TradeTheNews.com Staff
TradeTheNews.com
Notes/observations
- European Banking sector underperforms following Italy PM Meloni Cabinet approval of a tax on the extra profits of banks. Also hampering the mood was the earlier Moody's downgrade of several regional US banks overnight. Downgrade was on basis of higher funding costs, risks related to commercial property loans and potential regulatory capital weaknesses.
- ECB consumer survey saw a pullback in inflation expectations.
- Hang Seng led Asia to the downside following weak China July trade balance, saw biggest exports YoY drop since Feb 2020. FT noted Europe had doubled Chinese imports of goods, including phones and computers between 2018-2022, despite security concerns..
- EU Earnings Recap: Glencore H1 bottom line disappointed; Bayer Q2 saw sharp decline in crop science business due to glyphosate volumes and prices, weak guidance; Abrdn H1 adj op pft and pretax missed, citing higher costs; Fraport H1 healthy with raised FY23 guidance.
- Upcoming US Premarket Earnings: BR, DUK, EXPD, GOLD, J, NYT, PRGO, SEE, UA, UPS.
- Asia closed lower with Hang Seng underperforming at -1.9%. EU indices are -0.2% to -1.7%. US futures are -0.2% to -0.4%. Gold -0.1%, DXY +0.3%; Commodity: Brent -1.1%, WTI -1.1%, TTF -1.6%; Crypto: BTC +0.4%, ETH -0.1%.
Asia
- China July Trade Balance: $80.6B v $68.0Be v $70.6B prior; Exports Y/Y:-14.5% v -13.2%e v -12.4% prior; Imports Y/Y: -12.4% v -5.%e.
- Japan Jun Labor Cash Earnings Y/Y: 2.3% v 3.0%e; Real Cash Earnings Y/Y: -1.6% v -0.9%e [15th straight decline].
- Japan Jun Current Account: ¥1.508T v ¥1.500Te; Trade Balance (BoP basis): ¥0.3B v ¥0.2Be.
Taiwan
- Biden Administration signed an agreement with Taiwan on trade in 21st century.
Europe
- BOE’s Pill (chief economist) noted that he expected food price inflation to fall 10% this year in UK which would work through the UK economy; Food prices might not fall for a little while.
- Italy PM Meloni Cabinet approved tax on the extra profits of banks, the 40% windfall tax will only apply to 2023.
- UK July BRC LFL Sales Y/Y: 1.8% v 4.2% prior [slowest growth since Oct 2022].
- EU struggles to 'de-risk' trade with China as imports double.
Americas
- Moodys cut the outlook on various US banks (including Capital One, PNC Financial Services Group and Fifth Third Bancorp).
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 -0.39% at 7,541.03, FTSE -0.18% at 7,541.03, DAX -0.37% at 15,892.35, CAC-40 -0.27% at 7,300.10, IBEX-35 -0.32% at 9,328.74, FTSE MIB -1.59% at 28,093.00, SMI -0.03% at 11,104.00, S&P 500 Futures -0.29%].
Market focal points/Key themes: European indices open generally lower and failed to recover through the early part of the session; better performing sectors include utilities and technology; sectors trending lower include financials and materials; utilities sector supported and oil & gas subsector under pressure after two days of declines in Brent, which fell below $85/bbl; banking subsector under pressure following Moody’s downgrade of regional banks in the US, and Italy announcing windfall tax on banks; mining subsector dragged by disappointing results from Glencore; EC opens investigation into Adobe’s acquisition of Figma; focus on US trade balance later in the day; earnings expected during the upcoming Americas session include Barrick, UPS, Perrigo and Jacobs.
Equities
- Consumer discretionary: IWG [IWG.UK] +0.5% (H1 results), InterContinental Hotels Group [IHG.UK] +2.0% (earnings), Scout24 [G24.DE] +1.5% (Q2 results).
- Consumer staples: Sixt [SIX2.DE] +3.0% (Q2 results, beats estimates).
- Financials: Unicredit [UCG.IT] -6.5%, Intesa Sanpaolo [ISP.IT] -7.5%, Banca Monte Paschi de Siena [BMPS.IT] -7.0% (Italy windfall tax).
- Healthcare: Bayer [BAYN.DE] +0.5% (Q2 results, cuts FY23 guidance).
- Industrials: Fraport [FRA.DE] +7.0% (Q2 results, raises FY23 guidance), Wacker Neuson [WAC.DE] +3.0% (Q2 final results).
- Materials: Glencore [GLEN.UK] -3.5% (H1 results, plans additional $2.2B shareholder returns).
Speakers
- ECB Consumer Expectation Survey saw inflation over next 12 months at 3.4% vs. 3.9% prior and the 3-year outlook was at 2.3% v 2.5% prior.
- Italy govt said to plan on collecting <€3.0B from windfall tax on banks.
Currencies/fixed income - USD aided by some safe-haven flows as continued disappointing data comes out of China and fresh concerns over the banking sector. Dealers noted that weaker Chinese exports and imports figures just underscored the weak external and domestic demand in its economy. Added to risk aversion sentiment was Moodys cut of the outlook on various US banks (including Capital One, PNC Financial Services Group and Fifth Third Bancorp).
- USD was former against the JPY currency was Japan real wages fell for a 15th straight month. The data reinforced that BOJ policy would remain ultra-easy for the time being. USD/JPY at 143.06 as the NY morning approached.
