Markets await Nvidia results on Wednesday

EU mid-market update: Germany IFO Survey at lowest level since Jan; Markets await Nvidia results on Wednesday.

Notes/observations

- Quiet session with UK markets closed for bank holiday.

- Markets pricing slightly higher chance for 50bps rate cut by the Fed at Sept’s meeting after Chair Powell’s Jackson Hole speech; Key US jobs report next week.

- Oil prices were rising up to 1% amid escalation of Israel-Lebanon tensions following no progress towards an Israel-Hamas ceasefire.

- German IFO reading at lowest level since Feb; period of stagnation is extending.

- Traders focus on Nvidia earnings and US Treasury auctions later in the week.

Asia

- China PBOC left MLF rates unchanged at 2.30% (as expected).

- China govt said to urge local govts to accelerate special bond sales.

- PBOC has started gradual stress tests on financial firms for bond risks; tests are aimed at preventing interest rate risks.

- China PBOC Gov Pan Gongsheng reiterated overall financial system was stable.

Global conflict/tensions

- Hezbollah fired hundreds of Katyusha rockets and drones towards Israel.

- Israel Defense Forces (IDF): Approx 100 of its fighter jets “struck and destroyed thousands of Hezbollah rocket launcher barrels” across dozens of launch sites from Lebanon on Sunday. Approximately 200 rockets had been launched from Lebanon towards Israel early Sunday,

- Israel PM Netanyahu: Israel’s preemptive strike on Lebanon’s Hezbollah over the weekend was not the end of the story; carried out the strikes in self-defense.

- Diplomats: Israel, Hezbollah traded messages saying neither wants further escalation. main message was that both sides considered that Sunday’s intense exchange of bombardment was “done” and that neither side wanted a full-scale war.

- No agreement on Gaza ceasefire talks that took place in Cairo, with neither Hamas nor Israel agreeing to several compromises; talks continue.

Europe

- ECB's Lane (Ireland, chief economist) spoke at Jackson Hole symposium and noted that the return of inflation to 2% target was not yet secure; Policy must remain restrictive as long as necessary.

- UK markets closed for bank holiday.

Americas

- Fed Chair Powell commented at Jackson Hole that confidence had grown that inflation was on a sustainable path to the 2% target and that the time has come to adjust policy rate.

- IMF's Gourinchas stated that imminent rate cuts planned by the Fed are "in line" with IMF advice.

- Robert F. Kennedy Jr suspended his Presidential campaign and endorsed Donald Trump.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.01% at 518.12, FTSE +0.48% at 8,327.78, DAX -0.25% at 18,588.55, CAC-40 +0.13% at 7,586.67, IBEX-35 +0.05% at 11,283.60, FTSE MIB -0.03% at 33,641.00, SMI +0.01% at 12,352.72, S&P 500 Futures +0.22%].

Market focal points/key themes: European indices open generally lower and remained under pressure through the early part of the session; UK closed for holiday; among sectors clinging to the green are energy and real estate; sectors leading the way lower include technology and materials; oil & gas subsector supported with Middle East tensions rising again; UCB to divest its Mature Neurology and Allergy unit in China; reportedly Siemens Healthineers offered to acquire part of Novartis’ cancer screening business; PDD earnings expected in the upcoming US session; BHP to report overnight.

Equities

- Consumer staples: Bakkafrost [BAKKO.NO] +1.0% (earnings; comments from the call).

- Financials: Castellum [CAST.SE] +1.5% (analyst action).

- Financials: Allfunds Group [ALLFG.NL] -1.0% (UBS's decision to replace Allfunds as fund distribution platform partner).

- Healthcare: Novartis [NOVN.CH] +0.5% (Siemens Healthineers offers to acquire part of cancer scanning business of Novartis).

- Industrials: Meyer Burger Tech [MBTN.CH] -54.5% (halts construction of solar cell plant in Colorado, US citing it is 'currently not financially viable').

- Technology: IDEX Biometrics [IDEX.NO] +36.5% (milestone with Visa).

