- European equities are mostly, but modestly firmer (ex-FTSE 100); US futures are flat
- Dollar is flat, NZD outperforms and USD/JPY back to 146.50
- Bonds are incrementally firmer, Bunds dipped slightly on German Producer Prices but then edged higher as the morning progressed
- Crude is lower in a continuation of the prior day’s price action; XAU prints another fresh ATH at USD 2521/oz and base metals gain
- Looking ahead, Canadian CPI, CBRT Policy Announcement, US Primary (down-ticket), Democratic Convention, Comments from Fed's Bostic & Barr, Earnings from Lowe’s & Medtronic
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EUROPEAN TRADE
EQUITIES
- European bourses, Stoxx 600 (+0.1%) are mostly, but modestly firmer (ex-FTSE 100), continuing the strength seen on Wall St in the prior session.
- FTSE 100 (-0.6%) is the worst performing index in Europe, weighed on by losses in Energy names amid the broader weakness in underlying oil prices; Shell (-1.8%), BP (-1.6%).
- European sectors are mixed; Tech takes the top spot, continuing the strength seen in the US on Monday. Travel & Leisure is also one of the better performers, benefiting from the recent drop in oil prices – as such, Energy is found at the foot of the pile.
- US Equity Futures (ES U/C, NQ U/C, RTY U/C) are flat, taking a breather following the significant strength seen in the prior session.
- Antofagasta (ANTO LN) H1 (USD): Pretax 712.6mln (exp. 654mln), Revenue 2.955bln (exp. 2.833bln), EBITDA 1.394bln (exp. 1.348bln).
- Tesla (TSLA) has reportedly secured a lower, individual duty on EVs made in China which are shipped to the EU, via Politico; duty of 9% being proposed (vs. provisional levy of 21%); Volkswagen (VOW3 GY) to receive lower tariffs of 21.3% from European Commission on its China-made Cupra Tavascan, down from a provisional 37.6%, according to sources.
- Click for the sessions European pre-market equity newsflow
- Click for the additional news
- Click for a detailed summary
FX
- DXY is flat with the dollar showing mixed performance vs. peers. DXY remains stuck below the 102.00 mark in catalyst light trade as investors eye key risk events later in the week, including Jackson Hole and FOMC Minutes.
- EUR is flat vs. the USD in quiet newsflow. EUR on Monday was able to extend its advance on a 1.10 handle and has today printed a fresh YTD high at 1.1088.
- Cable has managed to poke its head above the 1.30 mark for the first time since July 18th, despite the lack of clear UK-specific catalysts.
- JPY is flat with USD/JPY well within yesterday's 145.19-148.05 range with newsflow out of Japan and the US on the light side in the run up to the Jackson Hole event later in the week and BoJ Governor Ueda's appearance before Parliament on the 23rd August.
- AUD is steady vs. the USD after a recent run of gains which has seen the pair gain a firm footing on a 0.67 handle and top out today at 0.6738.
- CAD is broadly steady vs. the USD in the run up to Canadian inflation metrics which are expected to see a pullback in the Y/Y rate and an increase in the M/M print.
- SEK was fairly unreactive to the Riksbank decision to cut rates by 25bps to 3.50%. The guidance for "two or three more times this year" in terms of policy cuts is a dovish shift vs the guidance seen at the last gathering for "two or three times in H2", as it opens the door to a cut per meeting in H2.
- PBoC set USD/CNY mid-point at 7.1325 vs exp. 7.1317 (prev. 7.1415).
- Click for a detailed summary
- Click for NY OpEx Details
FIXED INCOME
- USTs are contained within a thin six-tick range with the benchmark yet to lastingly deviate from the unchanged mark. Data docket remains light, but Fed speak sees Barr and Bostic later today.
- A firmer start with EGBs finding a grinding bid early doors, but a slight dip to the 134.09 low was seen on German Producer Price metrics which ticked up from the prior Y/Y.
