• European stock market, economy and companies update (July 22, 2015)

    ***Notes/Observations***
    - Greek parliament will vote on the 2nd bailout bill today; ECB said to again have raised ELA for Greek banking sector (not confirmed)
    - US tech earnings weighting on sentiment (AAPL, MSFT and YHOO lower in pre-market following earnings)
    - BoE's July MPC meeting minute remained unanimous to keep policy steady in July but showed a rise in hawkish arguments post Greece crisis
    - Commodity prices remain under pressure


    *** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
    **Equities**
    Indices [Stoxx50 -0.2%, FTSE 100 -0.8% at 6,714, DAX -0.3% at 11,566, CAC-40 -0.4% at 5,087, IBEX-35 +0.2% at 11,482, FTSE MIB +0.1% at 23,733, SMI -0.6% at 9,327, Athens Stock Exchange closed, S&P 500 Futures -0.3% at 2,107]

    - Market Focal Points/Key Themes: European equity markets open lower following declines seen on Tuesday; Apple suppliers decline amid the company's results and outlook; Swedish steelmaker SSAB misses ests; Spanish utility Ibedrola EBITDA in line; Weaker commodity prices weigh on miners ; US tech firms decline after earnings (Apple, Microsoft, Yahoo) ; US morning earnings include (Boeing, Coca-Cola, Angie's List, Whirlpool); Upcoming Greek parliamentary vote and ECB ELA decision in focus

    By Sector
    - Telecom [Telenor TEL.NO -3% (Q2 results below ests)]
    - Basic Materials/Resources [SSAB SSABA.SE -5% (Q2 results below ests, cautious outlook), BHP BLT.UK -3% (Q4 copper production declined)]
    - Financials [Danske Bank DANSKE.DK +2% (Q2 results above ests, raised outlook)]
    - Consumer Discretionary [Easyjet EZJ.UK +3.5% (positive reaction to Q3 sales and outlook)]
    - Stoxx50 Sectors [Energy -1%, Utilities -0.4%, Consumer Cyclical -0.4%, Basic Materials -0.4%, Industrials -0.3%, Technology -0.2%, Telecom -0.1%; Consumer Non-Cyclical +0.4%, Financials flat]

    **Speakers**
    - Bank of England (BOE) July Minutes showed all 9 BOE members keeping policy unchanged with the decision was 'clear cut' due to the Greek crisis. Some members leaned towards rate rise, but were held back by Greek crisis. Some members saw decision as becoming more finely balanced (**Note: previous stated two members)
    - BOE's Miles reiterated MPC view that rate hikes to come over the next few years and pace would be gradual. He added that he saw inflation back at target towards end of year (**Note CPI has now been below the BOE 2.0% target for the past 16 months)
    - EU's Juncker: Fear enabled recent Greek bailout agreement. Avoided the worst not because it was exceedingly wise but due to fear
    - Greece Fin Min Tsakalatos: Important to finish prior actions in order to begin bailout negotiations later this week (**Reminder: Greece Parliament needs to pass additional austerity measures later today required by creditor agreement)
    - ECB said to back another 900M hike in its emergency funding (ELA) to Greek banks
    - India said to consider gold monetization program in 2 weeks
    - Japan Cabinet Office confirmed speculation of missing its 2020 target of primary surplus and now forecasted FY20 Primary Balance deficit of 6.2T

    **Currencies***
    - USD seems to have increased its sensitivity to equities after several tech companies reported disappointing earnings.
    - Greek parliament set to vote on two further reforms required by the creditor agreement. Expect to pass but could show further erosion in the Syriza ruling coalition
    - The GBP currency initially got a lift from BOE member Miles who reiterated MPC view that rate hikes to come over the next few years and pace would be gradual but added he saw inflation back at target towards end of year. BoE's July MPC meeting also showed a rise in hawkish arguments. The vote was again unanimous to keep rate steady mainly due to the Greek crisis at the time. Now with a creditor agreement for a 3rd bailout program in place for Greece, the BOE can look seriously at hiking rates. GBP/USD higher by 0.5% at one point to test near 1.5650 area.
    - Commodity prices remain under pressure. AUD was softer after RBA Gov Stevens reiterated further rate cuts remained on the table (in line with recent rate decision and minutes). AUD/USD remained below 0.74 in the session
    - RBNZ debate has intensified with the looming rate cut likely on Thursday. Dealers ponder that the cut could be more aggressive than the current 25bps expectations. NZD/USD at 0.6605

