Quiet atmosphere ahead of Nvidia earnings

EU mid-market update: Quiet atmosphere ahead of Nvidia earnings; Focus is on status of Blackwell chip delays and sustainability of AI demand.

Notes/observations

- No change to macro narrative as light volume washes over market due to lack of news flows, no notable data and summer holiday trade.

- Market remains extremely tunnel visioned on Nvidia earnings for direction and risk sentiment. 1-day options implied volatility seen at +/- 10% (implies up to ~$600B market cap range). Doubt over Nvidia being able to meet demand due to new chip delays was triggered for the first time this month after company noted engineering issues in two of its next-gen AI chips in Blackwell family on Aug 5th. Also saw competitors begin to creep in with Huawei announcing on Aug 13th that they will start shipping new Ascend 910C chip as soon as Oct, aiming to challenge Nvidia’s H100. However, Nvidia has continually beat expectations over last ~2-years by huge margin and Wall Street continues to pile on capex for AI development.

- Other earners after the close include Salesforce and Crowdstrike, which set to update markets on recent global IT outage impact.

- Asia closed mixed with Hang Seng underperforming -1.0%. EU indices are -0.1% to +0.4%. US futures are 0.0-0.2%. Gold -0.6%, DXY +0.3%; Commodity: Brent -0.9%, WTI -0.9%; Crypto: BTC -5.5%, ETH -7.9%.

Asia

- Australia July CPI Y/Y: 3.5% v 3.4%e.

- Australia Treasurer Chalmers: Inflation data is a promising result but would not be complacent.

- BOJ Dep Gov Himino reiterated view that financial and capital markets remained unstable, and needed to be monitored with "utmost vigilance". Would to adjust degree of easing if certainty rose.

Mid-East

- Israel’s military said to have launched a “major operation” in three refugee camps in the occupied West Bank.

Europe

- UK PM Starmer meeting German Chancellor Scholz in Berlin to start discussions on a new cooperation treaty.

Americas

- Fed Discount Rate Meeting Minutes noted that Chicago, NY directors favored cut.

Energy

- Libya's oil production said to have dropped by at least 40% to below 600Kbpd since the production halt order.

- Weekly API Crude Oil Inventories: -3.4M v +0.3M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.19% at 519.86, FTSE -0.05% at 8,341.64, DAX +0.45% at 18,781.45, CAC-40 +0.34% at 7,591.15, IBEX-35 +0.05% at 11,332.28, FTSE MIB +0.17% at 33,835.00, SMI +0.40% at 12,352.06, S&P 500 Futures +0.08%].

Market focal points/key themes: European indices open generally higher and maintained the upbeat tone through the early part of the session; markets seen awaiting Nvidia earnings later in the day; among sectors leading the way higher are technology and communication services; lagging sectors include real estate and telecom; earnings expected in the upcoming US session include Nvidia, Abercrombie & Fitch, Kohl’s, Foot Locker, Salesforce and Crowdstrike.

Equities

- Consumer discretionary: Kingfisher [KGF.UK] -2.0% (analyst downgrade).

- Financials: Prudential [PRU.UK] +2.0% (H1 results, sees sales momentum into H2), SBB [SBB.SE] +4.0% (earnings) - Healthcare: GSK [GSK.UK] +1.5% (Zantac litigation statement), Elekta [EKTAB.SE] +9.5% (Q1 beats estimates, affirms guidance, takes actions to improve profitability; Announces JV with AnSheng) - Industrials: Stadler Rail [SRAIL.CH] -5.0% (earnings) - Technology: Focusrite [TUNE.UK] -17.5% (trading update), Agfa-Gevaert [AGFB.BE] +4.5% (Q2 results).

- Real Estate: Leg Immobilien [LEG.DE] -3.0% (to sell €500M of notes).

Speakers

- Libya's Oil production said to have dropped by at least 40% to below 600Kbpd since the production halt order.

Currencies/fixed income

- FX markets were quiet as no major data or macro catalysts were apparent. USD still finding it tough to find firm footing.

- EUR/USD initially drifted lower to test 1.1140 but was little changed by mid-session.

- USD/JPY stayed around 144.40 area. BOJ Himino stated that the financial and capital markets remain unstable.

Economic data

- (FI) Finland July House Price Index M/M: 0.0% v -0.9% prior; Y/Y: -2.6% v -3.5% prior.

- (SE) Sweden July Trade Balance (SEK): 6.5B v 8.1B prior.

- (FI) Finland Jun Final Trade Balance: €1.0B v €1.0B prelim.

- (FR) France Aug Consumer Confidence: 92 v 92e.

- (TR) Turkey July Trade Balance: -$7.3B v -$7.2Be.

- (EU) Euro Zone July M3 Money Supply Y/Y: 2.3% v 2.7%e.

- (AT) Austria Aug Manufacturing PMI: 44.4 v 43.1 prior (25th month of contraction).

- (CH) Swiss Aug Expectations Survey: -3.4 v +9.4 prior.

- (IT) Italy Jun Industrial Sales M/M: +0.1% v -1.0% prior; Y/Y: -3.7% v -4.8% prior.

- (IS) Iceland July Final Trade Balance (ISK): -35.5B v -33.9B prelim.

Fixed income issuance

- (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills.

- (AT) Austria Debt Agency (AFFA) opened its book to sell EUR-denominated 5-year bond via syndicate; guidance seen +10bps to mid-swaps.

- (UK) DMO sold £2.0B in 0.75% Nov 2033 inflation-linked Gilts; Real Yield: % v 0.518% prior; bid-to-cover: x v 2.89x prior.

- (SE) Sweden sold total SEK4.0B vs. SEK4.0B indicated in 2032 and 2035 Bonds.

- (IT) Italy Debt Agency (Tesoro) sold total €4.5B vs. €4.5B indicated in 6-month bills (2 tranches).

Looking ahead

- (BR) Brazil July Total Federal Debt (BRL): No est v 7.068T prior.

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

- 07:00 (US) MBA Mortgage Applications w/e Aug 23rd: No est v -10.1% prior.

- 07:00 (RU) Russia to sell OFZ Bonds.

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

- 08:15 (UK) BOE’s Mann.

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 4.50%.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 2-Year FRN Reopening.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (RU) Russia July Real Retail Sales Y/Y: 5.4%e v 6.3% prior.

- 12:00 (RU) Russia July Unemployment Rate: 2.4%e v 2.4% prior; June Real Wages Y/Y: 8.5%e v 8.8% prior.

- 12:00 (RU) Russia July Industrial Production Y/Y: 2.7%e v 1.9% prior.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 13:00 (US) Treasury to sell 5-Year Notes.

- 13:30 (BR) Brazil July Total Formal Job Creation: 186.8Ke v 201.7K prior.

- 14:30 (MX) Mexico Mexican Central Bank Releases Inflation Report (QIR).

- 18:00 (US) Fed’s Bostic.

- 21:00 (NZ) New Zealand Aug ANZ Business Confidence: No est v 27.1 prior; Activity Outlook: No est v 16.3 prior.

- 21:30 (AU) Australia Q2 Private Capex: 1.0%e v 1.0% prior.

- 23:35 (JP) Japan to sell 2-Year JGB Bonds.