• European stock market, economy and companies update (August 26, 2015)

    ***Notes/Observations***
    - Stock markets stabilized or bounced back in Asia following Tuesday's PBoC rate cuts; risk aversion recedes
    - Market sentiment still remains fragile amid increase global volatility; Focus shifting to the Fed's Jackson Hole symposium this weekend for rate guidance


    *** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
    **Equities**
    Indices [Stoxx50 -1.5%, FTSE-1.3% at 6,002, DAX -2.6% at 9,860, CAC-40 -1.3% at 4,503, IBEX-35 -1.4% at 9.970, FTSE MIB -1.5% at 21,331, SMI -1.5% at 8,625, S&P 500 Futures +1.3% at 1,897

    - Market Focal Points/Key Themes: European stocks return to the downside, lead by energy and healthcare stocks (Novartis NOVN.CH -2.1%, Roche ROG.CH -1.9%); concern that China might not be doing enough to stimulate growth keeping equities and risk sentiment under pressure; Abengoa (ABG.ES +4.8%)continues to buck the trends in renewables and energy benefiting from planned capital increase; Paddy Power and Betfair entered merger agreement

    By Sector:
    - Consumer discretionary [WPP WPP.UK -0.3% (results in line), Paddy Power PWL.IE +17.6% (merger), Betfair BET.UK +16.2% (merger)]
    - Energy [Transocean RIGN.CH -10.3% (cancels dividend)]
    - Financials [Raiffeisen RBI.AT -1.4%]
    - Industrials [Carillion CLLN.UK -1.8% (results disappoint), Volkswagen VOW3.DE -1.0% (China sales)]
    - Utilities [PGE PGE.PL -2.7% (impairment)]

    **Speakers**
    - ECB's Hansson (Estonia): Greece bank deposit situation remains fragile but positive. ELA should be seen as declining if Greece news seen as positive (**Reminder: On Aug 18th ECB agreed to lower emergency liquidity assistance (ELA) cap for Greece banks to 89.7B (from 90.4). This was the 1st reduction in ELA since Greece began using the facility back in Feb)
    - Israel Central Bank Gov Flug: Not ruling out negative interest rates
    - Russia Econ Min Ulyukayev stated that it could see continued GDP contraction into 2016 if oil prices stayed under $40/barrel
    - German DIW institute: Germany Q3 GDP seen at 0.4% (**Note: Final Q2 GDP was +0.4%). Growth will probably slow over concerns on China and weaker global growth
    - South Africa Mining Industry and Union draft Statement: To explore stream lining lay-off process; commit to delay implementation of layoff. Over 50% of South Africa mines operating at a loss. To explore possibility that BRICS members would hold platinum as reserve asset
    - Japan Cabinet Office (Govt) Monthly Report for Aug maintained its overall assessment of seeing a moderate economic recovery. Cuts view on private consumption to 'holding firm: (1st cut since Sept 2014) and cut its assessment in both exports and imports
    - India Central bank (RBI) Gov Rajan: Confident that domestic economy is healthy
    - South Korea Fin Min Choi: To offer temporary tax cuts to help increase consumption; effective Aug 27th
    - Philippines Central Bank Gov Tetangco: No need to adjust monetary policy at this time. Might adjust policy if El Nino conditions worsen or global economy slowdown intensified
    - PBoC: Central Bank conducted short-term liquidity operation (SLO); injected CNY140B at 2.30%

    **Currencies**
    - The session was relatively quiet given the recent volatility in equity markets. Risk aversion sentiment tried to recede after the PBoC rate cuts on Tuesday but it was no easy going.
    - The EUR/USD moved back above the 1.15 level. Dealers debated whether the pair might be painting a near-term top after the spike up to 1.1714 back on Monday.
    - USD/JPY could not get above the 120 handle despite solid gains in the Nikkei225 Index

    **Fixed Income:
    - Bund futures trade at 154.31 up 74 ticks as Bunds rebound after yesterday big drop. After closing the opening gap at 153.94, analyst cite a continuation to 154.52, with a break needed to see a move back to 155.30.. To the downside a 153.31 is serves as support with August lows at 152.91 next.
    - UK Gilt futures trades 118.93 up 45 ticks as Bonds rebound. Analysts look for a break of 119.38 to test resistance at 120.00 with 122.20 the eventual target. To the downside analysts see a break of the low targeting 118.15 as the next level of support followed by 117.80.
    - Wednesday's liquidity report showed Tuesday's excess liquidity rose to 486.7B a fall of 2.7B from 484.0B prior. This is primarily due to a fall in AFs and MonPol portfolios to a record low of negative 66.4B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility fell to 102M from 949M prior.