- Bunds then edged higher throughout the morning, to a 134.41 peak, approaching Monday's 134.62 best; but some modest pressure was seen following Bloomberg reports that China is said to be considering allowing local gov'ts to issue bonds for home buying. Bunds were unreactive to the Green Bund auction.
- Gilts are modestly firmer in a narrow 99.74-99.88 band, which is entirely within the parameters of both Monday and Friday.
- Germany sells EUR 0.734bln vs exp. EUR 0.75bln 2.30% 2033 Green Bund & EUR 0.727bln vs exp. EUR 0.75bln 0.00% 2050 Green Bund. Sells EUR 0.734bln 2.30% 2033: b/c 3.3x (prev. 3.4x), average yield 2.16% (prev. 2.51%) & retention 2.13% (prev. 15.4%). Sells EUR 0.727bln 0.00% 2050: b/c 1.6x (prev. 2.2x), average yield 2.42% (prev. 2.41%) & retention 3.07% (prev. 20.2%)
- Click for a detailed summary
COMMODITIES
- Crude is softer intraday and continuing the price action seen on Monday, with focus on continued Gaza ceasefire talks and a weak Chinese economy. Brent October sits towards the lower end of a USD 76.55-77.77/bbl parameter.
- Precious metals are firmer across the board with broad-based modest gains against the backdrop of a subdued Dollar and with geopolitical risks looming. Spot gold printed a fresh all-time-high at USD 2,521.30/oz (vs low USD 2,497.51/oz).
- Base metals are mostly firmer across the board but to varying degrees, with copper prices somewhat flat intraday with some suggesting a short-covering rally ended amid China growth woes.
- LME Stocks: Copper +11975 (prev. -975).
- Equinor (EQNR NO) has commenced work to resume oil and gas output from Norway's Gullfaks C platform.
- Click for a detailed summary
NOTABLE DATA RECAP
- German Producer Prices YY (Jul) -0.8% vs. Exp. -0.8% (Prev. -1.6%); MM (Jul) 0.2% vs. Exp. 0.2% (Prev. 0.2%)
- Swiss Trade (Jul) 4.889B CH (Prev. 6.180B CH, Rev. 6.117B CH); Swiss Watch Exports Y/Y +1.6% (prev. -7.2%)
- EU HICP Final MM (Jul) 0.0% (Prev. 0.2%); HICP-X F, E, A, T Final MM (Jul) -0.2% vs. Exp. -0.2% (Prev. -0.2%); HICP-X F&E Final YY (Jul) 2.8% vs. Exp. 2.8% (Prev. 2.8%); HICP-X F,E,A&T Final YY (Jul) 2.9% vs. Exp. 2.9% (Prev. 2.9%); HICP Final YY (Jul) 2.6% vs. Exp. 2.6% (Prev. 2.6%); HICP-X F&E MM (Jul) -0.1% (Prev. 0.4%)
- EU Current Account NSA,EUR (Jun) 52.4B (Prev. 9.6B); SA, EUR (Jun) 51.0B (Prev. 36.7B)
NOTABLE EUROPEAN HEADLINES
- ECB's Rehn said there are no clear signs of a pick-up in the manufacturing sector, while he added the recent increase in negative growth risks in the euro area has reinforced the case for a rate cut at the next ECB monetary policy meeting in September.
- Riksbank cuts its Rate by 25bps as expected to 3.50% (prev. 3.75%); Policy rate can be cut two or three more times this year - somewhat faster than the Board expected in June. Click for details.
- Riksbank's Governor Thedeen says moving gradually with rates is part of central bank strategy. There are good reasons to keep SEK on the Riksbank's radar. Inflation is not under target, it is currently in line with target.
NOTABLE US HEADLINES
- Former US President Trump said he would consider ending the USD 7,500 electric vehicle tax credit and if elected, he would tap Elon Musk for a cabinet or advisory role if Musk would do it, according to an interview. Trump later stated that VP Harris informed that she will not do the Fox News debate on September 4th and he will conduct a tele-town hall, according to a post on Truth Social.
GEOPOLITICS
MIDDLE EAST
- US President Biden says Hamas is 'backing down' from Gaza deal, according to AFP cited by Sky News Arabia.
