) July Import Price Index M/M: 0.1%e v 0.1% prior; Y/Y: -0.3%e v -0.2% prior; Import Price Index (ex-petroleum) M/M: 0.1%e v 0.0% prior.

- 08:30 (US) July Export Price Index M/M: 0.0%e v 0.5% prior; Y/Y: No est v 2.8% prior.

- 08:30 (CA) Canada Jun Manufacturing Sales M/M: +0.4%e v -0.9% prior; Wholesale Sales (ex-petroleum) M/M: 0.7%e v -2.3% prior.

- 09:15 (US) July Industrial Production M/M: 0.0%e v 0.3% prior; Manufacturing Production M/M: 0.0%e v 0.1% prior; Capacity Utilization: 77.5%e v 77.6% prior.

- 10:00 (US) Jun Business Inventories: 0.,2%e v 0.0% prior.

- 10:00 (US) Aug Preliminary University of Michigan Confidence: 62.0e v 61.7 prior.

- 11:00 (PE) Peru July Unemployment Rate: 6.3%e v 6.4% prior.

- 11:00 (PE) Peru Jun Economic Activity Index (Monthly GDP) Y/Y: 4.8%e v 2.7% prior.

- 12:00 (CO) Colombia Q2 GDP Q/Q: 1.0%e v 0.8% prior; Y/Y: 2.7%e v 2.7% prior.

- 12:00 (CO) Colombia Jun Economic Activity Index (Monthly GDP) Y/Y: 4.2%e v 2.8% prior.

- 12:00 (EU) Potential sovereign ratings after European close (Moody’s on Ireland).

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 15:00 (US) Trump-Putin meeting.

- 16:00 (US) Jun Total Net TIC Flows: No est v $311.1B prior; Net Long-Term TIC Flows: No est v $259.4B prior.