    **Political/In the Papers:
    - (US) Researcher at the China Central bank indicates that the US Federal Reserve is responsible for the China stock market troubles. Finds that the expectations in the market for the US Fed to raise rates created a trigger for the stock market decline
    - (EU) ECB is said to ask investors to sell ABS amid trouble buying debt

    **Looking Ahead***
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - 06:00 (UK) CBI Industrial Report Sales: 18e v 21 prior
    - 06:00 (IE) Ireland July Property Prices M/M: No est v 0.1% prior; Y/Y: No est v 10.7% prior
    - 06:00 (CZ) Czech Republic to sell 2018 and 2027
    - 06:40 (BE) ECB's Preat (Belgium)
    - 06:45 (US) Daily Libor Fixing
    - 07:00 (RU) Russia canceled planned OFZ Bond auction
    - 07:00 (US) MBA Mortgage Applications w/e Aug 21st: No est v +3.6% prior
    - 07:30 (CL) Chile Central Bank's Traders Survey
    - 08:00 (BR) Brazil July PPI Manufacturing M/M: No est v 0.3% prior; Y/Y: No est v 6.7% prior
    - 08:10 (US) Baltic Dry Bulk Index
    - 08:15 (DE) German Chancellor Merkel
    - 08:30 (US) July Durable Goods Orders: -0.4%e v 3.4% prior; Durables Ex Transportation: 0.3%e v 0.6% prior (revised from 0.8%); Capital Goods Orders (Non-defense/ex-aircraft): 0.3%e v 0.7% prior (revised from 0.9%); Capital Goods Shipments (Non-defense/ex-aircraft): 0.4%e v +0.3% prior (revised from -0.1%); Durables Ex-Defense: No est v 3.8% prior
    - 09:30 (BR) Brazil July Total Outstanding Loans (BRL): 3.103Te v 3.102T prior; M/M: No est v 0.6% prior; Personal Loan Default Rate: 5.5%e v 5.4% prior
    - 10:00 (US) Fed's Dudley (dove, voter) on local economy
    - 10:30 (US) DOE Weekly Crude Oil Inventories
    - 12:00 (FR) France July Net Change in Jobseekers: -1.0Ke v +1.3K prior; Total Jobseekers: 3.552Me v 3.554M prior
    - 12:00 (CA) Canada to sell 2-Year Bonds
    - 13:00 (US) Treasury to sell 2-Year Floating Rate Notes
    - 13:00 (US) Treasury to sell 5-Year Notes
    - 15:00 (AR) Argentina July Industrial Production M/M: No est v 1.2% prior; Y/Y: 0.1%e v 0.9% prior
    - 22:00 (PH) Philippines Q2 GDP Q/Q: 1.7%e v 0.3% prior; Y/Y: 5.7%e v 5.2% prior
    - 22:05 (NZ) New Zealand to sell NZD200M in 3% 2020 Bonds
    - 23:30 (TH) Thailand July Customs Trade Balance: $375Me v $150M prior; Customs Exports Y/Y: -3.8%e v -7.9% prior; Customs Imports Y/Y: -12.0%e v -0.2% prior
    - 23:35 (JP) Japan to sell 3-Month Bills
    - 23:45 (JP) Japan to sell 2-Year JGB Bonds


    **Economic data***
    - (SG) Singapore July Industrial Production (miss) M/M: 1.0% v 2.3%e; Y/Y: -6.1% v -4.0%e
    - (JP) Japan Aug Small Business Confidence: 48.8 v 49.3 prior
    - (CH) Swiss July UBS Consumption Indicator: 1.64 v 1.61 prior
    - (FI) Finland July Preliminary Retail Sales Volume Y/Y: 0.9% v 1.7% prior
    - (SE) Sweden Aug Consumer Confidence (beat): 100.1 v 97.4e; Manufacturing Confidence (beat): 104.8 v 104.4e; Economic Tendency Survey: 104.5 v 103.0e
    - (SE) Sweden July Trade Balance (SEK): 0.4B v 4.0Be
    - (NO) Norway Jun AKU Unemployment Rate (miss): 4.5% v 4.3%e
    - (UK) July BBA Loans for House Purchase (in-line): 46.0 K v 46.0Ke (7th straight MoM improvement and highest since Feb 2014)

    Fixed Income Issuance:
    - (IN) India sold INR140B indicated in 3-month and 6-month Bills (INR90B and INR50B respectively)
    - (EU) ECB allotted $135M in 7-day USD Liquidity Tender at 0.62% vs. $132M prior
    - (SE) Sweden sold SEK17.5B vs. SEK17.5B indicated in 3-month and 6-month Bills
    - (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 1.75% 2025 bond; Yield: 1.46% v 1.86% prior, Bid to cover 1.88x v 1.71x prior
    - (IT) Italy Debt Agency (Tesoro) sold 3.0B vs. 3.0B indicated in 0.0% Feb 2017 CTZ; Avg Yield: 0.166% v %0.204 prior; Bid-to-cover: 1.57x v 1.83x prior

    Contributed by Trade The News
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