• European stock market, economy and companies update (August 25, 2015)

    ***Notes/Observations***
    - Rout in China stock markets continue as concerns about a hard landing mount, effects seen decoupling in other markets as other Asian markets stabilize/bounce back
    - Germany Aug IFO Business Climate Survey registers its 2nd straight month of improvement (108.3 v 107.6e)
    - German Q2 Final GDP reading in line with its preliminary; Q3 outlook remains positive despite China situation


    *** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
    **Equities**
    Indices [Stoxx50 -2.4%, FTSE-2.7% at 6,021, DAX -2.6% at 9,860, CAC-40 -2.5% at 4,516, IBEX-35 -2.6% at 10,005, FTSE MIB -2.6% at 21,178, SMI -2.3% at 8,598, S&P 500 Futures -1.7% at 1,937

    - Market Focal Points/Key Themes: European stocks bounce back in early trading, despite Chinese equities conintuing to move lower; all sectors broadly supported, with best gains in basic materials; one of the few underperformers was Randgold Resources (RRS.UK -1.8%) due to disappointing gold price; S&P 500 futures trading up before New York open

    By Sector:
    - Financials [Zurich Insurance ZURN.CH +2.2% (acquisition)]
    - Industrials [Syngenta SYNN.CH +9.5% (raised offer), Antofagasta ANTO.UK +4.4% (results), Uralkali URKA.RU +2.3% (results, buyback)]
    - Materials [BHP Billiton BHP.AU +3.2% (results), DSM DSM.NL +3.3% (restructuring)]

    **Speakers**
    - France Econ Min Macron: Global economy was recovering but China did pose a risk
    - German Econ Min Gabriel: German economy remained solid despite China situation; not worried about the impact on outlook. German economic development helped by good European trends and lower oil prices
    - German Bundesbank Nagel stated that he did not see repeat of 1994 for China as emerging markets were better positioned compared to 20 years ago
    - Russia Economic Ministry said to cut 2015 GDP forecast from -2.8% to -3.3%
    - IFO Economists stated that German domestic economy remained a rock in turbulent waters. Most recent developments in China barely reflected in Index
    - Israel Central Bank's Sussman: Have option to take Base Rate into negative territory; have other tools in kitbox
    - Japan PM Abe's advisor Hamada: BOJ should consider extra easing if Yen currency rises sharply from situation in China or Q3 GDP fails to grow
    - Thailand Cabinet said to consider new economic measures in late Aug/early Sept
    - India Central Bank (RBI) official Mundra: Cannot target any particular level for INR currency (Rupee)
    - Indonesia Central Bank Dep Gov Warjiyo: Strengthening steps to stabilize the IDR currency (Rupiah); are intervening in FX with large amounts
    - Some Chinese agencies said to assume the CNY currency at 7.0 per USD in their research
    - Singapore PM Lee dissolves parliament in preparation for elections
    - UN Nuclear Agency (IAEA): Will need 138B over 15 years to implement Iran agreement
    - Iraq Oil Min: Have paid foreign oil companies $9.0B in remaining arrears for 2014. Paying 2015 arrears in stages until the beginning of 2016
    - Iran Oil Min: Oil prices determined by market forces

    **Currencies**
    - FX markets seems to calm down as some equity markets stabilized despite Chinese stocks coming under heavy pressure again. The recent global volatility had analyst rethink the time of both Fed and BOE rate hikes. One analyst noted that a worsening global outlook and slide in equity prices could have BOE keep policy steady in 2016. While another pushed back their view on 1st Fed rate hike from Sept 2015 until March 2016
    - EUR/USD hovered around the mid 1.15s after yesterday's surge to 1.1714.
    - USD/JPY back to around the 119.50 area despite a 4% decline in the Nikkei 225 Index (pair tested a low of 116.16 yesterday)

