Quieter macro session lets market dive deep into earnings and extrapolate consumer trends

Notes/observations

- European bourses opened higher but turned mixed as session wore on. Outperforming sectors from Food/Beverage and Energy, while Utilites and Bank lag. Key earnings from Continental (-2%), Infineon (+4%), DHL (+4%) and BP (+2%).

- Trade narrative relatively unchanged from Mon, with just a small development in Taiwan. US reportedly told them if they want their 20% tariff reduced to 15% then TSMC must acquire 49% stake in Intel and make investment of $400B into US.

- EU butters up pathway to finalizing US trade framework by declaring suspension of its planned countermeasures against US tariffs for six months.

- Service PMIs across EU were mixed. Notable beat from Spain (55.1 v 52.5 estimate) and miss from France (48.5 v 49.7 estimate).

- Earnings to direct sentiment, with AMD and Opendoor after close. Pfizer, Caterpillar, Dupont and Lemonade to report before open.

- Asia closed higher with KOSPI outperforming +1.6%. EU indices -0.3% to +0.5%. US futures +0.1%. Gold -0.2%, DXY +0.3%; Commodity: Brent -0.6%, WTI -0.7%; Crypto: BTC 0.0%, ETH +2.6%.

Asia

- China July S&P (Caixin) PMI Services: 52.6 v 50.6 prior (30th month of expansion).

- Australia July Final PMI Services: 54.1 v 53.8 prelim (confirms 18th month of expansion).

- Japan July Final PMI Services: 52.7 v 53.5 prelim (confirms 9th month of expansion).

- New Zealand July ANZ Commodity Price M/M: -1.8.

- South Korea July CPI M/M: 0.2% v 0.2%e; Y/Y: 2.1% v 2.1%e; CPI (ex-food/energy) Y/Y: 2.0% v 2.0%e.

- Australia Jun Household Spending M/M: 0.5 v 1.0% prior; Y/Y: 4.8% v 4.4% prior.

- Japan Economy Min/Trade Negotiator Akazawa to travel to US on Tuesday with focus is on timing of Presidential order on auto tariffs. Reiterated to push US to give order for auto tariff to take effect as soon as possible and ensure tariffs are not stacked ahead of Aug 7th roll out.

Global Conflict/tensions

- Israel PM Netanyahu said leaning towards expanding Gaza offensive and seizing entirety of Gaza strip.

Americas

- Fed’s Daly (non-voter) noted that was comfortable with Fed's July decision but not comfortable making the same decision again and again; Two rate cuts in 2025 still seemed appropriate.

Trade

- Pres Trump posted that to 'substantially' raising tariff paid by India to the US due to purchases of Russian oil.

Energy

- India Foreign Min Jaiswal noted that India began importing Russian oil because traditional supplies were diverted to Europe following the Ukraine war conflict; Would take necessary measures to safeguard interests.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.28% at 542.14, FTSE +0.35% at 9,160.05, DAX +0.44% at 23,862.14, CAC-40 +0.16% at 7,644.60, IBEX-35 -0.38% at 14,319.64, FTSE MIB +0.02% at 40,707.00, SMI +0.48% at 11,864.49, S&P 500 Futures +0.12%].

Market Focal Points/Key Themes: European indices open higher across the board and remained in the green through the early part of the session; further EU-US negotiations on trade seen supporting risk appetite; among sectors leading the way higher are industrials and technology; lagging sectors include utilities and telecom; Alcon to acquire STAAR Surgical; Bouygues to acquire Suit-Kote; KKR raises offer for Spectris; focus on US trade balance figures later in the day; earnings expected during the upcoming Americas session include Caterpillar, Pfizer, Qiagen and Commins.

Equities

- Consumer discretionary: Deutsche Post [DHL.DE] +4.5% (earnings), Hugo Boss [BOSS.DE] +6.5% (earnings).

- Energy: BP [BP.UK] +2.5% (earnings; raised dividend; Aramco results).