- EUR/USD tested above the 1.10 level but risk aversion flows aided the greenback as the session wore on. Pair at 1.0980 by mid-session.
Economic data
- (NL) Netherlands July CPI M/M: +1.0% v -0.3% prior; Y/Y (final): 4.6% v 4.6% prelim.
- (NL) Netherlands July Final CPI EU-Harmonized M/M: 1.2% v 1.2% prelim; Y/Y: 5.3% v 5.3% prelim.
- (DE) Germany July Final CPI M/M: 0.3% v 0.3% prelim; Y/Y: 6.2% v 6.2% prelim.
- (DE) Germany July Final CPI EU-Harmonized M/M: 0.5% v 0.5% prelim; Y/Y: 6.5% v 6.5% prelim.
- (FI) Finland Jun Preliminary Trade Balance: -€0.2B v -€0.1B prior.
- (HU) Hungary July CPI M/M: 0.3% v 0.1%e; Y/Y: 17.6% v 17.7%e.
- (HU) Hungary Jun Preliminary Trade Balance: €1.5B v €1.1B prior.
- (AU) Australia July Foreign Reserves: A$91.0B v A$89.4B prior.
- (FR) France Jun Trade Balance: -€6.7B v -€7.9B prior; Current Account Balance: +€0.8B v -€0.6B prior.
- (CZ) Czech July Unemployment Rate: 3.5% v 3.6%e.
- (TW) Taiwan July Trade Balance: $8.5B v $5.7Be; Exports Y/Y: -10.4% v -20.7%e; Imports Y/Y: -20.9% v -25.3%e.
- (CZ) Czech July International Reserves: $143.0B v $141.5B prior.
- (GR) Greece July CPI Y/Y: 2.5% v 1.8% prior; CPI EU Harmonized Y/Y: 3.5% v 2.8% prior.
- (HU) Hungary July YTD Budget Balance (HUF): -T v -2.896T prior.
Fixed income issuance
- (ID) Indonesia sold total IDR9.85T vs. IDR14.0T target in bills and bond.
- (ES) Spain Debt Agency (Tesoro) sold total €4.84B vs. €4.5-5.5B indicated range in 6-month and 12-month bills.
- (UK) DMO sold £900M in 0.125% Mar 2039 inflation-linked bonds (UKTi); Real Yield: 0.986% v 0.334% 0% prior; bid-to-cover: 2.62x v 2.65x prior.
- (AT) Austria Debt Agency (AFFA) sold total €1.495B vs. €1.495B indicated in 2028 and 2033 RAGB bonds.
Looking ahead
- 05:15 (CH) Switzerland to sell 6-month Bills.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (DE) Germany to sell €4.0B in 2.4% Oct 2028 BOBL.
- 05:30 (BE) Belgium Debt Agency (BDA) to sell €2.0B in 3-month and 12-month bills.
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2037, 2044 and 2053 bonds.
- 06:00 (US) July NFIB Small Business Optimism Index: 90.5e v 91.0 prior.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
- 07:00 (BR) Brazil Central Bank (BCB) Aug Minutes.
- 08:00 (CL) Chile July CPI M/M: +0.3%e v -0.2% prior; Y/Y: 6.4%e v 7.6% prior.
- 08:00 (CL) Chile July CPI (ex-volatile items) M/M: No est v 0.0% prior; Y/Y: No est v 9.1% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:15 (US) Fed's Harker.
- 08:30 (US) Jun Trade Balance: -$65.0Be v -$69.0B prior.
- 08:30 (CA) Canada Jun Int'l Merchandise Trade (CAD): -2.8Be v -3.4B prior.
- 08:55 (US) Weekly Redbook LFL Sales data.
- 10:00 (US) Jun Final Wholesale Inventories M/M: -0.3%e v -0.3% prelim; Wholesale Trade Sales M/M: -0.1%e v -0.2% prior.
- 11:30 (US) Treasury to sell 52-Week Bills.
- 13:00 (US) Treasury to sell 3-Year Notes.
- 16:30 (US) Weekly API Oil Inventories.
- 18:45 (NZ) New Zealand July Total Card Spending M/M: No est v 1.3% prior; Retail Card Spending M/M: No est v 1.0% prior.
- 19:00 (CO) Colombia July CPI M/M: 0.3%e v 0.3% prior; Y/Y: 11.6%e v 12.1% prior.
- 19:00 (CO) Colombia July CPI Core M/M: No est v 0.5% prior; Y/Y: No est v 11.6% prior.
- 19:00 (KR) South Korea July Unemployment Rate: 2.7%e v 2.6% prior.
- 19:50 (JP) Japan July M2 Money Supply Y/Y: No est v 2.6% prior; M3 Money Supply Y/Y: No est v 2.1% prior.
- 21:00 (PH) Philippines Jun Unemployment Rate: No est v 4.3% prior.
- 21:30 (CN) China July CPI Y/Y: -0.4%e v 0.0% prior; PPI Y/Y: -4.0%e v -5.4% prior.
- 21:30 (KR) Bank of Korea (BOK) to sell KRW800B in 1-Year Monetary Stabilization Bonds (MSB).
- 23:00 (NZ) New Zealand Q3 2-Year Inflation Expectations: No est v 2.8% prior.
- 23:30 (JP) Japan to sell 6-Month Bills.
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