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EU Market Update TRADETHENEWS.COM STAFF
Continued weak Chinese economic data weighs upon risk appetite
Economic Data
- (RU) Russia Narrow Money Supply w/e Aug 6th (RUB): 7.12T v 7.16T prior
- (FI) Finland Jun Industrial Production M/M: -1.4% v 1.2% prior; Y/Y: -1.0% v -1.4% prior
- (DE) Germany July Final Consumer Price Index M/M: 0.4% v 0.4%e; Y/Y: 1.7% v 1.7%e
- (DE) Germany July Final CPI EU Harmonized M/M: 0.4% v 0.4%e; Y/Y: 1.9% v 2.0%e
- (FR) France Jun Industrial Production M/M: 0.0% v 0.1%e; Y/Y: -2.3% v -1.8%e
- (FR) France Jun Manufacturing Production M/M: 0.1% v 0.0%e; Y/Y: -2.6% v -2.1%e
- (FR) France Jun Central Govt. Balance: -€56.7B v -€62.9Be
- (DK) Denmark Jun Industrial Production M/M: -1.8% v -0.9% prior; Industrial Orders M/M: -2.8% v -0.7% prior
- (DK) Denmark July CPI M/M: 0.0% v -0.1%e; Y/Y: 2.3% v 2.2%e
- (DK) Denmark July CPI EU Harmonized M/M: -0.1% v -0.2%e; Y/Y: 2.1% v 2.1%e
- (NL) Netherlands Jun Trade Balance: €3.7B v €3.9B prior
- (NO) Norway July CPI M/M: -0.5% v -0.3%e; Y/Y: 0.2% v 0.4%e
- (NO) Norway July CPI Underlying M/M: 0.0% v -0.2%e; Y/Y: 1.3% v 1.2%e
- (NO) Norway July Producer Prices incl.Oil M/M: 1.1% v -3.5% prior; Y/Y: -0.6% v -0.2% prior
- (NO) Norway Jun Credit Indicator Growth Y/Y: 7.1% v 6.8%e
- (IT) Italy July Final CPI (NIC incl. tobacco) M/M: 0.1% v 0.0%e; Y/Y: 3.1% v 3.0%e
- (IT) Italy July Final CPI EU Harmonized M/M: -1.7% v -1.6%e; Y/Y: 3.6% v 3.7%e
- (UK) July PPI Input M/M: 1.3% v 1.3%e; Y/Y: -2.4% v -1.5%e
- (UK) July PPI Output M/M: 0.0% v 0.0%e; Y/Y: 1.7% v 2.0%e
- (UK) July PPI Output Core M/M: 0.0% v 0.1%e; Y/Y: 1.3% v 1.6%e
- (HK) Hong Kong Q2 GDP Q/Q:-0.1% v 0.6%e; Y/Y: 1.1% v 1.2%e
- (PT) Portugal July Consumer Price Index M/M: 0.0% v -0.2% prior; Y/Y: 2.8% v 2.7% prior
- (PT) Portugal July CPI EU Harmonized M/M: +0.2% v -0.2% prior; Y/Y: 2.8% v 2.7% prior
- (RU) Russia Jun Trade Balance: $14.0B v $15.0Be; Exports: $40.8B v $42.1Be; Imports: $26.8B v $27.3Be
Fixed Income:
- (IN) India sold total INR150B vs. INR150B indicated in 2017, 2022, 2030 and 2036 bonds
- (ZA) South Africa sold total ZAR800M in I/ L2025, 2038 and 2050 Bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Notes/Observations
-Cyprus Central Bank: Support for banking sector to be determined in late October
-Italian Minister: No discussions on seeking European Union Bond help
-German Ministry: Moderate Economic Growth in Q2
-China July Trade Balance comes in below expectations with horrible components
- Japan Parliament passed the consumption tax increase (as expected); first sales tax increase since 1997
Equities
Indices: FTSE 100 -0.10% at 5848, DAX -0.30% at 6942, CAC-40 -0.60% at 3434, IBEX-35 -0.90% at 7045, FTSE MIB -0.20% at 14,622, SMI -0.20% at 6490, S&P 500 Futures -0.25% at 1397
- After opening lower, most indices have continued to trade in negative territory. Today's declines have been led by weakness in the Spanish IBEX and French CAC-40 indices. Factors which have weighed on markets include more disappointing economic data out of China and cautious commentary from Germany's Economy Ministry related to the growth outlook. European banks are trading mixed. Underperformers in the sector include Commerzbank, Bank of Ireland and Intesa, while shares of Barclays have outperformed. Resources related companies are broadly lower, tracking the declines in commodity prices.