- Healthcare: Novo Nordisk [NOVOB.DK] -1.5% (UBS analysts cut after Hims&Hers results) - Industrials: Continental [CON.DE] -2.0% (earnings), Adecco [ADEN.CH] -3.0% (earnings) - Technology: Infineon [IFX.DE] +4.5% (earnings; guidance; call comments), Keller Group [KLR.UK] +6.5% (earnings), Spectris [SXS.UK] +1.5% (KKR raises offer 2%).

Speakers

- EU Commission Official noted that was already seeing implementation of EU-US trade deal framework.

- China PBoC stated to attract long-term capital for tech push; enhance financial support for industrialization. Push for high-end industry development to curb over competition and support listed companies to carry out industry upgrade. To improve exchange rate risk management capabilities.

- Japan Cabinet Office said to cut FY25 GDP growth forecast citing tariff impact.

Currencies/fixed income

- USD continued to consolidate its recent losses as markets increased its odds of the Fed resuming interest rate cuts in September.

- EUR/USD at 1.1540 arae by mid-session as various PMI Services readings were revised lower but staying in expansion territory.

- GBP/USD at 1.3270 ahead of the BOE Thurs rate decision. Analysts continued to foresee a series of gradual cuts by the MPC.

- USD/JPY drifted higher towards 147.50 as reports circulated that Japan Cabinet Office would cut its FY25 GDP growth forecast citing tariff impact.

- 10-year German Bund yield at 2.61% and 10-year Gilt yield at 4.51%. 10-year Treasury yield: 4.21%.

Economic data

- (FI) Finland Jun Preliminary Trade Balance: €0.5B v €0.1B prior.

- (RU) Russia July Services PMI: 48.6 v 49.2 prior; Composite PMI: 47.8 v 48.5 prior.

- (SE) Sweden July PMI Services: 48.8 v 54.0e; PMI Composite: 50.3 v 53.6 prior.

- (FR) France Jun Industrial Production M/M: 3.8% v 0.6%e; Y/Y: +2.0% v -0.5%e.

- (FR) France Jun Manufacturing Production M/M: 3.5% v 1.2%e; Y/Y: +2.4% v -0.4% prior.

- (FR) France Jun YTD Budget Balance: -€100.4B v -€94.0B prior.

- (ES) Spain Jun Home Sales Y/Y: 17.9% v 39.7% prior.

- (ES) Spain Jun Industrial Production M/M: +1.0% v -0.1%e; Y/Y: 2.3% v 1.7% prior; Industrial Output NSA (unadj) Y/Y: +4.9% v -1.0% prior.

- (CZ) Czech July Preliminary CPI M/M: 0.5% v 0.5%e; Y/Y: 2.7% v 2.7%e.

- (ES) Spain July Services PMI: 55.1 v 52.5e (23rd month of expansion); Composite PMI: 54.7 v 52.6e.

- (ZA) South Africa July PMI (whole economy): 50.3 v 50.1 prior.

- (IT) Italy July Services PMI:52.3# v 52.6e (8th month of expansion); Composite PMI: 51.5 v 51.5e.

- (FR) France July Final Services PMI: 48.5 v 49.7 prelim (confirmed 12th month of contraction); Composite PMI 48.6 v 49.6 prelim.

- (DE) Germany July Final Services PMI: 50.6 v 50.1 prelim (confirmed 1st expansion in 4 months); Composite PMI: 50.6 v 50.3 prelim.

- (EU) Euro Zone July Final Services PMI: 51.0- v 51.2 prelim (confirmed 2nd month of expansion); Composite PMI: 50.9 v 51.0 prelim.

- (UK) July New Car Registrations Y/Y: -5.0% v +6.7% prior.

-- (TW) Taiwan July Foreign Reserves: $597.9B v $598.4B prior.

- (UK) July Final Services PMI: 51.8 v 51.2 prelim (confirmed 3rd month of expansion); Composite PMI: 51.5 v 51.0 prelim.

- (UK) July Official Reserves Changes: -$0.9B v +$1.2B prior.

- (EU) Euro Zone Jun PPI M/M: 0.8% v 0.9%e; Y/Y: 0.6% v 0.6%e.

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) sold total €5.585B vs. €5.0-6.0B indicated range in 6-month and 12-month bills.