    **Fixed Income:
    - Bund futures trade at 154.76 down 94 ticks as stronger IFO data puts pressure on Bonds. Bunds have been under pressure from the off as Equities rebound with analysts citing resistance 155.59, with a break of 156.02 needed to see strength back to 156.54 followed by 157.25. To the downside a break of strong resistance at 154.50 could target 154.14 next.
    - UK Gilt futures trades 118.91 down 54 ticks as a rebound in stocks push Bonds lower. Analysts look for resistance at 120.00 with 122.20 the eventual target. To the downside analysts target gap support at 118.67 with 118.15 as the next level of support followed by 117.80.
    - Tuesday's liquidity report showed Monday's excess liquidity fell to 484.0B a fall of 1.0B from 485.0B prior. AFs and MonPol portfolios remained at a record low of negative 64.5B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to 949M from 101M prior.
    - Corporate Issuance was a non factor as market volatility put off any deals coming to market. For the prior week European high yield bonds sow 97M of inflows, this follows a revised 93M in outflows in the prior week. For the year to date net inflows have totaled 8.06B against 4.15B in 2014.
    In the US High yield bond inflows came in at $111M for the week ending 19th August, a small rebound after $4.1B of outflows in the prior 3 weeks.
    - Early estimates for September issuance has come in at $90-110B, this is below the $150B in the prior year, with pending rate hike and general economic conditions cited as a factor.

    **Political/In the Papers:
    - (CN) PBoC to inject CNY150B in 7-day reverse repos (18th consecutive injection); largest daily injection since Jan 2014

    **Looking Ahead***
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - (PT) Portugal Year-to-Date Budget Report
    - 05:30 (ZA) South Africa Q2 GDP QoQ: 0.6%e v 2.1% prior; Y/Y: 2.0%e v 1.3% prior
    - 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month Bills
    - 06:40 (PT) ECB's Constancio (Portugal)
    - 06:45 (US) Daily Libor Fixing
    - 07:00 (RU) Russia announces weekly OFZ bond auction
    - 07:00 (BR) Brazil Aug FGV Consumer Confidence: No est v 82.0 prior
    - 07:00 (DE) German Chancellor Merkel host town hall event in Duisburg
    - 07:30 (TR) Turkey Aug Real Sector Confidence (Seasonally Adj): No est v 102.9 prior; Real Sector Confidence NSA (unadj): No est v 105.4 prior
    - 07:30 (TR) Turkey Aug Capacity Utilization: No est v 75.9% prior
    - 07:45 (US) Goldman Economist Chain Store Sales
    - 08:00 (HU) Hungary Central Bank (NBH) Interest Rate Decision: Expected to leave Base Rate unchanged at 1.35%
    - 08:00 (BR) Brazil Jun National Unemployment Rate: 8.3%e v 8.1% prior
    - 08:10 (US) Baltic Dry Bulk Index
    - 08:30 (AT) German-speaking Finance Ministers meet in Salzburg
    - 08:55 (US) Weekly Redbook Sales
    - 09:00 (US) Jun FHFA House Price Index M/M: 0.4%e v 0.4% prior; Q/Q: 1.2%e v 1.3% prior
    - 09:00 (US) Jun S&P/Caseshiller 20 City M/M: +0.13%e v -0.18% prior; Y/Y: 5.10%e v 4.94% prior; House Price Index: 181.28e v 179.03 prior
    - 09:00 (US) Jun S&P/Caseshiller M/M: No est v 0.04% prior; Y/Y: No est v 4.39% prior; House Price Index: No est v 172.08 prior
    - 09:00 (BE) Belgium Aug Business Confidence: -4.0e v -4.1 prior
    - 09:00 (EU) Weekly ECB Forex Reserves
    - 09:00 (HU) Hungary Central Bank Gov post rate decision press conference
    - 09:30 (PT) Portugal Fin Min Gaspar at event
    - 09:30 (BR) Brazil July Current Account Balance: -$6.6Be v -$2.6B prior; Foreign Direct Investment (FDI): $5.9Be v $5.4B prior
    - 09:45 (US) Aug Preliminary Markit Services PMI: 55.1e v 55.7 prior; PMI Composite: No est v 55.7 prior
    - 10:00 (US) July New Home Sales: 511Ke v 482K prior
    - 10:00 (US) Aug Consumer Confidence Index: 93.0e v 90.9 prior
    - 10:00 (US) Aug Richmond Fed Manufacturing Index: 9.0e v 13.0 prior
    - 10:00 (MX) Mexico Q2 Current Account Balance: -$9.0Be v -$9.5B prior
    - 10:00 (MX) Mexico Weekly International Reserves
    - 10:00 (US) Congressional Budget Office (CBO) budget and economic outlook for 2015-25
    - 11:30 (US) Treasury to sell 4-Week Bills
    - 12:25 (CA) Bank of Canada (BOC) Dep Gov Schembri speaks in Kingston, Ontario
    - 13:00 (US) Treasury to sell new 2-year Note
    - 14:00 (US) Fed Discount rate minutes
    - 16:30 (US) Weekly API Oil Inventories
    - 17:00 (KR) South Korea Aug Consumer Confidence: No est v 100 prior
    - 18:45 (NZ) New Zealand Trade Balance: -600Me v -60M prior
    - 23:00 (CN) China to sell 3-Year Bonds
    - 23:00 (TH) Thailand to sell THB7B in 2061 Bonds
    - (AU) RBA gov Stevens at Reform National event


