China swings anti-trust hammer at Nvidia, knocks stock down 2%

EU mid-market update: China swings anti-trust hammer at Nvidia, knocks stock down 2%; Fitch sovereign downgrade on France fails to impact French assets.

Notes/observations

- French assets unfazed by Fitch downgrade that cut its rating to A+ from AA-, citing high debt, weak fiscal record and 2025 deficit. Also noted political deadlock and ouster of PM Bayrou add to risks. Analysts warn of possible further downgrades. French CAC-40 is outperforming Europe up >1.0%, while OAT yields little changed.

- China weekend data for Aug disappointed for retail sales, industrial production and fixed urban assets. Goldman sees need for targeted easing amid weak demand, property slump and weather disruptions.

- Several major central bank decisions this week, Fed is expected to cut 25bps on Weds, BOE expected to hold but with slowdown of QT to £60B and BOJ expected to hold with next hike planned for Jan 2026.

- China declared that a preliminary anti-trust probe into Nvidia found that the company violated it laws, plans to continue probe. Nvidia dropped 2-3% and US futures saw volatility. The probe can lead to fines of up to 10% of Nvidia’s $1-5B China revenue. Final decision within 210 days.

- Asia closed mixed with Nikkei225 outperforming +0.9%. EU indices -0.1% to +1.0%. US futures -0.1% to +0.2%. Gold +0.0%, DXY 0.0%; Commodity: Brent +0.3%, WTI +0.4%; Crypto: BTC -1.0%, ETH -3.2%.

Asia

- China Aug New Home Prices M/M: -0.30% v -0.31% prior; Used Home Prices M/M: -0.58% v -0.55% prior.

- China Aug Retail Sales Y/Y: 3.4% v 3.7% prior.

- China Aug Industrial Production Y/Y: 5.2% v 5.6%e.

- China Aug YTD Fixed Urban Assets Y/Y: 0.5% v 1.5%e.

- China Aug Surveyed Jobless Rate: 5.3% v 5.2%e.

- China Aug YTD Property Investment Y/Y: -12.9% v -12.5%e.

- New Zealand Aug Performance Services Index: 47.5 v 48.9 prior.

Global conflict/tensions

President Trump reiterated stance that was willing to impose sanctions on Russia and Europe had to act in a way that is commensurate with the US.

- G7 Finance Ministers statement: Discussed a variety of economic measures to increase pressure on Russia, which could include more trade measures and sanctions on nations that are enabling Russia's war effort.

Europe

- Fitch cut France sovereign rating one notch to A+ from AA-; Outlook revised to Stable from Negative.

- Fitch raised Portugal sovereign rating one notch to A from A-; Outlook revised to Stable from Positive.

- S&P raised Spain sovereign rating one notch to A+ from A; Outlook Stable.

- France PM Lecornu: Dropping a proposal by his predecessor to cut back two public holidays as part of budget measures.

- Italy Fin Min Giorgetti reiterated view of 2025 GDP growth at 0.6% and 2026 GDP growth of 0.8% despite tariffs uncertainties.

- UK Rightmove House Prices M/M: +0.4% v -1.3% prior; Y/Y: -0.1% v +0.3% prior.

- North Rhine-Westphalia local elections in Germany show Chancellor Merz's CDU party set to win, but AfD making strong gains.

Americas

Pres Trump stated over the weekend that China was 'paying a lot' in tariffs; Talks with China in Spain were going well . Expected a 'big cut' from the Fed (timing not specified). The current Fed Chair was incompetent and was hurting the housing market. Had have three people (to lead the Fed) I like a lot.

- Fraudulent Texas unemployment filings drove the spike Thursday's weekly jobless claims, which hit a 4-year high.

- Congressional Budget Office (CB)) cut 2025 GDP growth forecast from 1.9% to 1.4% citing tariff impact and lower net immigration.

Trade

- US-China complete first day of ongoing trade talks in Madrid on Sunday, to be continued Monday.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.4% at 557, FTSE -0.1% at 9273, DAX +0.4% at 23788, CAC-40 +1.0% at 7903, IBEX-35 +0.5% at 15377, FTSE MIB +0.8% at 4194, SMI -0.1% at 12183, S&P 500 Futures +0.1%].

Market focal points/key themes: European indices opened generally higher; cautious optimism ahead of major risk events later in the week; outperforming sectors include consumer discretionary and energy; among underperforming sectors are telecom and real estate; Sainsbury ends discussion with JD.com to sell Argos; Sword acquires Bubble; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: Puma [PUM.DE] +1.0% (US investor proposes idea of Adidas merger).

- Consumer staples: Sainsbury [SBRY.UK] +5.0% (terminated talks about Argos with JD.com).

- Financials: S4 Capital [SSFOR.UK] -8.0% (H1 results).

- Healthcare: - AstraZeneca [AZN.UK] -2.5% (analyst downgrade).

- Industrials: Rheinmetall [RHM.DE] +2.0-2.5% (acquires NVL).

Speakers

- ECB's Kazimir (acting Slovakia member) noted that rates were in a good place. No need to act on tiny deviations from target but monetary policy must remain nimble.

- EU Council Pres Costa noted that agreed on need for common funding for defense capabilities.

- Treasury Sec Bessent noted that made good progress with China on technical details. Close to resolving Tiktok issue.

