Risk off for US futures as September blues in minds of traders ahead of Payrolls on Friday
|Notes/observations
-European indices are flat to mixed as volatility and volume remains absent. US traders return to desks following extended weekend but will likely continue to wait for US Nonfarm Payrolls on Fri.
-Israel PM Netanyahu under domestic and foreign pressure: Pres Biden warned Netanyahu he was not doing enough to secure a deal for release of hostages held by Hamas in Gaza, comes at a time of protests in Israel following the news of Hamas executing hostages at the weekend. Oil moves down on hopes Netanyahu will give in to pressure and negotiate with Hamas, easing overall tensions in the region.
-French budget deficit widened substantially by €53.4B since last month as govt cited increase local spending, while improved UK Aug BRC LFL Sales was attributed to weather.
-Notable corporate news: Cathay pacific cancelled collection of Airbus A350 flights following degraded fuel lines regarding the Rolls-Royce engines. Cathay noted issue affects 15 aircraft. Elsewhere, Volkswagen said to close some factories in Germany for first time in their 87-year history, amid increased energy costs from lack of Russian gas and China EV competition.
-Asia closed lower with Shanghai underperforming -0.3%. EU indices are -0.5% to +0.1%. US futures are -0.3% to -0.5%. Gold +0.2%, DXY +0.1%; Commodity: Brent -0.8%, WTI +0.1%; Crypto: BTC +1.3%, ETH +1.3%.
Asia
- South Korea Aug CPI M/M: 0.4% v 0.4%e; Y/Y: 2.0% v 2.1%e; CPI Core Y/Y: 2.1% v 2.1%e.
- Australia Q2 Current Account Balance(A$): -1.6B v -5.0Be.
- New Zealand Q2 Terms of Trade Q/Q: 2.0% v 2.7%e.
Global conflict/tensions
- US President Biden stated that Israel PM Netanyahu was not doing enough to secure a deal for the release of hostages held in Gaza by Hamas.
- Hamas blamed Israel for recent hostage deaths because they blocked a ceasefire deal; issued new instructions to guards handling hostages if Israeli forces approach detention sites.
- Israel PM Netanyahu dismissed widespread protests in Israel and refused to surrender to pressure and agree a hostage deal with Hamas.
Europe
- UK Aug British Retail Consortium (BRC) LFL Sales Y/Y: 0.8% v +0.3% prior.
- France government said to have ‘warned’ of wider budget deficit; local spending might add €16B to the deficit.
Americas
- VP Kamala Harris says she is opposed to Japan's Nippon Steel buying US Stee. Added that company should remain domestically owned and operated.
Energy
- Libya declared force majeure on El Feel field (**Note: On Sept 1st Arabian Gulf Oil resumed output production at 120k bpd to meet domestic needs; exports are still halted.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 -0.2% at 524, FTSE -0.1% at 8356, DAX -0.1% at 18905, CAC-40 +0.1% at 7650, IBEX-35 -0.4% at 11355, FTSE MIB -0.4% at 3353, SMI -0.5% at 12393, S&P 500 Futures -0.3%].
Market focal points/key themes: European indices open generally higher; improved risk appetite seen following slightly better than anticipated PMI figures from the Euro Area; among sectors leading to the upside are financials and consumer discretionary; lagging sectors include real estate and technology; reportedly Italgas to launch bid for 2i Rete Gas this week; focus on US PMIs later in the day; no major earnings expected in the upcoming Americas session.
Equities
- Consumer discretionary: Watches of Switzerland Group [WOSG.UK] +9.5% (FY trading update).
- Financials: AFRY AB [AFRY.SE] +4.0% (analyst upgrade); Gimv [GIMB.BE] +2.5% (trading update); Swiss Life Holding [SLHN.SE] +1.5% (H1 earnings).
- Healthcare: Valneva [VLA.FR] +3.5% (study results); Hikma Pharmaceuticals [HIK.LN] +1.5% (analyst upgrade).
- Industrials: Rolls-Royce Holdings [RR.UK] +4.5% (Cathay engine issues); dormakaba Holding [DOKA.SE] +5.5% (FY earnings); Ashtead Group [AHT.UK] +4.0% (Q1 earnings; appoints new CFO).
- Technology: Atea [ATEA.NO] +3.0% (wins large public sector frame agreement).
Speakers
- Sweden Central Bank (Riksbank) Gov Thedeen stated that three additional rate cuts in 2024 was more likely than just two. Saw neutral rate around 2.50% (**Note: Repo Rate currently 3.50%).
- World Bank on India noted that growth to remain strong over the medium term. Saw India GDP averaging 6.7% in FY26 and FY27.
- BOK's Shin: Country's housing market is in a bubble.
Currencies/fixed income
- FX majors were locked in narrow ranges as overall volatility remained subdued. Greenback trying to reclaim some of the lost ground endured over the past few weeks. USD weakness had been attributed in anticipating the first US interest-rate cut on Sept. 18th. Expectations for a 25 basis point cut already priced into market.
- USD/JPY moved lower on reports that BOJ Gov Ueda Ueda had submitted document to a govt panel suggesting that the BOJ would continue to raise interest rates if the economy and prices performed as expected.
Economic data
- (CH) Swiss Aug CPI M/M: 0.0% v 0.1%e; Y/Y: 1.1% v 1.2%e.
- (CH) Swiss Aug CPI EU Harmonized M/M: 0.0% v 0.4% prior; Y/Y: 1.0% v 1.2%e; CPI Core Y/Y: 1.1% v 1.1%e.