- (UK) DMO sold £4.5B in 4.5% Mar 2035 Gilts; Avg Yield: 4.522% v 4.635% prior; bid-to-cover: 3.33x v 2.89x prior; Tail: 0.1bps v 0.2bps prior.

- (AT) Austria Debt Agency (AFFA) sold total €1.438B vs. €1.438B indicated in 2033 and 2035 RAGB bonds.

Looking ahead

- (MX) Mexico CitiBanamex Survey of Economists.

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

- 05:30 (DE) Germany to sell €4.0B in 1.90% Sept 2027 Schatz.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €2.8B in 3-month, 6-month and 12-month bills.

- 05:30 (CH) Switzerland to sell 6-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2035, 2040 and 2044 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:00 (FI) Finland to sell combined €2.0B in 6-month and 9-month Bills.

- 06:30 (EU) ESM to sell €1.1B in 3-month Bills.

- 07:00 (BR) Brazil Central Bank (BCB) July Minutes.

- 07:30 (TR) Turkey July Real Effective Exchange Rate (REER): No est v 69.97 prior.

- 08:00 (MX) Mexico May Gross Fixed Investment M/M: +0.4%e v -1.7% prior; Y/Y: -6.3%e v -12.5% prior; Private Consumption Y/Y: No est v -1.7% prior.

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

- 08:00 (US) President Trump on CNBC.

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (US) Jun Trade Balance: -$61.3Be v -$71.5B prior.

- 08:30 (CA) Canada Jun Int'l Merchandise Trade (CAD): -6.3Be v -5.9B prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (BR) Brazil July Services PMI: No est v 49.3 prior; Composite PMI: No est v 48.7 prior.

- 09:45 (US) July Final S&P Services PMI: 55.1e v 55.2 prelim; Composite PMI: No est v 54.6 prelim.

- 10:00 (US) July ISM Services Index: 51.5e v 50.8 prior.

- 11:00 (CO) Colombia Jun Exports: $4.0Be v $4.4B prior.

- 11:30 (US) Treasury to sell 6wWeek Bills.

- 11:30 (US) Treasury to sell 52-week Bills.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 16:30 (US) Weekly API Crude Oil Inventories:

- 18:00 (CO) Colombia Central Bank July Minutes.

- 18:45 (NZ) New Zealand Q2 Unemployment Rate: 5.3%e v 5.1% prior.

- 18:45 (NZ) New Zealand Q2 Employment Change Q/Q: -0.1%e v +0.1% prior; Y/Y: =0.9%e v -0.7% prior; Participation Rate: 70.7%e v 70.8% prior; Private Wages (ex-overtime) Q/Q: 0.5%e v 0.4% prior; Private Wages 0.5%e v 0.4% prior; Average Hourly Earnings Q/Q: No est v 0.2% prior.

- 19:30 (JP) Japan Jun Labor Cash Earnings Y/Y: 3.0%e v 1.4% prior (revised from 1.0%); Real Cash Earnings Y/Y: -0.7%e v -2.6% prior (revised from -2.9%); Cash Earnings - Same Sample Base Y/Y: 3.5%e v 2.1% prior (revised from 2.3%).

- 20:01 (IE) Ireland July PMI Services: No est v 51.5 prior; PMI Composite: No est v 52.8 prior.

- 21:00 (PH) Philippines Jun Unemployment Rate: No est v 3.9% prior.

- 22:05 (VN) Vietnam July CPI Y/Y: 3.4%e v 3.6% prior.

- 22:05 (VN) Vietnam July Trade Balance: $2.5Be v $2.8B prior; Exports Y/Y: 14.0%e v 16.3% prior; Imports Y/Y: 15.2%e v 20.2% prior.

- 22:05 (VN) Vietnam July Industrial Production Y/Y: 10.5%e v 10.8% prior.

- 22:05 (VN) Vietnam July Retail Sales Y/Y: 8.2%e v 8.3% prior.

- 23:00 (TH) Thailand to sell THB20B in 2045 Bonds.

- 23:30 (TH) Thailand July CPI M/M: 0.0%e v 0.0% prior; Y/Y: -0.4%e v -0.3% prior; CPI Core Y/Y: 0.9%e v 1.1% prior.