EU Mid-Market Update: Manufacturing PMI's fail to quell recession fears; Geopolitical tensions heightened across Pacific; New tropical depression Five forms over the North Atlantic.
Notes/Observations
-Following yesterday's govt official PMI, Chinese Caixin Manufacturing PMI also moved back into contraction after 2 months of expansion; In other news, the capital of Sichuan province and one of China's biggest cities Chengdu with 21M residents announced lockdown to conduct mass COVID testing from Sept 1-4th.
-Multitude of European Manufacturing PMIs with main EU components Germany, Spain, Italy and UK all confirming contractions as per prelims. France surprise beat back into expansion territory.
-UK Nationwide House Price Index beat consensus at 10.0% YoY compared to 8.9%, which lifted GBPUSD slightly. Germany retail sales beat estimates with +1.9% MoM compared to -0.1%e but still declining YoY -5.5%.
-Global trend of Govt’s reviewing nuclear energy solutions continues as UK chips in with Fin Min Nahawi stating in negotiations with EDF on Sizewell C Nuclear plant.
-Geopolitical tensions elevated as Taiwan shoots down ‘unidentified’ civilian drone, originally reported as Chinese, which was later corrected. A Taiwan Defense Ministry report highlighted concern that China is strengthening combat preparedness for an attack on Taiwan. Comments came as China Foreign Min spokesperson said the UN Human Rights report that came overnight is illegal, null and void and orchestrated by US and Western forces.
-Asia closed lower with Hang Seng underperforming at -1.8%. EU indices are lower, with bond yields higher. US futures are firmly in the red. Gold -0.6%, DXY +0.1%; Commodity: Brent -1.8%, WTI -1.8%, UK Nat Gas -6.1%; Crypto: BTC -1.7%, ETH -1.5%.
Asia
- China Aug Caixin PMI manufacturing: 49.5 V 50.0E (moves back into contraction after 2 months of expansion, lowest since May).
- (HK) Hong Kong reportedly receives China preliminary NOD to reverse quarantine; Proposal will allow more HK residents to travel to mainland China after completing a quarantine period locally.
- (HK) Hong Kong officials said to target end to hotel quarantine in Nov 2022.
-(SG) Singapore Central Bank (MAS) Survey of Economists: Cuts 2022 GDP outlook to 3.5% (prior 3.8%); Raises 2022 core CPI outlook to 3.8%.
-(CN) UN Human Rights Report: China responsible for ‘serious human rights violations’ in Xinjiang province.
- (HK) Macau Aug Casino Rev (MOP) 2.2B v 0.4B prior; Y/Y -50.7% v -95.3% prior.
-(CN) China Shenzhen District shuts indoors places and halts dine-in due to covid.
- (CN) Chengdu city, China [21M residents] announces lockdown; To conduct mass COVID testing from Sept 1-4th.
-(JP) Japan Chief Cabinet Sec Matsuno: Volatility rising in recent FX market; Watching FX trends with high degree of urgency.
-(CN) China Ministry of Commerce (MOFCOM) Spokesperson: Will continue to boost consumption; Resolutely oppose the US move to halt Nvidia top AI chips exports to China.
-(CN) China Foreign Min spokesperson Wang Wenbin: UN report is illegal, null and void, orchestrated by US and Western forces.
Taiwan
-(TW) Taiwan to raise monthly minimum wage by 4.6% for 2023.
-(TW) Taiwan Defence Ministry: Shot down 'unidentified' civilian drone in Kinmen offshore island.
-(TW) Taiwan Defense Ministry: China continues to strengthen its combat preparedness for an attack on Taiwan; China's drills have expanded beyond first island chain, aim is to stop foreign forces from interfering in attack on Taiwan.
Ukraine conflict
-(UR) According to Ukrainian officials, Russian forces are shelling the pre-arranged route the IAEA mission to Zaporizhnaya nuclear power plant; The mission cannot proceed as a result of the shelling.
Europe
-(HU) Hungary Central Bank raises One Week Deposit Rate by 100bps to 11.75%; as expected.
-(TR) Turkey Central Bank (CBRT) to charge 3% commission on some required FX reserves for banks.
-(EU) EU said to be looking at all possibilities to intervene in energy market, including energy price caps and reducing gas demand.
-(EU) EU Commission President Von der Leyen: To outline EU power plan and energy price caps in Sept 14th's speech.
-(UK) BOE Survey: DMP members raise forecast for one-year ahead CPI from 7.3% to 8.4%.