- In UK movers, shares of UK Coal [UKC.UK] have lost over 20% on the company's H1 results. Insurer Prudential [PRU.UK] has traded lower as the company reported in line H1 results. In the banking sector, Barclays [BARC.UK] is higher by over 1% amid speculation that the firm could name former BoE official David Walker as its new chairman. Bank of Ireland has lost over 3% after reporting y/y declines in its H1 operating profit and revenues. In Germany, Hannover Re [HNR1.DE] is lower by over 4%, as the company reported weaker than expected profits. Hannover reported y/y declines in its ROE, EBIT margin and net investment income. Germany's largest steelmaker ThyssenKrupp [TKA.DE] is higher by more than 3% on better than expected Q3 results. The company's stated that strength in its elevator/escalators business offset weakness in the materials business. Oil services firm Fugro [FUR.NL] has lost approx. 1.5% after issuing H1 results.
Speakers:
- Japan Parliament passed the consumption tax increase (as expected)
- Spain region of Catalonia urged central govt to quickly implement FLA to assist with its budget strains as soon as possible without political entanglements.
- German Economic Ministry confirmed that it saw moderate GDP growth in Q2. It noted that it saw weaker momentum in the international environment with the debt crisis being a key negative factor in outlook and carried significant risks
- Czech Central Bank Minutes noted that the Board voted 4 - 2 to leaves rates unchanged back on Aug 2nd. Vice-Governor Vladimir Tomsik and board member Lubomir Lizal called for a 25bps rate cut
- Finland PM Katainen called for a US-style banking fund for the European crisis management and should have the power to close down banks. The fund should also have the power to separate good parts from bad in banks. Proposes deposit insurance system for cross-border banking clients
- IEA Monthly Oil Market Report cut its 2013 global oil demand forecast by 150K bpd to 830K bpd and cited the slowdown in economic activity. The IEA cut its China oil demand forecast for both 2012 and 2013 period
- Libor-Setting Review Discussion Paper was published which noted that the current lack of Libor regulation was untenable and saw no magic solution for its reform
Currencies:
- The FX markets seemed to have become concerned that the ECB would not be able to act fast enough to prevent an increase in sovereign risk and this has hampered the Euro's price action over the last few session. The EUR/USD was softer by 25bps ahead of the NY morning at 1.2280.
- The weak Chinese data help to take some shine off the commodity-related currencies and overall risk appetite. The AUD/USD was off 50 pips from its Far East open at test 1.0520 area.
- The JPY currency was little moved as the USD/JPY pair was cemented around 78.50 area.
Political/ In the Papers:
- German banks are reported to have not been passing on rate cut by ECB to customers citing a survey conducted from FMH. The survey included 27 banks.
- The Spanish region of Catalonia is requesting the central government to implement the FLA to assist with its budget strains as soon as possible without political entanglements as it requires approximately €2.5B to meet their needs, and debt maturities. Note the Economy Ministry created the solidarity fund, the Fondo de Liquidez Autonmico (or Autonomy Liquidity Fund - FLA), which funded by the Treasury, managed by the Finance Ministry and the Official Credit Institute (ICO).
- The Finnish Prime Minister Katainen proposed a crisis fund to provide capital to troubled financial institutions, which would be paid for by the banking sector. The ECB has been determined in tackling Euro crisis, but cannot solve it alone.
