European stock market, economy and companies update (August 07, 2015)

***Notes/Observations***
- BOJ keeps policy steady (as expected) believing that weakness in growth and inflation during Q2 will be temporary
- July US Payroll data seen key in determining timing for the first Fed hike


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
**Equities**
Indices [Stoxx50 -0.2%, FTSE 100 unchanged at 6,7465, DAX -0.2% at 11,560, CAC-40 -0.2% at 5,182, IBEX-35 -0.2% at 11,316, FTSE MIB -0.2% at 23,776, SMI -0.2% at 9,441, Athens Stock Exchange +2%, S&P 500 Futures flat 2,080]

- Market Focal Points/Key Themes: European equities slid after better than expected US jobs report yesterday; focus turns to NFP later in session

By Sector:
- Consumer discretionary [Bechtle BC8.DE +4.3% (results beat), William Hill WMH.UK -5.9% (results disappoint), Tod's TOD.IT -1.7% (results)]
- Consumer Staples [Carl Zeiss AFX.DE -1.8% (results disappoint)]
- Financials [Allianz ALV.DE -0.8% (results), Banca Monte dei Paschi BMPS.IT +7.8% (results above ests)]
- Healthcare [Evotec EVT.DE +3.2% (collaboration)]
- Telecom [Telecom Italia TIT.IT -0.2% (results below ests)]

**Speakers**
- BOE's Broadbent reiterated MPC view that was moving closer to time when interest rates might need to move higher but he saw no urgency seen at this time. Would be foolish to announce any date for potential rate change. Must see balance of risks on inflation over target for rate hike. UK Economy was recovering but some spare capacity; not much inflationary pressure. Reiterated MPC view that rate hikes to be gradual and shallow
- Germany said to prefer a bridge loan for Greece
- German Steel Association: Expects decline in order intake through end of H2
- BOJ Gov Kuroda post rate decisions press conference reiterates view that virtuous cycle continued in domestic economy with recovery remaining modest. Inflation to hit 2% target in H1 FY16/17 if oil prices rose gradually from current levels. He saw no problem if oil prices continued to fall due to supply side factors; overall it was a plus for Japan. CPI might dip below zero due to effects from oil. Reiterated view to assess risks and adjust policy as needed. He added that it was not appropriate to comment on FX level or pace of moves; reiterates G7 view that is desirable for FX to move in a stable manner
- China Securities Regulator (CSRC) spokesperson: To step up efforts to crack down on insider trading

**Currencies**
- FX markets were steady ahead of the US July payrolls report. Dealer noting that if NFP come in within expectations of +225K then the door for a September rate hike would be pushed wide open. US front-end yields should rally, pushing the USD higher across the board.
- EUR/USD steady at 1.0935
- GBP/USD holding below 1.5530 after BOE Minutes from Thursday BoE turned out less hawkish than feared
- The USD/JPY shrugged off the expected BOJ steady policy decision and was holding at 124.70 ahead of the US payroll data
- RBA quarterly policy statement saw the AUD/USD pair rose some 30pips toward $0.7380 after the 2016 Core CPI target was raised from 1.75-2.75% to 2-3%. RBA also reiterated a more upbeat outlook for employment as it did earlier this week in its monetary decision

**Fixed Income:
- Bund futures trade at 153.73 up 2 ticks on the day in a quiet morning session with 65K contracts traded so far. To the upside a break of today's high at 153.92 would signal a move back up towards 154.50, with strength beyond seeing a retest of month highs at 155.09. To the downside 38.2% retracement stand at 152.91, with further support coming at 152.50.
- UK Gilt futures trades 116.87 down 8 as futures consolidate yesterdays move after the more dovish BoE outlook. Analysts still look for upside resistance at 117.05 before looking to gap fill at 117.41, which would be followed by 117.75 resistance. 118.15 would represent strong resistance as it represent July high and the 200 MA. To the downside a break of the lows could target 116.15 followed by 115.78, before gap support at 115.24.
- Friday's liquidity report showed Thursday's excess liquidity fell to €468B a fall of €0.4B from €468.4B prior. This was due primarily to a small rise of €0.4B in AFs and MonPol portfolios to negative €46.2B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to €215M from €95M prior.

**Political/In the Papers:
- (CN) Some banks and brokerages to lower amount of loans that investors can use stocks as collateral. Loans backed with main-board stocks are usually up to 40% of stock market value

