CPI from Spain and Germany to give direction for tomorrow's EA print

In focus today

The focus in the Nordics for today will be the Q2 GDP report from Sweden due at 08.00 CET. The unofficial GDP indicator showed a 0.8% q/q drop in GDP, however, that seems a tad excessive to us and we would not be surprised if today's release indicates slightly less negative growth. We will also get retail sales and the August consumer confidence survey today.

Today, we also get August flash inflation prints for Spain and Germany, which will make us much wiser in terms of what to expect from the euro area figure tomorrow.

Overnight, we get a pile of Japanese data with July retail sales and August Tokyo inflation as the most interesting. We got the first uplifting data on private spending in a very long time with the Q2 national accounts. Whether wage growth has translated into spending growth is key for the reflation outlook in Japan.

Economic and market news

What happened overnight

The long-awaited Nvidia earnings beat expectations but not by as much as previously, and markets have been jittery overnight with Asian equities dragged down by tech stocks as investors cool expectations of AI demand.

What happened yesterday

In geopolitics, the Kremlin said it would continue its operations in Ukraine after President Zelenskiy said he was preparing to present a peace plan to the US government yesterday.

In Libya, more oil fields were reported to have halted production after the announcement two days ago by the East Libyan government that it would do so. Yet oil prices trended lower during the day as markets weighed the prospects of lower economic activity and, thus, demand.

Equities: Global equities were lower yesterday, primarily dragged down by the US and large-cap tech sectors ahead of Nvidia's results, which were posted after the cash close. With no significant catalyst and tech stocks having already had more than 25% p/e expansion this year based on 2024 earnings projections, some profit-taking should be expected. It is also important to recall that tech experienced the largest multiple expansion last year, which leaves very little room for companies in this sector to disappoint without experiencing a sharply negative share price reaction. In the US yesterday, Dow -0.4%, S&P 500 -0.6%, Nasdaq -1.1%, and Russell 2000 -0.7%. Asian markets are broadly lower this morning, with focus on US futures, particularly the tech-heavy futures in the US, which are lower as Nvidia's results failed to impress investors. European futures are mixed this morning.

FI: Yields were 2-3bp lower across jurisdictions with the outperformance in the long end of the curve, however the day was split into two segments. Yields were on a steady decline until late lunchtime from where rates sold off slightly when 5y Austria and 10y EIB syndication were priced, as well as the decision from Austria not to tap the ultra-long dated 2086-bond. After that it was more sideways trading. German Bund-asset swaps were trading close to the 28.5bp mark yesterday.

FX: Yesterday was yet another quiet day in FX markets where the most notable moves were the modest strengthening of the USD and the CEEs alongside the EUR trading heavy. Both SEK and NOK did better than the EUR but posted marginal declines vs the greenback.