European Indices rebound despite continued trade tensions

Notes/Observations

- German inflation confirmed as slowing in June, while France was revised lower

- Trump continues divisive stance at NATO

- President Trump to meet PM May amid Brexit 'turmoil'

Asia:

-Asian stocks boosted by comments from a White House Aide noting the US has held high level talks with China, open to further discussions on trade, which later has been firmly denied by China's Mofcom

- Bank of Korea kept rates on hold but with a dissenter, cuts GDP outlook

Europe:

-Comcast raises offer from SKY once again trumping raised offer from 21st Century Fox.

- PM May Office tweet “12 key principles that we will use in our EU negotiations”

- BOE Q2 Credit Conditions & Bank Liabilities Survey: Lenders expect unchanged availability of loans to businesses in next 3 months Energy -IEA maintains 2018 global demand growth forecast at 1.4Mbpd

 

Economic Data:

(NL) Netherlands May Trade Balance: €5.03B v €3.8B prior

(SG) Singapore May Retail Sales M/M: +0.1% v -0.2% prior; Y/Y: 0.1% v 0.5%e

*(DE) GERMANY JUNE FINAL CPI M/M: 0.1% V 0.1%E; Y/Y: 2.1% V 2.1%E

(DE) Germany Jun Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 2.1% v 2.1%e

*(FR) FRANCE JUNE FINAL CPI M/M: 0.0% V 0.1%E; Y/Y: 2.0% V 2.1%E

(FR) France June Final CPI EU Harmonized M/M: 0.0% v 0.1%e; Y/Y: 2.3% v 2.4%e, CPI Ex-Tobacco Index: 103.07 v 103.15e

(CN) China Jun Foreign Direct Investment (FDI) YTD y/y: 0.3% v 1.3% prior

*(SE) SWEDEN JUNE CPI M/M: 0.2% V 0.3%E; Y/Y: 2.1% V 2.1%E

(EU) EURO ZONE MAY INDUSTRIAL PRODUCTION M/M: 1.3% V 1.2%E; Y/Y: 2.4% V 2.4%E

Fixed Income Issuance:

-(IE) IRELAND DEBT AGENCY (NTMA) SELLS TOTAL €1.25B VS. €1.25B INDICATED IN 2028 AND 2045 IGB BONDS

-(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €6.5B VS. €4.5-6.5B IN 2021, 2025, 2033 AND 2038 BTP BONDS

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 +0.1% at 3,429, FTSE +0.6% at 7,636, DAX +0.4% at 12,461, CAC-40 +0.3% at 5,370; IBEX-35 +0.1% at 9,741, FTSE MIB +0.2% at 21,746, SMI +0.4% at 8,720, S&P 500 Futures +0.3%]

Market Focal Points/Key Themes: European indices opened higher across the board but later reversed to trade mixed as the session wore on; concerns over trade keep risk sentiment muted; energy sector impacted, ongoing discussions regarding Iran sanctions; consumer discretionary remains best performing sector mostly due to airlines; Sky receives better offer from Comcast, with Fox noting new offer by as yet not providing counter; Asos tumbles after missing earnings expectations; earnings expected in upcoming US session include Delta Airlines and Brunello Cucinelli

 

Equities

- Consumer discretionary: Asos ASC.UK -11.3% (results), Bang & Olufsen BO.DK +2.3% (results), DFS Furniture DFS.UK -5.3% (trading update), Dunelm Group DNLM.UK -0.2% (results), Mears MER.UK +1.9% (rejects proposal), Norwegian Air NAS.NO +7.9% (results), Sky SKY.UK +1.8% (improved offer from Comcast)

- Consumer staples: Suedzucker SZU.DE +1.3% (results)

- Financials: CNP CNP.FR +1.1%(CEO resigns)

- Industrials: BMW BMW.DE +0.8% (monthly sales, stake increase), Fraport FRA.DE +0.3% (traffic), Gerresheimer GXI.DE +8.0% (outlook), Maersk MAERSKB.DK +3.0% (analyst action)

- Healthcare: Onxeo ONXEO.FR 13.0% (study results)

