OPEC+ expected to either hold oil output unchanged or make a symbolic cut

EU Mid-Market Update: China cuts FX RRR; Gazprom and Services PMI's weigh heavy on indices amid recessionary winter fears; OPEC+ expected to either hold oil output unchanged or make a symbolic cut.

Notes/Observations

- Heavy risk off momentum after Gazprom news on Friday about halted gas flows on Nord Stream pipeline due to a newly discovered oil leak which sent EU markets tumbling and Nat Gas prices skyward (+30%) this morning on fruition of earlier fears that Russia would weaponize the pipeline ahead of the European winter.

- Misses in major European Aug Services PMI exacerbated recessionary fears as Spain, Germany, Euro Zone and UK all miss ( Beats for France and Italy). Overnight, China Aug Caixin Services PMI beat to match 3rd consecutive expansion.

- China PBOC cut FX RRR for financial institutions by 200bps from 8% to 6% to support the CNY (Yuan) exchange rate and improve FX capital capacity of financial institutions. Cut effective from Sept 15th.

- Earlier speculation over the weekend about today's Opec+ meeting leaving output unchanged has been modified slightly as rumors circulate of a symbolic 100K/bpd cut to output.

- Final results for the UK leadership contest are expected at 07:30ET in which Liz Truss is expected to triumph and be appointed as new PM.

- Asia closed mixed with Hang Seng underperforming at -1.2%. EU indices are sharply lower, with bond yields higher. US futures are flat to red. Gold 0.0%, DXY +0.4%; Commodity: Brent +2.7%, WTI +2.6%, UK Nat Gas +36.3%; Crypto: BTC +0.2%, ETH +0.8%.

Asia

-(CN) China PBOC cuts FX RRR for financial institutions by 200BPS TO 6.0%; Effective Sept 15th.

-(CN) China Aug Caixin PMI Services: 55.0 V 54.0E (3rd consecutive expansion).

-(AU) Australia Aug Final PMI Services: 50.2 v 49.6 prelim; PMI Composite: 50.2 v 49.8 prelim (avoids contraction).

-(KR) Said that South Korea is considering easing Mortgage regulations - Korean press.

-(JP) Japan Aug Final PMI Services: 49.5 v 49.2 prelim; PMI Composite: 49.4 v 48.9 prelim.

-(TH) Thailand Aug CPI M/M: -0.1% v +0.1%e; Y/Y: 7.9% v 7.9%e (8th month above target range).

Mid-East

-OPEC+ reportedly considering a symbolic 100K/bpd cut among other options - press.

Europe

- (UK) UK policy chiefs said to draw up emergency plans to maintain law and order amid cost of living crisis and fear hard winter of surging crime and civil unrest - UK press.

- (EU) EU Commission is seeking right to confiscate corporate assets in an emergency, and to re-write commercial contracts with suppliers and customers at will.

- (DE) Germany and Denmark plan >3GW offshore wind power hub Bornholm Energy Island in Baltic Sea; The project would require €9B investment - press.

- (RU) Russia govt spokesperson Peskov: There can only be retaliatory measures on oil price cap; The only Nord Stream 1 turbine left is malfunctioning which leads to stoppages.

Americas

- (AR) Health officials in Argentina believe an infectious pneumonia outbreak which killed four people may have been caused by Legionnaire's disease; An estimated 10% of people who contract the disease die from complications arising from the infection.

- (CL) Chilean voters reject new constitution in referendum: 38% vote for the proposed constitution, 62% against.

Energy

- Gazprom to increase gas flows to Europe via Ukraine, after not restarting Nord Stream pipeline as planned - US financial press.

- (EU) EU new energy measures reportedly will be decided as soon as Friday, Sept 9th after Germany finally backed the European Commission proposal - Politico.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -1.36% at 410.34, FTSE -0.98% at 7,209.85, DAX -2.68% at 12,700.28, CAC-40 -1.97% at 6,045.71, IBEX-35 -1.87% at 7,783.72, FTSE MIB -2.42% at 21,391.00, SMI -1.47% at 10,731.30, S&P 500 Futures +0.02%].

Market Focal Points/Key Themes: European indices open down across the board and stayed broadly in the red through the early part of the session; energy crisis seen sapping investor sentiment (Norway index lest negative); better performing sectors include energy and health care; sectors among those leading to the downside are technology and financials; utilities sector under pressure, but oil & gas subsector supported, following suspension of Nord Stream 1 deliveries; UBS agrees to end deal with Wealthfront; Vistry to merge with Countryside; US, Canada closed for holiday.

Equities

- Energy: Uniper [UN01.DE] -11%, RWE [RWE.DE] -3.5% (Gazprom pipeline halt; new German govt energy relief package), 2G Energy [2GB.DE] -2% (earnings).

- Financials: Countryside Partnerships [CSP.UK] +5%, Vistry Group [VTY.UK] -1% (merger).

- Healthcare: AstraZeneca [AZN.UK] -1.5% (approvals), Sanofi [SAN.FR] -1.5% (trial data).

Speakers

-(IE) Ireland Foreign Min Coveney: Don't see Truss triggering Article 16.

-(TR) Turkey Fin Min Nebati: Inflation to continue to slow.

-(DE) German Chancellor Scholz: Germany plans to completely stop importing Russian gas in Dec 2022; Will get through this winter.

-(CN) China State Planner (NDRC) official Yang Yinkai: Q3 is crucial for rolling of China policy measures and recovery from COVID; Will appropriately step up support for domestic economy.

-(CN) China PBOC Dep Gov: To step up policy support for domestic economy, but avoid flood-like stimulus.