Energy
-(KZ) Kazakhstan Energy Min: Kazakh oil is now exporting via CPC without any limits.
-(TR) Turkey said to hike electricity prices for households by 20% and natural gas prices as much as 50% for industry.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 -1.56% at 408.66, FTSE -1.65% at 7,164.10, DAX -1.66% at 12,621.41, CAC-40 -1.62% at 6,025.89, IBEX-35 -1.08% at 7,800.71, FTSE MIB -1.47% at 21,243.00, SMI -1.48% at 10,694.78, S&P 500 Futures -0.87%].
Market Focal Points/Key Themes: European indices open lower across the board and fell further through the early part of the session; all sectors start the day in the red; less negative sectors include telecom and energy; sectors among those leading to the downside are real estate and consumer discretionary; semiconductor subsector under pressure after US instructed NVidia to not export AI chips to China; luxury brands underperforming following new lockdown announcements in China; Walmart confirms is interested in acquiring remaining interest in Massmart; Lufthansa pilots announce one-day strike; earnings expected in the upcoming US session include Broadcom, Weibo, Hormel Foods and Ciena.
Equities
- Consumer discretionary: Jet2 [JET2.UK] +2% (AGM update), Richemont [CFR.CH] -3% (analyst action).
- Consumer staples: Pernod Ricard [RI.FR] -0.5% (earnings; buyback; dividend), Reckitt Benckiser [RKT.UK] -2.5% (new CFO).
- Healthcare: Santhera Pharmaceuticals [SANN.CH] +27% (trial results), Biocartis [BCART.BE] -16% (earnings; recapitalization plans).
- Telecom: Nokia [NOKIA.FI] +2% (contract).
Speakers
- (ES) Spain PM Sanchez: To propose cutting VAT on gas from 21% to 5%.
- (DE) Germany Econ Min: Confirms Germany to charter fifth floating LNG terminal for this winter.
- (HU) Hungary Econ Development Min Nagy: Hungary's CPI to peak at 15-16% in Nov.
- (UK) Fin Min Zahawi: Ongoing negotiations with EDF on Sizewell C Nuclear plant; Good idea to invest in nuclear.
- (FR) France PM Borne: Too early to tell whether or not France has passed inflation peak.
Currencies/fixed income
- No substantial change in strong USD over the session as risk off momentum carries over from US and Asia sessions. USD at 108.9.
- EUR/USD experienced some slight increased volatility as plethera of PMI readings came in. Currently at 1.00292 as it continues to battle parity.
-GBP/USD pushes high following higher than expected nationwide house price index. Cable at 1.160.
- USD/JPY pulling back after hitting highest point since 1998 earlier in the day. Trades 139.3.
Economic data
- (ID) Indonesia Aug CPI M/M: -0.2% v -0.1%e, Y/Y: 4.7% v 4.9%e.
- (IN) India Aug PMI Manufacturing: 56.2 v 55.0e.
- (JP) Japan Aug Domestic Vehicle Sales Y/Y: -13.3% v -13.4% prior.
- (UK) Aug Nationwide House Price Index M/M: 0.8% V 0.1%E; Y/Y: 10.0% V 8.9%E.
- (RU) Russia Aug Manufacturing PMI: 51.7 v 50.1e (4th straight expansion).
- (SE) Sweden Q2 Current Account (SEK): 36.0B v 42.8B prior.
- (DE) Germany Aug Retail Sales M/M: +1.9% V -0.1%E; Y/Y: -5.5% V -6.5%E.
- (CH) Swiss Aug CPI M/M: 0.3% V 0.2%E; Y/Y: 3.5% V 3.4%E; CPI EU Harmonized M/M: 0.3% v 0.1% prior; Y/Y: 3.3% v 3.3%e; CPI Core Y/Y: 2.0% v 2.0%e.
- (CH) Swiss July Real Retail Sales YoY: 2.6% v 0.7% prior.
- (SE) Sweden Aug PMI Manufacturing: 50.6 v 52.0e (27th straight expansion).
- (AU) Australia Aug Commodity Index: 147.4 v 151.3 prior.
- (NL) Netherlands Aug Manufacturing PMI: 52.6 v 52.8e (25th straight expansion but lowest print since Oct 2020).
- (TR) Turkey Aug PMI Manufacturing: 47.4 v 46.9 prior (6th straight contraction).
- (PL) Poland Aug PMI Manufacturing: 40.9 v 41.6e (4th straight contraction).