- "[Israel-Hamas ceasefire] Negotiations scheduled in Cairo are expected to be postponed until the end of the week due to lack of progress in contacts", according to Sky News Arabia citing Israeli official and diplomats via Israeli Broadcasting Corp
- Israeli PM Netanyahu accepted the updated proposal that includes some of his new demands because he knew that Hamas would reject it, according to Al Jazeera citing Axios quoting Israeli officials.
- US Secretary of State Blinken made it clear to Israeli PM Netanyahu that the US expects negotiations to continue until an agreement is reached, according to Al Jazeera citing Axios sources.
- Hamas senior official Hamdan said they confirmed to mediators that they don't need new Gaza negotiations and what they need is to agree on an implementation mechanism. Hamdan added that US Secretary of State Blinken's statement that Netanyahu accepted an updated proposal 'raises many ambiguities' since it is not what was presented to them and not what was agreed on, according to Reuters.
- Iran's Foreign Ministry said they affirm the right to respond to the attack on their sovereignty and will do so at the appropriate time.
- Iran's mission to the UN said they have no intention to interfere in US elections and demanded evidence from Washington after Tehran was accused of targeting the Trump campaign electronically.
OTHER
- Ukrainian military said its forces experienced repeated attacks in the Toretsk zone, Donetsk region and that its forces were under heavy Russian attack around Pokrovsk, eastern Ukraine. Ukrainian military later announced that air defence units were engaged in repelling a Russian air attack on Kyiv.
- Russia on Monday ruled out any peace talks with Ukraine despite Kyiv raising pressure on the Kremlin by claiming fresh advances in its offensive into Russian territory, according to AFP.
- US and South Korea are holding joint air drills to counter North Korean threat, according to Reuters.
CRYPTO
- Bitcoin edges higher and passed USD 60k to the upside; Ethereum also posts modest gains and climbs above USD 2.6k.
APAC TRADE
- APAC stocks traded mixed and only partially took impetus from the tech-led gains stateside amid a lack of major macro drivers.
- ASX 200 edged mild gains with stock news in Australia dominated by earnings releases, while the RBA Minutes noted it is possible the cash rate would have to stay steady for an extended period and members agreed a rate cut in the short term was unlikely.
- Nikkei 225 outperformed and reclaimed the 38,000 level despite the absence of notable catalysts.
- Hang Seng and Shanghai Comp. declined amid lingering economic concerns, while China also maintained its Loan Prime Rates which was widely expected after last month's bout of cuts to key funding rates.
NOTABLE ASIA-PAC HEADLINES
- Chinese Loan Prime Rate 1Y (Aug) 3.35% vs. Exp. 3.35% (Prev. 3.35%); 5Y 3.85% vs. Exp. 3.85% (Prev. 3.85%)
- China is unleashing billions of dollars of lending to technology start-ups and other small companies using their intellectual property as collateral as Beijing seeks to revive demand for loans and stimulate a lagging economy, according to FT.
- RBA Minutes from the August 5th-6th meeting stated the board considered the case to raise rates but decided a steady outcome better balanced the risks and it is possible the cash rate would have to stay steady for an extended period. Members agreed it is unlikely rates would be cut in the short term and they need to be vigilant to upside risks to inflation, while policy would need to remain restrictive and it was noted that an immediate hike in rates could be justified if risks to inflation had increased materially. Furthermore, members also observed that holding the cash rate target steady at its current level for a longer period than currently implied by market pricing may be sufficient to return inflation to target in a reasonable timeframe, but the Board will need to reassess this possibility at future meetings.
- China is said to be mulling allowing local governments to issue bonds for home purchases, according to Bloomberg sources.
- Xpeng Inc (XPEV) Q2 2024 (CNY): Revenue 8.11bln (exp. 8.23bln). Net Income -1.28bln (exp. -1.64bln), Adj. Net Income -1.22bln. GUIDANCE: Sees Q3 revenue between CNY 9.1-9.8bln (exp. 10.02bln)