- China Pres Xi stated that would promote ‘orderly exit’ of outdated capacities.

- China SAMR Preliminary probe into Nvidia noted that the company violated anti-trust laws.

- China Commerce Ministry (MOFCOM) opposed US restrictive measures related to Russian oil and pledged necessary measures to defend interest.

Currencies/fixed income

- FX trading was on the dull side ahead of some major rate decisions this week that includes Fed, BOE and BOJ.

- EUR/USD drifted higher despite Fitch sovereign downgrade of France rating. ECB speak continued to highlight that current level of rates were in a good place.

- GBP/USD near 1.36 with BOE likely to keep policy steady at upcoming meeting and reduce QT.

- USD/JPY at 147.40 with BOJ expected to keep policy steady at its Friday’s meeting.

Economic data

- (FI) Finland Aug CPI M/M: -0.2% v 0.2% prior; Y/Y: 0.5% v 0.2% prior.

- (DE) Germany Aug Wholesale Price Index M/M: -0.6% v -0.1% prior; Y/Y: 0.7% v 0.5% prior.

- (NO) Norway Aug Trade Balance (NOK): 60.1 v 54.6B prior.

- (DK) Denmark Aug PPI M/M: -0.9% v +1.5% prior; Y/Y: 3.0% v 9.8% prior.

- (IN) India Aug Wholesale Prices (WPI) Y/Y: 0.5% v 0.3%e.

- (CH) Swiss Aug Producer & Import Prices M/M: -0.6% v -0.2% prior; Y/Y: -1.8% v -0.9% prior.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 468.5B v 471.9B prior; Domestic Sight Deposits: 441.7B v 442.0B prior.

- (IT) Italy July Total Trade Balance: €7.9B v €5.4B prior; EU Trade Balance: +€1.9B v -€0.1B prior.

- (TR) Turkey Aug Central Gov't Budget Balance (TRY): +96.7B v -23.9B prior.

- (PL) Poland Aug Final CPI M/M: 0.0% v -0.1% prelim; Y/Y: 2.9% v 2.8% prelim.

- (ZA) South Africa Q3 BER Inflation Expectations: 3.8% v 3.9% prior.

- (IT) Italy July General Government Debt: €3.056T v €3.071T prior.

- (HK) Hong Kong Q2 Industrial Production Y/Y: 0.9% v 0.7% prior.

- (HK) Hong Kong Q2 PPI Y/Y: 4.0% v 4.8% prior.

- (EU) Euro Zone July Trade Balance (seasonally adj): €5.3B v €12.0Be; Trade Balance NSA (unadj): €12.4B v €7.0B prior.

- (IS) Iceland Aug International Reserves (ISK): 917B v 907B prior.

- (CA) Canada Aug Existing Home Sales M/M: 1.1% v 3.8% prior.

Fixed income issuance

- (MX) Mexico to sell EUR-denominated 4-year; 8-year and 12-year notes.

- (NO) Norway sells NOK2.0B vs. NOK2.0B indicated in 12-month Bills; Avg Yield: 3.95% v 4.18% prior; bid-to-cover: 1.53x v 1.38x prior.

Looking ahead

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

- 05:30 (DE) Germany to sell €3.0B in 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel Aug Unemployment Rate: No est v 3.0% prior.

- 06:00 (IE) Ireland July Trade Balance: No est v €5.4B prior.

- 06:00 (IL) Israel to sell bonds.

- 06:30 (TR) Turkey to sell Bonds (2 tranches).

- 07:00 (RO) Romania to sell combined RON800M in 2029 and 2033 bonds.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:30 (DE) ECB’s Schnabel (Germany).

- 08:00 (BR) Brazil July Economic Activity Index (Monthly GDP) M/M: -0.3%e v -0.1% prior; Y/Y: 1.4%e v 1.4% prior.

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance (if any).

- 08:30 (US) Sept Empire Manufacturing: 5.0e v 11.9 prior.

- 08:30 (CA) Canada July Manufacturing Sales M/M: 1.8%e v 0.3% prior; Wholesale Sales (ex-petroleum) M/M: 1.3%e v 0.7% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.1-7.7B in 3-month, 6-month and 12-month bills.

- 11:00 (PE) Peru Aug Unemployment Rate: 6.2%e v 6.1% prior.

- 11:00 (PE) Peru July Economic Activity Index (Monthly GDP) Y/Y: 3.0%e v 4.5% prior.

- 11:30 (IL) Israel Aug CPI M/M: 0.6%e v 0.4% prior; Y/Y: 2.8%e v 3.1% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 14:30 (EU) ECB chief Lagarde.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea Aug Export Price Index M/M: No est v 1.0% prior; Y/Y: No est v -4.3% prior.

- 17:00 (KR) South Korea Aug Import Price Index M/M: No est v 0.9% prior; Y/Y: No est v -5.9% prior.

- 18:45 (NZ) New Zealand Aug Food Prices M/M: No est v 0.7% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 89.3 prior.

- 19:50 (AU) RBA's Hunter holds fireside chat.

- 23:00 (KR) South Korea July M2 Money Supply M/M: No est v 0.6% prior; “L” Money Supply M/M: No est v 0.5% prior.

- 23:00 (NZ) New Zealand Aug Non-Resident Bond Holdings: No est v 62.8% prior.