- Ambrose Evans-Pritchard noted that in a Nomura report, it was suggested that a worsening of the euro zone debt crisis could cause UK officials to reevaluate the country's EU membership. According to the report, if the debt crisis were to worsen, this could make more EU integration necessary. However, UK officials could be reluctant to give more powers to the EU. Additionally near term flash points could include the issues of the single bank supervisor, the EU's 2014-20 budget and the transaction (tobin) tax.
Looking Ahead
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (CO) Colombia Monetary Policy Minutes
- (PE) Peru Jun Trade Balance: -$30.0Me v -$106.4M prior
- 06:00 (PT) Portugal Jun Construction Works Index: no est v 61.3 prior
- 06:10 (UK) DMO to sell combined £3.0B in 1-month, 3-month and 6-month Bills
- 07:30 (IN) India weekly Forex Reserves
- 08:00 Brazil Jun Unemployment Rate: 5.7%e v 5.8% prior
- 08:00 (RU) Russia Q2 Advanced GDP Y/Y: 4.0%e v 4.9% prior
- 08:30 (US) WASDE Crop Report
- 08:30 (CL) Chile Central Bank Economist Survey
- 08:30 (US) July Import Price Index M/M: 0.0%e v -2.7% prior; Y/Y: -2.5%e v -2.6% prior
- 08:30 (CA) Canada July Net Change in Employment: +6.0K v +7.3K prior; Unemployment Rate: 7.2%e v 7.2% prior; Participation Rate: 66.7%e v 66.7% prior
- 11:00 (US) Fed to sell $7.0-8.0B in Notes
- 12:30 (CA) BOC's Dodge speaks at Couchiching Conference
- 14:00 (US) July Monthly Budget Statement: -$93.0Be v -$129.4B prior
- 15:00 (AR) Argentina July Consumer Prices M/M: 0.8%e v 0.7% prior; Y/Y: 9/9%e v 9.9% prior
- 15:00 (AR) Argentina July Wholesale Price Index M/M: No est v 1.0% prior; Y/Y: No est v 12.8% prior
- (RU) Russia Narrow Money Supply w/e Aug 6th (RUB): 7.12T v 7.16T prior
- (FI) Finland Jun Industrial Production M/M: -1.4% v 1.2% prior; Y/Y: -1.0% v -1.4% prior
- (DE) Germany July Final Consumer Price Index M/M: 0.4% v 0.4%e; Y/Y: 1.7% v 1.7%e
- (DE) Germany July Final CPI EU Harmonized M/M: 0.4% v 0.4%e; Y/Y: 1.9% v 2.0%e
- (FR) France Jun Industrial Production M/M: 0.0% v 0.1%e; Y/Y: -2.3% v -1.8%e
- (FR) France Jun Manufacturing Production M/M: 0.1% v 0.0%e; Y/Y: -2.6% v -2.1%e
- (FR) France Jun Central Govt. Balance: -€56.7B v -€62.9Be
- (DK) Denmark Jun Industrial Production M/M: -1.8% v -0.9% prior; Industrial Orders M/M: -2.8% v -0.7% prior
- (DK) Denmark July CPI M/M: 0.0% v -0.1%e; Y/Y: 2.3% v 2.2%e
- (DK) Denmark July CPI EU Harmonized M/M: -0.1% v -0.2%e; Y/Y: 2.1% v 2.1%e
- (NL) Netherlands Jun Trade Balance: €3.7B v €3.9B prior
- (NO) Norway July CPI M/M: -0.5% v -0.3%e; Y/Y: 0.2% v 0.4%e
- (NO) Norway July CPI Underlying M/M: 0.0% v -0.2%e; Y/Y: 1.3% v 1.2%e
- (NO) Norway July Producer Prices incl.Oil M/M: 1.1% v -3.5% prior; Y/Y: -0.6% v -0.2% prior
- (NO) Norway Jun Credit Indicator Growth Y/Y: 7.1% v 6.8%e
- (IT) Italy July Final CPI (NIC incl. tobacco) M/M: 0.1% v 0.0%e; Y/Y: 3.1% v 3.0%e
- (IT) Italy July Final CPI EU Harmonized M/M: -1.7% v -1.6%e; Y/Y: 3.6% v 3.7%e
- (UK) July PPI Input M/M: 1.3% v 1.3%e; Y/Y: -2.4% v -1.5%e
