Global indices rise as US-China tariffs enter into effect

Notes/Observations

- All eyes on today's Wage and Non-Farm Payroll data; wages expected to post a solid 0.3% monthly increase while payrolls are eyed between 180-200K

- PM May aims to resolve splits within cabinet over shape of Brexit at her Chequers meeting; the showdown threatens to throw talks with the EU into disarray

Asia:

-First round of US tariffs on $34B worth of goods on China officially take effect

-China reciprocal tariffs take effect on US products; China Commerce Ministry (MOFCOM): Reiterates has to fight back, forced to retaliate on tariffs; will continue evaluating impact of US tariffs

-China Central Bank Advisor forecasts small 0.2% impact to Chinese domestic GDP as a result of $50B US tariffs

-Samsung Electronics declines as Q2 prelim results missed ests

Europe:

-German Press reports suggest JP Morgan and ICBC could look at taking stakes in Deutsche Bank; according to the same report German Chancellor Merkel asked UBS Chairman for his assessment on Deutsche Bank situation

- Italy Stats Agency (ISTAT) Monthly Economic Outlook: Sees economy slowing down in coming months

Energy:

- (US) National Hurricane Center (NHC): Beryl becomes first hurricane of Atlantic season

Economic Data:

- (JP) Japan May Preliminary Leading Index CI: 106.9 V 106.6E; Coincident Index: 116.1 V 116.1E

- (DE) GERMANY MAY INDUSTRIAL PRODUCTION M/M: 2.6% V 0.3%E; Y/Y: 3.1% V 1.5%E

- (NO) Norway May Industrial Production M/M: -0.9% v -1.4% prior; Y/Y: -1.6% v -1.9% prior

- (RO) Romania Q1 Final GDP (3rd reading) Q/Q: 0.1% v 0.0% prelim; Y/Y: 4.0% v 4.0%e

- (DK) Denmark May Industrial Production M/M: -1.5% v +1.2% prior

- (ZA) South Africa Jun Gross Reserves: $50.6B v $51.2B prior; Net Reserves: $42.5B v $42.9B prior

-(AU) Australia Jun Foreign Reserves (AUD): 75.8B v 82.5B prior

- (FR) FRANCE MAY TRADE BALANCE: -€6.0B V -€5.1BE

- (FR) France May Current Account: -€2.9B V -€1.3B prior

- (HU) Hungary May Industrial Production SA M/M: 1.9% v 1.7%e; Y/Y: 3.8% v 2.1%e

- (CH) Swiss Jun Foreign Currency Reserves (CHF): 748.5B v 740.9B prior

- (MY) Malaysia End-Jun Foreign Reserves: $104.7B v $107.9B prior

- (AT) Austria Jun Wholesale Price Index M/M: 0.2% v 1.4% prior; Y/Y: 6.3% v 5.2% prior

- (PL) Poland Jun Unemployment Rate: 5.9% v 6.1% prior - Polish press

- (UK) JUN HALIFAX HOUSE PRICES M/M: 0.3% V 0.2%E; 3M/Y: 1.8% V 1.6%E

- (SE) Sweden Jun Budget Balance (SEK): -17.3B v +50.6B prior

- (IT) Italy May Retail Sales M/M: +0.8% v +0.5%e; Y/Y: 0.4% v -4.6% prior

- (RU) Russia Narrow Money Supply w/e Jun 29th: 10.10T v 10.16T prior

Fixed Income Issuance:

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 +0.3% at 3451, FTSE +0.1% at 7,612, DAX +0.2% at 12,490, CAC-40 +0.3% at 5.384; IBEX-35 +0.4% at 9.903, FTSE MIB +0.3% at 21.978, SMI +0.1% at 8.682, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European stocks open higher across the board and maintained positive as the session progressed; tariffs take effect between US and China, but risk sentiment remains positive; consumer goods and media sectors best performers; materials stocks slightly underperforming; Czechia closed for holiday; Ross Royce sells Commercial Marine unit to Kongsberg; focus on upcoming NFP in US session

Equities

- Consumer discretionary: BCA Marketplace BCA.UK -1.6% (Apax won't issue bid), L'Oreal OR.FR +0.1% (analyst action), Hella HLA.DE +1.3%(asset sale), Wilmington Group WIL.UK -22.1% (trading update)

- Financials: Eurazeo RF.FR +5.9% (analyst action)

- Industrials: Aena Aeropuertos AENA.ES +1.2% (analyst action), Assa Abloy ASSAB.SE -6.9% (Prelim results), Kongsberg Gruppen KOG.NO -4.7% (acquisition), Rolls Royce RR.UK -0.2% (asset sale), ThyssenKrupp TKA.DE -1.0% (CEO resignation)

- Materials: ArcelorMittal MT.NL +1.4% (analyst action)

- Technology: Parrot PARRO.FR +3.3% (asset sale)

- Telecom: Inmarsat ISAT.UK -8.2% (rejects offer from Ecostar)

Speakers

- (CN) China Foreign Ministry spokesperson Lu Kang: Retaliatory tariffs on US goods are now in effect - press conf

Currencies

- Dollar slightly softer against its major trading partners as US/China tariffs kick in; U.S. wage and jobs data eyed

Fixed Income

- Bund Futures trade 7 ticks higher at 162.67 following the move in Treasuries. Upside targets 163.25 followed by 163.85, while a return lower targets the 159.75 level.

- Gilt futures trade at 123.31 higher by 2 ticks as PM May faces a decisive battle over the weekend. Support continues stands at 121.75 then 120.25, with upside resistance at 123.85 then 124.25.

- Friday's liquidity report showed Thursday's excess liquidity rose from €1.852T to €1.873T. Use of the marginal lending facility fell from €50M to €0M.

- Corporate issuance saw no deals priced in the primary market

Looking Ahead

- 07:30 (IN) India Weekly Forex Reserves

- 08:00 (BR) Brazil Jun IBGE Inflation IPCA M/M: 1.3%e v 0.4% prior; Y/Y: 4.4%e v 2.9% prior

- 08:00 (CL) Chile Jun CPI M/M: 0.2%e v 0.3% prior; Y/Y: 2.6%e v 2.0% prior, CPI Ex Food and Energy M/M: 0.0%e v 0.3% prior; Y/Y: No est v 1.6% prior

- 08:00 (PL) Poland Jun Official Reserves: No est v $111.8B prior

- 08:15 (UK) Baltic Dry Bulk Index

- 08:30 (US) Jun Change in Nonfarm Payrolls: 195Ke v 223K prior

- 08:30 (US) Jun Unemployment Rate: 3.8%e v 3.8% prior

- 08:30 (US) Jun Average Hourly Earnings M/M: 0.3%e v 0.3% prior; Y/Y: 2.8%e v 2.7% prior; Average Weekly Hours: No est v 34.5 prior

- 08:30 (US) May Trade Balance: -$43.7Be v -$46.2B prior

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

- 08:30 (US) Jun Unemployment Rate: No est v 3.8% prior

- 08:30 (CA) Canada Jun Net Change in Employment: +20.0Ke v -7.5K prior; Unemployment Rate: 5.8%e v 5.8% prior

- 08:30 (CA) Canada May Int'l Merchandise Trade (CAD): -2.2Be v -1.9B prior

- 10:00 (CA) Canada Jun Ivey Purchasing Managers Index (Seasonally Adj): No est v 62.5 prior

- 10:30 (TR) Turkey Jun Cash Budget Balance (TRY) : No est v B prior

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

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