-(CN) China Assistant Commerce Min Li Fei: China supports Electric-car makers in expanding overseas markets.

-(ID) Indonesia Finance Ministry Official: 2022 inflation seen between 6.6-6.8%.

-(TH) Thailand Central Bank Gov Sethaput: More concerned about core inflation, 2022 inflation to be above 6.0% this year peaking in Q3; Expect Economy to grow 3.0% in 2022 and 4.0% in 2023.

-(CN) China Foreign Min spokesperson: China is against the decision of the G7 countries to introduce a price cap for Russian oil; In favor of revising the position of the member states of the group.

Currencies/fixed income

- A strong USD in risk off momentum to start the week has placed a lot of pressure on major pairs.

-GBP/USD drops below 1.15, nearing pandemic lows in March 2020 of 1.14.

-EUR/USD contained below parity at 0.99 as weight of PMI data takes it toll.

- USD/JPY rises despite strong dollar, and approaches two decade highs of 140.5.

-USD/KRW rises rapidly above 1,370 for first time since 2009.

Economic data

-(IN) India Aug PMI Services: 57.2 v 55.5 prior (13th month of expansion); PMI Composite: 58.2 v 56.6 prior.

-(SG) Singapore July Retail Sales M/M: +0.6% v -1.4% prior; Y/Y: 13.7% v 14.8% prior; Retail Sales (ex-auto) Y/Y: 18.1% v 19.8% prior.

-(RU) Russia Aug Services PMI: 49.9 v 54.0e (1st contraction in 3 months); PMI Composite: 50.4 v 51.9e.

-(CH) Swiss Q2 GDP Q/Q: 0.3% v 0.4%e; Y/Y: 2.8% v 3.0%E.

-(HU) Hungary July Retail Sales Y/Y: 4.3% v 6.1%e.

-(CZ) Czech Q2 Average Real Monthly Wage Y/Y: -9.8% v -9.5%e.

-(TR) Turkey Aug CPI M/M: 1.5% v 2.0%e; Y/Y: 80.2% v 81.2%e (1st deceleration in 15 months); CPI Core Index Y/Y: 66.1% v 65.5%e v 61.7% prior; PPI M/M: 2.4% v 5.2% prior; Y/Y: 143.8% v 144.6% prior.

-(ES) Spain Aug Services PMI: 50.6 v 52.4e (7th straight expansion); Composite PMI: 50.5 v 52.5e.

-(ZA) South Africa Aug PMI (whole economy): 51.7 v 52.0e (7th straight expansion).

-(IT) Italy Aug Services PMI: 50.5 v 48.8e (reverses back to expansion after 1 contraction); Composite PMI: 49.6 v 48.0e.

-(FR) France Aug Final Services PMI: 51.2 v 51.0e(confirms 17th straight expansion but lowest print since Apr 2021); PMI Composite: 50.4 v 49.8e (lowest print since Mar 2021).

-(DE) Germany Aug Final Services PMI: 47.7 v 48.2e (confirms 2nd straight contraction and lowest print since Feb 2021); Composite: 46.9 v 47.6e (lowest print since May 2020).

-(EU) Euro Zone Aug Final Services PMI: 49.8 v 50.2e (1st contraction in 17 months and lowest print since Mar 2021); PMI Composite: 48.9 v 49.2e (2nd straight contraction and lowest print since Feb 2021).

-(CH) Swiss weekly Total Sight Deposits (CHF): 752.8B v 752.8B prior; Domestic Sight Deposits: 640.8B v 643.7B prior

-(UK) Aug New Car Registrations Y/Y: +1.2% v -9.0% prior

-(TW) Taiwan Aug Foreign Reserves: $545.5B v $547.8B prior.

-(EU) Euro Zone Sept Sentix Investor Confidence: -31.8 V -26.8E.

-(UK) Aug Final Services PMI: 50.9 v 52.5e (confirms 18th straight expansion but lowest since Feb 2021).

-(UK) Aug Official Reserves Changes: -$1.8B v $0.0B prior.

Fixed income issuance

-(PH) Philippines sells total PHP7.07B vs. PHP15.0B indicated in 3-month, 6-month and 12-month bills.

Looking ahead

- 05:30 (DE) Germany to sell combined €6.0B in 3-month and 9-month BuBills.

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

- 05:40 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-3.0B in 3-month and 6-month bills.

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

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 07:00 (CO) Colombia Aug CPI M/M: No est v 0.8% prior; Y/Y: No est v 10.2% prior; Core CPI M/M: No est v 0.7% prior; Y/Y: No est v 7.3% prior.

- 07:00 (MX) Mexico Aug Consumer Confidence: No est v 41.3 prior.

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

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

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

- 09:00 (BR) Brazil Aug Services PMI: No est v 55.8 prior; Composite PMI: No est v 55.3 prior.

- 11:30 (UK) BOE's Mann on 'Inflation Persistence and Monetary Policy Strategy'.

- 19:01 (UK) Aug BRC Sales LFL Y/Y: No est v 1.6% prior.

- 19:30 (JP) Japan July Household Spending Y/Y: No est v 3.5% prior.

- 19:30 (JP) Japan July Labor Cash Earnings Y/Y: No est v 2.2% prior; Real Cash Earnings Y/Y: No est v -0.4% prior.

- 21:00 (PH) Philippines Aug CPI Y/Y: No est v 6.4% prior.

- 21:30 (AU) Australia Q2 Current Account (A$): No est v 7.5B prior; Net Exports of GDP: No est v -1.7% prior.

- 23:35 (JP) Japan to sell 30-Year JGB Bonds.