- (UK) July PPI Output M/M: 0.0% v 0.0%e; Y/Y: 1.7% v 2.0%e
- (UK) July PPI Output Core M/M: 0.0% v 0.1%e; Y/Y: 1.3% v 1.6%e
- (HK) Hong Kong Q2 GDP Q/Q:-0.1% v 0.6%e; Y/Y: 1.1% v 1.2%e
- (PT) Portugal July Consumer Price Index M/M: 0.0% v -0.2% prior; Y/Y: 2.8% v 2.7% prior
- (PT) Portugal July CPI EU Harmonized M/M: +0.2% v -0.2% prior; Y/Y: 2.8% v 2.7% prior
- (RU) Russia Jun Trade Balance: $14.0B v $15.0Be; Exports: $40.8B v $42.1Be; Imports: $26.8B v $27.3Be
Fixed Income:
- (IN) India sold total INR150B vs. INR150B indicated in 2017, 2022, 2030 and 2036 bonds
- (ZA) South Africa sold total ZAR800M in I/ L2025, 2038 and 2050 Bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Notes/Observations
-Cyprus Central Bank: Support for banking sector to be determined in late October
-Italian Minister: No discussions on seeking European Union Bond help
-German Ministry: Moderate Economic Growth in Q2
-China July Trade Balance comes in below expectations with horrible components
- Japan Parliament passed the consumption tax increase (as expected); first sales tax increase since 1997
Equities
Indices: FTSE 100 -0.10% at 5848, DAX -0.30% at 6942, CAC-40 -0.60% at 3434, IBEX-35 -0.90% at 7045, FTSE MIB -0.20% at 14,622, SMI -0.20% at 6490, S&P 500 Futures -0.25% at 1397
- After opening lower, most indices have continued to trade in negative territory. Today's declines have been led by weakness in the Spanish IBEX and French CAC-40 indices. Factors which have weighed on markets include more disappointing economic data out of China and cautious commentary from Germany's Economy Ministry related to the growth outlook. European banks are trading mixed. Underperformers in the sector include Commerzbank, Bank of Ireland and Intesa, while shares of Barclays have outperformed. Resources related companies are broadly lower, tracking the declines in commodity prices.
- In UK movers, shares of UK Coal [UKC.UK] have lost over 20% on the company's H1 results. Insurer Prudential [PRU.UK] has traded lower as the company reported in line H1 results. In the banking sector, Barclays [BARC.UK] is higher by over 1% amid speculation that the firm could name former BoE official David Walker as its new chairman. Bank of Ireland has lost over 3% after reporting y/y declines in its H1 operating profit and revenues. In Germany, Hannover Re [HNR1.DE] is lower by over 4%, as the company reported weaker than expected profits. Hannover reported y/y declines in its ROE, EBIT margin and net investment income. Germany's largest steelmaker ThyssenKrupp [TKA.DE] is higher by more than 3% on better than expected Q3 results. The company's stated that strength in its elevator/escalators business offset weakness in the materials business. Oil services firm Fugro [FUR.NL] has lost approx. 1.5% after issuing H1 results.
Speakers:
- Japan Parliament passed the consumption tax increase (as expected)
- Spain region of Catalonia urged central govt to quickly implement FLA to assist with its budget strains as soon as possible without political entanglements.
