Markets ignor EU inflation data, COVID-19 concerns linger

Notes/Observations

- Various release of EU inflation data largely ignored in session (France, Spain, Finland, Sweden and Poland CPIs; German Wholesale prices, Swiss Producer& Import prices).

- More emerging markets raising interest rates (Mexico & Peru overnight).

- Poland GDP reading providing calls for higher interest rates to combat the fastest inflation in a decade.

- Continued concerns over the surge of Covid-19 and its Delta variant; analysts note growing evidence that the current virus wave is affecting consumer activity.

Asia

- China coronavirus infection said to close shipping terminal at Ningbo-Zhoushan Port. All other terminals aside from Meishan have been operating normally (Insight: Closed terminal accounts for about 25% of container cargo through the port).

Coronavirus

- Total global cases 206.2M (+0.4% d/d); total deaths: 4.35M (+0.2% d/d). Active cases stand at 16.8M (+0.6% d/d).

- Japan daily new coronavirus cases to exceed 20,000 for the 1st time. Tokyo's daily new COVID-19 cases hit record 5,773.

- FDA on Thursday authorized third dose of Pfizer (PFE) and Moderna (MRNA) vaccines for immunocompromised patients.

Americas

- Canada PM Trudeau reportedly hold snap election scheduled for Sept 20th.

- UK and US said they’re sending troops to Afghanistan to help evacuate their embassy staff.

- Mexico Central Bank (Banxico) raised the Overnight Rate by 25bps to 4.25% (as expected) for its 2nd straight hike.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.23% at 475.92, FTSE +0.41% at 7,222.79, DAX +0.42% at 16,004.60, CAC-40 +0.29% at 6,902.69, IBEX-35 +0.25% at 9,001.00, FTSE MIB +0.31% at 26,639.50, SMI +0.34% at 12,471.90, S&P 500 Futures +0.07%].

Market Focal Points/Key Themes: European indices open generally flat but later drifted into positive territory; upbeat sectors include consumer discretionary and industrials; while technology and energy sectors trend to the downside; energy sector under pressure after crude prices slip; Adidas divests Reebok to Authentic brands; Zooplus recieves takeover offer from Zorro; Babcock sells Frazer-Nash unit; earnings expected during the upcoming US session include Embraer and Crescent Point Energy.

Equities

- Consumer discretionary: Adidas [ADS.DE] +2% (sells Reebok unit), zooplus [ZO1.DE] +40% (offer).

- Consumer staples: ForFarmers [FFARM.NL] -5% (earnings).

- Healthcare: Ipsen [IPN.FR] -12% (withdrawal of NDA).

- Industrials: Babcock International [BAB.UK] +5% (divestment), Knorr-Bremse [KBX.DE] -1.5% (earnings).

- Technology: SimCorp [SIM.DK] +2% (earnings; buyback; new CEO).

- Materials: Avon Rubber [AVON.UK] -24% (trading update).

Speakers

- Germany Econ Ministry saw positive underlying momentum of overall domestic economy persisting. Saw no signs of a wage-price spiral that could lead to permanently high inflation.

- Czech Central Bank (CNB) Aug Minutes: Vote to raise rates by 25bps was not unanimous (4--1-2); Noted that rate hikes were needed to cap inflationary expectations. Majority view that interest rates are very low and likely need to be gradually raised over the coming H2.

Currencies/Fixed income

- USD steady in a listless market. Dealers noted that safe-haven demand for the greenback remained viable and being spurred by concerns over the surge of Covid-19 and its Delta variant.

- EUR/USD was steady in quiet trade with markets basically ignored the various releases of EU inflation during the session (France, Spain, Finland).

Economic data

- (FI) Finland July CPI M/M: +0.3% v -0.1% prior; Y/Y: 1.9% v 2.0% prior.

- (FR) France Q2 ILO Unemployment Rate: 8.0% v 7.8%e; Mainland Unemployment Rate: %7.8 v 7.6%e.

- (DE) Germany July Wholesale Price Index M/M: 1.1% v 1.5% prior; Y/Y: 11.3% v 10.7% prior.

- (CH) Swiss July Producer & Import Prices M/M: 0.5 % v 0.3%e; Y/Y: 3.3% v 3.1%e.

- (FR) France July Final CPI M/M: 0.1% v 0.1%e; Y/Y: 1.2% v 1.2%e; CPI (ex-tobacco index): 105.55 v 105.56e.