Speakers

- Sweden Central Bank (Riksbank) Aug Minutes noted that policy should move towards a more neutral stance; Large cut could create inflationary impulses. Asset holdings would continue to decrease through maturities and sales.

- German IFO President noted Germany needed structural reforms to increase consumer confidence. Domestic economy was increasingly falling into crisis.

- Russia Pres Putin stated that coordinated action was needed to decrease inflation.

- Iran Foreign Min Kani stated it was not seeking increasing tensions with Israel but not afraid of it; the response will be definite, calculated and accurate.

Currencies/fixed income

- USD was steady in a quiet session following losses in the aftermath of dovish Jackson Hole symposium.

- EUR/USD consolidated from its 1-year high to stay around 1.1180 level. German IFO beat consensus but was still at itsl lowest level since Feb.

- GBP/USD consolidated just under the 1.32 handle. Focus on M Starmer's speech on Tuesday.

- USD/JPY back below 144 area.

Economic data

- (FI) Finland July PPI M/M: -0.4% v -0.3% prior; Y/Y: +0.2% v -0.3% prior.

- (NO) Norway July Trend Unemployment Rate: 4.0% v 4.0% prior.

- (HU) Hungary Jun Average Gross Wages Y/Y: 13.3% v 14.2%e.

- (ES) Spain July PPI M/M: % v 1.9% prior; Y/Y: % v -3.5% prior.

- (CZ) Czech Aug Consumer Confidence: 97.3 v 98.4e; Business Confidence: 93.0 v 94.6e; Composite Confidence: 93.7 v 95.1e.

- (TR) Turkey Aug Real Sector (Manufacturing) Confidence: 98.0 v 98.7 prior; Real Sector Confidence (unadj): 98.5 v 100.3 prior; Capacity Utilization: 75.4% v 75.9% prior.

- (DE) Germany Aug IFO Business Climate:86.6# v 86.0e; Current Assessment Survey: 86.5 v 86.5e; Expectations Survey: 86.8 v 85.8e.

- (PL) Poland Q2 Unemployment Rate: 2.7% v 3.1%e.

- (PL) Poland July Unemployment Rate:5.0 % v 4.9%e.

- (CH) Swiss weekly Total Sight Deposits (CHF): 463.6B v 464.9B prior; Domestic Sight Deposits: 455.7B v 457.2B prior.

Fixed income issuance

- None seen.

Looking ahead

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

- 05:30 (DE) Germany to sell combined €6.0B in 6-month and 12-month BuBills.

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

- 05:30 (EU) European Union to sell combined €5.0B in 2028 and 2034 NGEU Bonds.

- 07:00 (BR) Brazil Aug FGV Consumer Confidence: No est v 92.9 prior.

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

- 07:30 (BR) Brazil July Current Account Balance: No est v -$4.0B prior; Foreign Direct Investment (FDI): $7.2Be v $6.3B prior.

- 08:00 (UK) No Daily Baltic Dry Bulk Index (UK holiday).

- 08:30 (US) July Preliminary Durable Goods Orders: +4.9%e v -6.7% prior; Durables (Ex-Transportation): 0.0%e v 0.4% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.1%e v 0.9% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.2%e v 0.2% prior.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 09:00 (FR) France Debt Agency (AFT) to sell €6.2-7.8B in 3-month, 6-month and 12-month bills (4-tranches).

- 09:00 (BE) Belgium Aug Business Confidence: -12.7e v -12.3 prior.

- 10:30 (US) Aug Dallas Fed Manufacturing Activity: No est v -17.5 prior.

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

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

- 19:01 (UK) Aug BRC Shop Price Index Y/Y: No est v 0.2% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 83.0 prior.

- 19:50 (JP) Japan July PPI Services Y/Y: 2.9%e v 3.0% prior.

- 21:30 (CN) China July YTD Industrial Profits Y/Y: No est v 3.4% prior; July Industrial Profits Y/Y: No est v 0.7% prior.

- 21:30 (KR) South Korea to sell KRW100B in 20-year Bonds.

- 22:30 (KR) South Korea to sell KRW300B in 20-year Bonds.

- 23:00 (TH) Thailand Central Bank to sell THB55B in 3-month bills.