- (HU) Hungary Aug Manufacturing PMI: 57.8 v 53.0e (17th straight expansion).
- (HU) Hungary Q2 Final GDP Q/Q: 1.0% v 1.1%e; Y/Y: 6.5% v 6.5%e.
- (HU) Hungary Central Bank raises One Week Deposit Rate by 100bps to 11.75%; as expected.
- (HU) Hungary Jun Final Trade Balance: -€0.4B v -€0.5B prelim.
-(ES) Spain Aug Manufacturing PMI: 49.9 V 48.5E.
- (CH) Swiss Aug PMI Manufacturing: 56.4 v 58.0 prior.
- (CZ) Czech Republic Aug Manufacturing PMI: 46.8 v 46.8 prior.
- (TH) Thailand Aug Business Sentiment Index: 49.6 v 49.4 prior.
- (IT) Italy Aug Manufacturing PMI: 48.0 v 48.1e (2nd straight contraction and lowest reading since June 2020).
- (FR) France Aug Final Manufacturing PMI: 50.6 v 49.0e (returns to expansion territory after 1st contraction in 20 months in July).
- (DE) Germany Aug Final Manufacturing PMI: 49.1 v 49.8e (confirms 2nd straight contraction and lowest print June 2020).
- (EU) Euro Zone Aug Final Manufacturing PMI: 49.6 v 49.7e (confirms 2nd straight contraction and lowest print since June 2020).
- (IT) Italy July Unemployment Rate: 7.9% v 8.1%e.
- (NO) Norway Aug PMI Manufacturing: 52.3 v 54.0 prior.
- (GR) Greece Aug Manufacturing PMI: 48.8 v 49.1 prior.
- (UK) Aug Final Manufacturing PMI: 47.3 V 46.0E (confirms 1st contraction in 27 months and lowest since May 2020).
- (IT) Italy Q2 Final GDP Q/Q: 1.1% v 1.0%e; Y/Y: 4.7% v 4.6%e.
- (DK) Denmark Aug PMI Survey: 48.0 v 38.0 prior.
- (ZA) South Africa Aug Manufacturing PMI: 52.1 v 48.2e (back into expansion after 1st contraction in 12 months in July).
- (BE) Belgium July Unemployment Rate: 5.9% v 5.9% prior.
- (EU) Daily 3-month Euribor Fixing: 0.712% v 0.654% prior.
- (EU) Euro Zone July Unemployment Rate: 6.6% V 6.6%E.
Fixed income issuance
- (ES) Spain Debt Agency (Tesoro) sells total €4.96B vs. €4.0-5.0B indicated range in 2025, 2032 and 2052 SPGB bonds.
- (ES) Spain Debt Agency (Tesoro) sells €415M vs. €250-750M indicated range in 0.70% Nov 2033 inflation-linked bonds (SPGBei); Real Yield: 0.607% v -0.112% prior; Bid-to-cover: 2.33x v 1.76x prior.
- (FR) France Debt Agency (AFT) sells total €9.998B vs €9.0-10.0B indicated range in 2031, 2032 and 2038 bonds.
- (UK) DMO sells £2.0B in 0.875% Jan 2046 GILTS; Avg Yield: 3.224% V 1.178% prior; Bid-to-cover: 2.51X V 2.03X prior; Tail: 0.4BPS V 1.0BPS prior.
Looking ahead
- 05:25 (EU) Daily ECB Liquidity Stats.
- 06:00 (PT) Portugal July Industrial Production M/M: No est v -1.5% prior; Y/Y: No est v 3.7% prior.
- 07:00 (ZA) South Africa July Electricity Consumption Y/Y: No est v -1.1% prior; Electricity Production Y/Y: No est v -4.0% prior.
- 07:30 (US) Aug Challenger Job Cuts: No est v 25.8K prior; Y/Y: No est v 36.3% prior.
- 08:00 (CZ) Czech Aug Budget Balance (CZK): No est v -192.7B prior.
- 08:00 (BR) Brazil Q2 GDP Q/Q: 0.9%e v 1.0% prior; Y/Y: 2.8%e v 1.7% prior; GDP 4 Quarters Accumulated: 2.5%e v 4.7% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (US) Q2 Final Nonfarm Productivity: -4.5%e v -4.6% prelim; Unit Labor Costs: 10.7%e v 10.8% prelim.
- 08:30 (CA) Canada July Building Permits M/M: -0.4%e v -1.5% prior.