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- 05:30 (ZA) South Africa to sell I/L Bonds
- 06:00 (IE) Ireland July Live Registry Monthly Change: No est v -2.3K prior; Live Registry Level: No est v 344.9K prior
- 06:00 (UK) DMO to sell combined £4.0B in 1-month, 3-month and 6-month Bills (£0.5B, 1.5B and £2.0B respectively)
- 07:00 (BR) Brazil July FGV Inflation IGP-DI M/M: 0.6%e v 0.7% prior; Y/Y: 7.5%e v 6.2% prior
- 07:00 (CL) Chile July CPI M/M: 0.4%e v 0.5% prior; Y/Y: 4.5%e v 4.4% prior; CPI Ex Food and Energy M/M: 0.3%e v 0.4% prior
- 07:30 (CL) Chile July Trade Balance: $0.4Be v $0.8B prior; Total Exports: $5.7Be v $5.7B prior; Total Imports: $5.1Be v $4.9B prior; Copper Exports: No est v $3.1B prior
- 07:30 (CL) Chile July International Reserves: No est v $38.2B prior
- 07:30 (IN) India Weekly Forex Reserves
- 08:00 (PL) Poland July Official Reserves: No est v $104.1B prior
- 08:00 (RU) Russia July Official Reserve Assets: $359.0Be v $361.6B prior
- 08:00 (BR) Brazil July IBGE Inflation M/M: 0.6%e v 0.8% prior; Y/Y: 9.5%e v 8.9% prior
- 08:15 (US) Baltic Dry Bulk Index
- 08:30 (US) July Change in Nonfarm Payrolls: +225Ke v +223K prior; Change in Private Payrolls: +214Ke v +223K prior; Change in Manufacturing Payrolls: +5Ke v +4K prior
- 08:30 (US) July Unemployment Rate: 5.3%e v 5.3% prior; Underemployment Rate: No est v 10.5% prior; Change in Household Employment: No est v -56K prior; Labor Force Participation: No est v 62.6% prior
- 08:30 (US) July Average Hourly Earnings M/M: 0.2%e v 0.0% prior; Y/Y: 2.3%e v 2.0% prior; Average Weekly Hours: 34.5e v 34.5 prior
- 08:30 (CA) Canada July Net Change in Employment: +9.8Ke v -6.4K prior; Unemployment Rate: 6.8%e v 6.8% prior; Full Time Employment Change: No est v +64.8K prior; Part Time Employment Change: No est v -71.2K prior; Participation Rate: 65.9%e v 65.8% prior
- 08:30 (CA) Canada Jun Building Permits M/M: 5.0%e v -14.5% prior
- 09:00 (MX) Mexico July CPI M/M: 0.2%e v 0.2% prior; Y/Y: 2.8%e v 2.9% prior; CPI Core M/M: 0.2%e v 0.2% prior
- 10:00 (CA) Canada July Ivey Purchasing Managers Index (Seasonally Adj): 52.0e v 55.9 prior; PMI Unadj: No est v 59.5 prior
- 11:00 (EU) Potential European Sovereign Rating (Austria, Ireland, Sweden)
- 13:00 (US) Weekly Baker Hughes Rig Count
- 15:00 (US) Jun Consumer Credit: $17.0Be v $16.1B prior
- 21:30 (CN) China July CPI Y/Y: 1.5%e v 1.4% prior
- 21:30 (CN) China July PPI Y/Y: -5.0%e v -4.8% prior
- (CN) China July Trade Balance: $54.7Be v $46.5B prior; Exports Y/Y: -1.5%et v +2.8% prior; Imports Y/Y: -8.0%e v -6.1% prior


**Economic data***
- (CH) Swiss July Unemployment Rate: 3.1% v 3.1%e; Unemployment Rate (Seasonally Adj): % v 3.3%e
- (DE) Germany Jun Industrial Production (miss) M/M: -1.4% v +0.3%e; Y/Y: 0.6% v 2.2%e
- (DE) Germany Jun Current Account Balance (beat): €24.4B v €16.0Be; Trade Balance: €24.0B v €21.0Be; Exports M/M: -1.0% v -0.3%e: Imports M/M: -0.5% v +0.5%e
- (NL) Netherlands Jun Manufacturing Production M/M: -0.3% v -0.4% prior; Y/Y: 3.6% v 2.5% prior; Industrial Sales Y/Y: +3.8% v -3.7% prior
- (FR) France Jun YTD Budget Balance: -€58.5B v -€63.9B prior
- (FR) France Jun Trade Balance (beat): -€2.7B v -€3.6Be
- (FR) France Jun Industrial Production (miss) M/M: -0.1% v +0.2%e; Y/Y: 0.6% v 1.4%e
- (FR) France Jun Manufacturing Production (miss) M/M: -0.7% v +0.2%e; Y/Y: 0.1% v 1.8%e
- (CH) Swiss July Foreign Currency Reserves (CHF): 531.8BB v 516.2B prior
- (ES) Spain Jun Industrial Output NSA Y/Y: 7.5% v 1.4% prior; Industrial Output SA Y/Y: 4.5% v 3.8%e
- (HU) Hungary Jun Industrial Production M/M: 1.1% v -0.2% prior; Y/Y: 6.0% v 5.6%e
- (TR) Turkey Jun Industrial Production M/M: 2.4% v 0.8%e; Y/Y: 5.5% v 3.0%e
- (CN) China July FX Reserves: $3.651T v $3.693T prior
- (CN) China Q2 Current Account: $76.6B v $75.6 prior
- (TW) Taiwan July Trade Balance (beat): $3.6B v $3.2Be; Exports Y/Y: -11.9% v -10.5%e; Imports Y/Y: -17.4% v -12.9%e
- (NO) Norway Jun Credit Indicator Growth Y/Y: 5.8% v 6.0%e
- (NO) Norway Jun Industrial Production M/M: 3.5% v 0.7% prior; Y/Y: 2.8% v 4.2% prior
- (NO) Norway Jun Manufacturing Production M/M: 0.1% v 1.2%e; Y/Y: -3.7% v -2.6% prior
- (UK) Jun Visible Trade Balance (beat): -£9.2B v -£9.3Be; Total Trade Balance: -£1.6B v -£1.7Be; Trade Balance Non EU: -£1.6B v -£2.4Be
- (GR) Greece July CPI Y/Y: -2.2% v -2.0%e; CPI EU Harmonized Y/Y: -1.3% v -1.1%e

Fixed Income Issuance:
- (IN) India sold total INR140B vs. INR140B indicatedin 2024, 2030, 2032 and 2044 bonds

Contributed by Trade The News