    **Economic data***
    - (FI) Finland July Unemployment Rate: 8.4% v 10.0% prior
    - (DE) Germany Q2 Final GDP (in-line) Q/Q: 0.4% v 0.4%e; Y/Y: % v 1.6%e; GDP WDA Y/Y: 1.6% v 1.6%e
    - (DE) Germany Q2 Private Consumption Q/Q: 0.2% v 0.3%e; Government Spending Q/Q: 0.3% v 0.2%e; Capital Investment Q/Q: -0.4% v -0.3%e; Construction Investment Q/Q: -1.2% v +1.8% prior; Domestic Demand Q/Q: -0.3% v +0.6% prior; Exports Q/Q: 2.2% v 1.8%e; Imports Q/Q: 0.8% v 1.7%e
    - (CZ) Czech Aug Business Confidence: 13.1 v 13.6 prior; Consumer Confidence Index: 1.3 v 1.3 prior; Composite: 10.7 v 11.1 prior
    - (NL) Netherlands Aug Producer Confidence Index: 3.5 v 3.8e
    - (DE) Germany Aug IFO Business Climate Survey (beat): 108.3 v 107.6e; Current Assessment Survey: 114.8 v 113.9e ; Expectations Survey: 102.2 v 102.0e
    - (PD) Poland July Unemployment Rate: 10.1% v 10.1%e
    - (HK) Hong Kong July Trade Balance (HKD): -28.4B v -41.2Be; Exports Y/Y: -1.6% v -4.5%e; Imports Y/Y: -5.2% v -3.3%e
    - (ZA) South Africa Jun Total Mining Production M/M: +1.1% v -0.7%e; Y/Y: 4.0% v 3.1%e; Gold Production Y/Y: -2.3% v -4.9% prior; Platinum Production Y/Y: 84.0% v 99.6% prior

    Fixed Income Issuance:
    - (FI) Finland to sell EUR-denominated 10-year bond; guidance seen at high single digits to mid-swaps
    - (ES) Spain Debt Agency (Tesoro) sold total 3.965B vs. 3.0-4.0B indicated range in 3-Month and 9-Month Bills
    - Sold 375M in 3-month Bills; Avg Yield: -0.072% v -0.053% prior; Bid-to-cover:5.46 x v 7.15x prior
    - Sold 3.59B in 9-month Bills; Avg Yield: 0.022% v +0.022% prior; Bid-to-cover: 1.47x v 1.80x prior
    - (ZA) South Africa sold total ZAR2.35B vs. ZAR2.35B indicated in 2032, 2035, 2037 and 2048 bonds

    Contributed by Trade The News
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