- (HU) Hungary Q2 Final GDP Q/Q: -0.2% v -0.2% prelim; Y/Y: 1.5% v 1.5% prelim.
- (FR) France July YTD Budget Balance: -€156.9B v -€103.5B prior.
- (ES) Spain Aug Net Unemployment Change: +21.9K v -10.8K prior; Net Change In Employment M/M: +30.2K v +1.3K prior.
- (CH) Swiss Q2 GDP Q/Q (final): 0.7% v 0.5%e; Y/Y: 1.8% v 1.6%e.
- (CZ) Czech Q2 Average Real Monthly Wage Y/Y: 3.9% v 4.3%e; Average Nominal Monthly Wage Y/Y: 6.5% v 7.2% prior.
- (TR) Turkey Aug CPI M/M: 2.5% v 2.3%e; Y/Y: 52.0% v 51.9%e; CPI Core Y/Y: 51.6% v 50.1%e.
- (TR) Turkey Aug PPI M/M: 1.7% v 1.9% prior; Y/Y: 35.8% v 41.4% prior.
- (BR) Brazil Aug FIPE CPI (Sao Paulo) M/M: 0.2% v 0.1% prior.
- (IS) Iceland Q2 Current Account Balance (ISK): -30.5B v -33.8B prior.
Fixed income issuance
- (ID) Indonesia sold total IDR22.0T vs. IDR22.0T target in bills and bonds.
- (ID) Indonesia opened its book to sell EUR-denominated 8-year notes, guidance seen at +160bps to mid-swaps.
- (UK) DMO opened its book to sell 4.375% Jan 2040 Gilts; guidance seen +4.0-4.5bps to UK Gilts; order book over £100B.
- (ES) Spain Debt Agency (Tesoro) sold total €5.35B vs. €4.5-5.5B indicated range in 6-month and 12-month bills.
- (AT) Austria Debt Agency (AFFA) sold total €1.438B vs. €1.438B indicated in 2034 and 2086 RAGB Bonds.
Looking ahead
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (ZA) South Africa Q2 GDP Q/Q: +0.5%e v -0.1% prior; Y/Y: 0.3%e v 0.5% prior.
- 05:15 (CH) Switzerland to sell 3-month Bills.
- 05:30 (DE) Germany to sell €4.5B in 2.7% Sept 2026 Schatz.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €2.0B in 3-month and 6-month bills.
- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2037, 2040 and 2048 bonds.
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
- 06:30 (EU) ESM to sell €1.1B in 3-month Bills.
- 08:00 (BR) Brazil Q2 GDP Q/Q: 0.9%e v 0.8% prior; Y/Y: 2.7%e v 2.5% prior; GDP 4 Quarters Accumulated: 2.3%e v 2.5% prior.
- 08:00 (MX) Mexico July Unemployment Rate: 3.0%e v 2.8% prior; Unemployment Rate (seasonally adj): No est v 2.7% prior.
- 08:00 (MX) Mexico Jun Gross Fixed Investment M/M: -0.4%e v +0.7% prior; Y/Y: 1.1%e v 6.0% prior; Private Consumption Y/Y: 1.0%e v 2.6% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
- 08:45 (SE) Sweden Central Bank (Riksbank) Breeden.
- 09:30 (CA) Canada Aug Manufacturing PMI: No est v 47.8 prior.
- 09:45 (US) Aug Final S&P Manufacturing PMI: 48.0e v 48.0 prelim.
- 10:00 (US) Aug ISM Manufacturing: 47.5e v 46.8 prior; Prices Paid: 52.0e v 52.9 prior.
- 10:00 (US) July Construction Spending M/M: +0.1%e v -0.3% prior.
- 11:00 (DK) Denmark Aug Foreign Reserves (DKK): No est v 640.0B prior.
- 11:00 (CO) Colombia July Exports: $4.4Be v $3.8B prior.
- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
- 11:30 (US) Treasury to sell 52-Week Bills.
- 12:45 (DE) ECB's Nagel (Germany).
- 17:00 (KR) South Korea Aug Foreign Reserves: No est v $413.5B prior.
- 18:00 (CL) Chile Central Bank (BccH) Interest Rate Decision: Expected to cut Overnight Rate Target by 25bps to 5.50%.
- 19:00 (AU) Australia Aug Final Services PMI: No est v 52.2 prelim; Composite PMI: No est v 51.4 prelim.
- 20:01 (IE) Ireland Aug PMI Services: No est v 53.6 prior; PMI Composite: No est v 52.2 prior.
- 20:30 (JP) Japan Aug Final Services PMI: No est v 54.0 prelim; Composite PMI: No est v 53.0 prelim.
- 20:30 (HK) Hong Kong Aug PMI (whole economy): No est v 48.2 prior.
- 20:30 (SG) Singapore Aug PMI (whole economy): No est v 57.2 prior.
- 20:30 (VN) Vietnam Aug PMI Manufacturing: No est v 54.7 prior.
- 21:00 (NZ) New Zealand Aug ANZ Commodity Price M/M: No est v -1.7% prior.
- 21:30 (AU) Australia Q2 GDP Q/Q: 0.2%e v 0.1% prior; Y/Y: 0.9%e v 1.1% prior.
- 21:30 (AU) Australia July Household Spending M/M: +0.6%e v -0.5% prior; Y/Y: 3.3%e v 3.1% prior.
- 21:45 (CN) China Aug Caixin PMI Services: 52.1e v 52.1 prior; PMI Composite: No est v 51.2 prior.
- 22:35 (CN) China to sell 3 Year Bonds.
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