- German Economic Ministry confirmed that it saw moderate GDP growth in Q2. It noted that it saw weaker momentum in the international environment with the debt crisis being a key negative factor in outlook and carried significant risks
- Czech Central Bank Minutes noted that the Board voted 4 - 2 to leaves rates unchanged back on Aug 2nd. Vice-Governor Vladimir Tomsik and board member Lubomir Lizal called for a 25bps rate cut
- Finland PM Katainen called for a US-style banking fund for the European crisis management and should have the power to close down banks. The fund should also have the power to separate good parts from bad in banks. Proposes deposit insurance system for cross-border banking clients
- IEA Monthly Oil Market Report cut its 2013 global oil demand forecast by 150K bpd to 830K bpd and cited the slowdown in economic activity. The IEA cut its China oil demand forecast for both 2012 and 2013 period
- Libor-Setting Review Discussion Paper was published which noted that the current lack of Libor regulation was untenable and saw no magic solution for its reform
Currencies:
- The FX markets seemed to have become concerned that the ECB would not be able to act fast enough to prevent an increase in sovereign risk and this has hampered the Euro's price action over the last few session. The EUR/USD was softer by 25bps ahead of the NY morning at 1.2280.
- The weak Chinese data help to take some shine off the commodity-related currencies and overall risk appetite. The AUD/USD was off 50 pips from its Far East open at test 1.0520 area.
- The JPY currency was little moved as the USD/JPY pair was cemented around 78.50 area.
Political/ In the Papers:
- German banks are reported to have not been passing on rate cut by ECB to customers citing a survey conducted from FMH. The survey included 27 banks.
- The Spanish region of Catalonia is requesting the central government to implement the FLA to assist with its budget strains as soon as possible without political entanglements as it requires approximately €2.5B to meet their needs, and debt maturities. Note the Economy Ministry created the solidarity fund, the Fondo de Liquidez Autonmico (or Autonomy Liquidity Fund - FLA), which funded by the Treasury, managed by the Finance Ministry and the Official Credit Institute (ICO).
- The Finnish Prime Minister Katainen proposed a crisis fund to provide capital to troubled financial institutions, which would be paid for by the banking sector. The ECB has been determined in tackling Euro crisis, but cannot solve it alone.
- Ambrose Evans-Pritchard noted that in a Nomura report, it was suggested that a worsening of the euro zone debt crisis could cause UK officials to reevaluate the country's EU membership. According to the report, if the debt crisis were to worsen, this could make more EU integration necessary. However, UK officials could be reluctant to give more powers to the EU. Additionally near term flash points could include the issues of the single bank supervisor, the EU's 2014-20 budget and the transaction (tobin) tax.
Looking Ahead
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (CO) Colombia Monetary Policy Minutes
- (PE) Peru Jun Trade Balance: -$30.0Me v -$106.4M prior
- 06:00 (PT) Portugal Jun Construction Works Index: no est v 61.3 prior
- 06:10 (UK) DMO to sell combined £3.0B in 1-month, 3-month and 6-month Bills
- 07:30 (IN) India weekly Forex Reserves
- 08:00 Brazil Jun Unemployment Rate: 5.7%e v 5.8% prior
- 08:00 (RU) Russia Q2 Advanced GDP Y/Y: 4.0%e v 4.9% prior
- 08:30 (US) WASDE Crop Report
- 08:30 (CL) Chile Central Bank Economist Survey
- 08:30 (US) July Import Price Index M/M: 0.0%e v -2.7% prior; Y/Y: -2.5%e v -2.6% prior
- 08:30 (CA) Canada July Net Change in Employment: +6.0K v +7.3K prior; Unemployment Rate: 7.2%e v 7.2% prior; Participation Rate: 66.7%e v 66.7% prior
- 11:00 (US) Fed to sell $7.0-8.0B in Notes
- 12:30 (CA) BOC's Dodge speaks at Couchiching Conference
- 14:00 (US) July Monthly Budget Statement: -$93.0Be v -$129.4B prior
- 15:00 (AR) Argentina July Consumer Prices M/M: 0.8%e v 0.7% prior; Y/Y: 9/9%e v 9.9% prior
- 15:00 (AR) Argentina July Wholesale Price Index M/M: No est v 1.0% prior; Y/Y: No est v 12.8% prior
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Above listed TradeTheNews.com market updates are delayed 5 minutes. To sample the live audio broadcasts, real-time headlines and research on demand in real time, please go to http://www.tradethenews.com for your no-obligation FREE trial.