- Materials: Bellzone Mining BZM.UK -25.0%(placement)

- Technology: Computacenter CCC.UK +6.3% (trading update)

 

Speakers

(CN) China Commerce Ministry (MOFCOM) US accusation on China's IP theft is 'groundless'; Impact of trade tensions to show in H2 this year

(KR) South Korea President Moon: No difference between North Korea, South Korea and US on concept of denuclearization

 

Currencies

- Yuan has its first Death Cross since 2015 devaluation

- Swedish krona pared gains after CPI data and Riksbank minutes

 

Fixed Income

- Bund Futures trade 7 ticks lower at 162.59 following softer German and French inflation data. Upside targets 163.25 followed by 163.85, while a return lower targets the 159.75 level.

- Gilt futures trade at 123.02 higher by 3 ticks ahead of the White Paper release. Support continues stands at 121.75 then 120.25, with upside resistance at 123.85 then 124.25.

- Thursday's liquidity report showed Wednesday's excess liquidity fell from €1.868T to €1.867T. Use of the marginal lending facility rose from €31M to €56M.

- Corporate issuance saw Honda as the lone issuer in the primary market

 

Looking Ahead

- 05:30 (ZA) South Africa May Mining Production M/M: No est v -2.0% prior; Y/Y: No est v -4.3% prior

- 06:00 (IE) Ireland Jun CPI M/M: No est v 0.6% prior; Y/Y: No est v 0.4% prior, CPI EU Harmonized M/M: No est v 0.6% prior; Y/Y: No est v 0.7% prior

- 06:00 (IL) Israel Jun Trade Balance: No est v -$2.4B prior

- 07:00 (ZA) South Africa May Manufacturing Production M/M: No est v -0.6% prior; Y/Y: No est v 1.1% prior

- 07:00 (UR) Ukraine Central Bank Interest Rate Decision: Expected to leave Key Rate unchanged at 17.00%

- 08:00 (BR) Brazil May Retail Sales M/M: No est v 1.0% prior; Y/Y: No est v 0.6% prior, Broad Retail Sales M/M: No est v 1.3% prior; Y/Y: No est v 8.6% prior

- 08:00 (IN) Jun CPI Y/Y: 5.3%e v 4.9% prior

- 08:00 (IN) India May Industrial Production Y/Y: 4.5%e v 4.9% prior

- 08:05 (UK) Baltic Dry Bulk Index

- 08:30 (US) Jun CPI M/M: 0.2%e v 0.2% prior; Y/Y: 2.9%e v 2.8% prior, CPI Ex Food and Energy M/M: 0.2%e v 0.2% prior; Y/Y: 2.3%e v 2.2% prior, CPI Index NSA: 252.092e v 251.588 prior, CPI Core Index SA: 257.361e v 256.889 prior

- 08:30 (US) Initial Jobless Claims: 225Ke v 231K prior; Continuing Claims: 1.730Ke v 1.739M prior

- 08:30 (US) Weekly USDA Net Export Sales

- 08:30 (US) Jun Real Avg Weekly Earnings Y/Y: No est v 0.3% prior; Real Avg Hourly Earning Y/Y: No est v 0.0% prior

- 08:30 (CA) Canada May New Housing Price Index M/M: 0.1%e v 0.0% prior; Y/Y: 1.0%e v 1.6% prior

- 08:30 (CA) Canada Jun Teranet/National Bank HPI M/M: No est v 1.0% prior; Y/Y: No est v 4.5% prior

- 09:00 (MX) Mexico May Industrial Production SA M/M: 0.6%e v -0.4% prior; Y/Y: 0.8%e v 3.8% prior, Manufacturing Production NSA Y/Y: No est v 5.6% prior

- 09:00 (RU) Russia Gold and Forex Reserve w/e July 6th: No est v $ prior

- 09:00 (RU) Russia May Trade Balance: No est v $15.3B prior

- 10:30 (US) Weekly EIA Natural Gas Inventories

- 12:00 (US) USDA World Agricultural Supply and Demand Estimate (WASDE) Crop Report

- 14:00 (US) Jun Monthly Budget Statement: -$80.0Be v -$146.8B prior

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