- (FR) France July Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 1.5% v 1.6%e.

- (ES) Spain July Final CPI M/M: -0.8% v -0.7%e; Y/Y: % v 2.9%e.

- (ES) Spain July Final CPI EU Harmonized M/M: -1.2% v -1.2%e; Y/Y: 2.9% v 2.9%e.

- (ES) Spain July CPI Core M/M: -0.9% v +0.1% prior; Y/Y: 0.6% v 0.2% prior.

- (TR) Turkey Jun Current Account Balance: -$1.1B v -$1.2Be.

- (SE) Sweden July CPI M/M: 0.3% v 0.2%e; Y/Y: 1.4% v 1.3%e; CPI Level: 342.23 v 342.07e.

- (SE) Sweden July CPIF M/M: 0.3% v 0.2%e; Y/Y: 1.7% v 1.6%e.

- (SE) Sweden July CPIF (ex-energy) M/M: 0.0% v 0.0%e; Y/Y: 0.5% v 0.5%e.

- (CN) Weekly Shanghai copper inventories (SHFE): 93.0K v 99.5K tons prior.

- (PL) Poland Q2 Preliminary GDP Q/Q: 1.9% v 2.0%e; Y/Y: 10.9% v 10.7%e (fastest annual pace recorded).

- (PL) Poland July Final CPI M/M: 0.4% v 0.4% prelim; Y/Y: 5.0% v 5.0% prelim (confirmed 4th month above target range and highest since Jun 2011.

- (CZ) Czech Jun Current Account (CZK): 0.0B v -3.9Be.

- (RU) Russia Narrow Money Supply w/e Aug 6th (RUB): 14.25T v 14.19T prior.

- (HK) Hong Kong Q2 Final GDP Q/Q: -0.9% v -1.0%e; Y/Y: 7.6% v 7.5%e.

- (TW) Taiwan Q2 Final GDP Y/Y: 7.4% v 7.5%e.

- (EU) Euro Zone Jun Trade Balance (seasonally adj): €B v €10.8Be; Trade Balance NSA (unadj): €B v €7.5B prior.

- (CY) Cyprus Q2 Preliminary GDP Q/Q: % v 2.0% prior; Y/Y: % v -1.6% prior.

Fixed income issuance

- None seen.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (IN) India to sell combined INR310B in 2026, 2033, 2035 and 2050 bonds.

- 05:30 (ZA) South Africa to sell combined ZAR1.2B in I/L 2029, 2038 and 2050 Bonds.

- 06:00 (PT) Portugal Q2 Labour Costs Y/Y: No est v 7.0% prior.

- 06:00 (UK) DMO to sell £3.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.5B respectively).

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces upcoming bill issuance (held on Wed.

- 07:30 (IN) India Weekly Forex Reserve w/e Aug 6th: No est v $620.6B prior.

- 08:00 (PL) Poland Jun Current Account Balance: €0.5Be v €0.1B prior; Trade Balance: €0.9Be v €0.2B prior; Exports: €23.6Be v €22.6B prior; Imports: €23.0Be v €22.5B prior.

- 08:00 (BR) Brazil Jun Economic Activity Index (Monthly GDP) M/M: +0.4%e v -0.4% prior; Y/Y: 8.6%e v 14.2% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) July Import Price Index M/M: 0.6%e v 1.0% prior; Y/Y: 10.5%e v 11.2% prior; Import Price Index (ex-petroleum) M/M: 0.5%e v 0.7% prior.

- 08:30 (US) July Export Price Index M/M: 0.8%e v 1.2% prior; Y/Y: No ets v 16.8% prior.

- 10:00 (US) Aug Preliminary University of Michigan Confidence: 81.2e v 81.2 prior.

- 11:00 (CO) Colombia Jun Trade Balance: -$1.4Be v -$1.0B prior; Total Imports: $4.9Be v $4.4B prior.

- 11:00 (EU) Potential sovereign ratings after European close (Moody's on Ireland sovereign rating; S&P on Sweden sovereign rating).

- 12:00 (RU) Russia Q2 Advance GDP Y/Y: +10.0%e v -0.7% prior.

- 13:00 (US) Weekly Baker Hughes Rig Count.

- (CO) Colombia Central Bank Economist Survey.