- 08:30 (US) Initial Jobless Claims: 249Ke v 243K prior; Continuing Claims: 1.45Me v 1.415M prior.
- 08:30 (CL) Chile July Economic Activity Index (Monthly GDP) M/M: No est v -0.2% prior; Y/Y: 1.6%e v 3.7% prior.
- 08:30 (US) Weekly USDA Net Export Sales.
- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 26th: No est v $574.0B prior.
- 09:00 (BR) Brazil Aug Manufacturing PMI: No est v 54.0 prior.
- 09:30 (CA) Canada Aug Manufacturing PMI: No est v 52.5 prior.
- 09:45 (US) Aug Final S&P/Markit Manufacturing PMI: 51.3e v 51.3 prelim.
- 10:00 (US) Aug ISM Manufacturing: 52.0e v 52.8 prior; Prices Paid: No est v 60.0 prior.
- 10:00 (US) July Construction Spending M/M: -0.1%e v -1.1% prior.
- 10:00 (MX) Mexico July Total Remittances: $5.1Be v $5.2B prior.
- 10:00 (MX) Mexico Central Bank Economist Survey.
- 10:30 (MX) Mexico Aug Manufacturing PMI: No est v 48.5 prior.
- 10:30 (US) Weekly EIA Natural Gas Inventories.
- 11:00 (CO) Colombia Aug PMI Manufacturing: No est v 49.5 prior.
- 11:00 (PE) Peru Aug CPI M/M: 0.6%e v 0.9% prior; Y/Y: 8.4%e v 8.7% prior.
- 12:00 (IT) Italy Aug New Car Registrations Y/Y: No est v -0.9% prior.
- 13:00 (MX) Mexico Aug IMEF Manufacturing Index: No est v 52.2 prior; Non-Manufacturing Index: No est v 52.2 prior.
- 14:00 (BR) Brazil Aug Monthly Trade Balance: $3.4Be v $5.44B prior; Exports: $30.5Be v $30.0B prior; Imports: $26.8Be v $24.5B prior.
- 18:45 (NZ) New Zealand Q2 Terms of Trade Index Q/Q: No est v 0.5% prior.
- 19:00 (KR) South Korea Aug CPI M/M: 0.3%e v 0.5% prior; Y/Y: 6.1%e v 6.3% prior; CPI Core Y/Y: 4.5%e v 4.5% prior.
- 19:50 (JP) Japan Aug Monetary Base Y/Y: No est v 2.8% prior; Monetary Base End of Period: No est v ¥666.0T prior.
Speakers/events
- 06:30 PO 334) ECB's Centeno (Portugal) in Lisbon.
- 09:30 (SE) (SE) Sweden Central Bank (Riksbank) Gov Ingves speaks at financial conference.
- (US) Fed’s Bostic speaks to Business School Students.
Fixed Income
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.
- 06:45 (US) Daily Libor Fixing.
- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.
- 12:00 (CA) Canada to sell 30 Year Bonds.
- 22:35 (CN) China to sell 30-year Upsized Bond.
- 22:35 (CN) China to sell 3-month Bills.
- 22:30 (JP) Japan to sell 3-Month Bills.
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.
Recommended Content
Editors’ Picks
AUD/USD holds steady near 0.6250 ahead of RBA Minutes
The AUD/USD pair trades on a flat note around 0.6250 during the early Asian session on Monday. Traders brace for the Reserve Bank of Australia Minutes released on Monday for some insight into the interest rate outlook.
USD/JPY consolidates around 156.50 area; bullish bias remains
USD/JPY holds steady around the mid-156.00s at the start of a new week and for now, seems to have stalled a modest pullback from the 158.00 neighborhood, or over a five-month top touched on Friday. Doubts over when the BoJ could hike rates again and a positive risk tone undermine the safe-haven JPY.
Gold price bulls seem non-committed around $2,620 amid mixed cues
Gold price struggles to capitalize on last week's goodish bounce from a one-month low and oscillates in a range during the Asian session on Monday. Geopolitical risks and trade war fears support the safe-haven XAU/USD. Meanwhile, the Fed's hawkish shift acts as a tailwind for the elevated US bond yields and a bullish USD, capping the non-yielding yellow metal.
Week ahead: No festive cheer for the markets after hawkish Fed
US and Japanese data in focus as markets wind down for Christmas. Gold and stocks bruised by Fed, but can the US dollar extend its gains? Risk of volatility amid thin trading and Treasury auctions.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.