    **Fixed Income:
    - Bund futures trade at 152.84 up around 9 ticks on the day on another quiet morning with less then 70K contracts so far. Futures trade midrange with analysts citing a break of gap resistance at 153.33 would see 153.56 initially followed by July 8th 154.24 high, which also corresponds with the 50% retracement of the April June fall. Downside support moves to 15242, with 152.24 needed to be broken to start seeing a turn in the trend and target 151.66.
    - Portugal will look to tap its 5Yr and re open its 22Yr bonds for a combined 1-1.25B, the equivalent of 9K Bunds futures and 19K Bobl futures.
    - UK Gilt futures trades 115.57 up 21 ticks on the day, as BOE minutes showed 9-0 to keep rates unchanged. Analysts see support remain at115.18 initially, the bottom of the range, followed by gap support at 114.41. Beyond this sees a test of the 114.07 low. To the upside 115.94 remains strong resistance. 116.31 above here would be needed to fill Friday's gap.
    - Wednesday's liquidity report showed Tuesday's excess liquidity fell to 397.6B a fall of 21.7B from 419.3B prior. This was due to a big rise of 21.8B in AFs and MonPol portfolios to 32.8B. Use of the marginal lending facility rose slightly to 172M from 141M prior.Today will see a 3.28B coupon payment.
    - Corporate Issuance remained active yesterday with notables including Numericable SAS coming to market with an 800M 7 year cross-border TLB, and TWX selling a 700M 8 year bond. The anticipated Intel offering has now been delayed and expected Thursday at the earliest. Analysts estimate some $35-40B worth of USD supply coming to market this week.
    - US Month End Extensions estimations are above average for Treasuries (0.10y, v +0.06y avg), with focus on the US Agg index, which is above avg at +0.09y. This is of importance as it is the largest index and the benchmark for both bond and mutual fund managers. European extensions are large with the Eur Agg Treasury extension at +0.12y, with Sterling also above average at +0.08y.

    **Political/In the Papers:
    - (GR) S&P raised Greek sovereign debt rating two notches to CCC+ from CCC-; outlook to Stable from Negative
    - (EU) Global regulators said to be considering a weakening of rules on asset-backed or pooled-debt securities

    **Looking Ahead***
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - (GR) Greece Parliament needs to pass additional austerity measures (required by creditor agreement)
    - 05:30 (PT) Portugal Debt Agency (IGCP) to sell 1.00-1.25B in 2020 and 2037 OT bonds
    - 06:00 (IE) Ireland Jun PPI M/M: No est v -2.4% prior; Y/Y: No est v 6.3% prior
    - 06:15 (EU) EU's Juncker with EIB's Hoyer
    - 06:45 (US) Daily Libor Fixing
    - 07:00 (RU) Russia to sell Bonds
    - 07:00 (US) MBA Mortgage Applications w/e July 17th: No est v -1.9% prior
    - 07:30 (CL) Chile Central Bank's Traders Survey
    - 08:00 (BR) Brazil July IBGE Inflation IPCA-15 M/M: 0.6%e v 1.0% prior; Y/Y: 9.3%e v 8.8% prior
    - 08:15 (US) Baltic Dry Bulk Index
    - 09:00 (US) May FHFA House Price Index M/M: 0.4%e v 0.3% prior
    - 09:00 (MX) Mexico May Retail Sales M/M: +0.2%e v -0.3% prior; Y/Y: 4.8%e v 4.6% prior
    - 09:30 (BR) Brazil Jun Current Account Balance: -$2.1Be v -$3.4B prior; Foreign Direct Investment (FDI): $4.5Be v $6.6B prior
    - 10:00 (US) Jun Existing Home Sales: 5.40Me v 5.35M prior
    - 10:30 (US) Weekly DOE Crude Oil Inventories
    - 12:00 (CA) Canada to sell C$3.3B in Sept 0.75% 2020 bond
    - 15:00 (AR) Argentina Jun Trade Balance: $0.6Be v $0.4B prior
    - 17:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to cut Official Cash Rate by 25bps to 3.00%
    - 19:00 (KR) South Korea Q2 Preliminary GDP Q/Q: 0.4%e v 0.8% prior; Y/Y: 2.3%e v 2.5% prior
    - 19:50 (JP) Japan Jun Trade Balance: 45.8Be v 217.2B prior (revised from -216.0B); Adjusted Trade Balance: -260.0Be v -182.5B prior; Exports Y/Y: 10.0%e v 2.4% prior; Imports Y/Y: -4.3%e v -8.7 % prior
    - 23:35 (JP) Japan to sell 3-Month Bills


    **Economic data***
    - (JP) Japan Jun Supermarket Sales Y/Y: 0.3% v 5.7% prior
    - (JP) Japan Jun Final Machine Tool Orders Y/Y: 6.6% v 6.6% prior
    - (FR) France July Business Survey Overall Demand: 1 v 5 prior
    - (FR) France July Business Confidence (beat): 99 v 98e; Manufacturing Confidence: 102 v 101e
    - (NL) Netherlands Bureau for Economic Policy Analysis (CPB): May Global trade volume: -1.2% m/m
    - (ZA) South Africa Jun CPI (miss) M/M:0.4 % v 0.6%e; Y/Y: 4.7% v 5.0%e
    - (ZA) South Africa Jun CPI Core M/M: 0.3% v 0.5%e; Y/Y: 5.5% v 5.7%e
    - (IT) Italy May Industrial Orders M/M: -2.5% v +5.5% prior; Y/Y: -0.5% v +5.5%e
    - (IT) Italy May Industrial Sales M/M: +1.2 v -0.5% prior; Y/Y: +2.4 v -0.2% prior
    - (UK) Bank of England (BOE) voted 9-0 (unanimous) to leave Interest Rates unchanged at 0.50%
    - (IT) Italy May Retail Sales (mixed) M/M: -0.1% v 0.0%e; Y/Y: 0.3% v 0.2%e

    Fixed Income Issuance:
    - None seen

    [I]Contributed by Trade The News[/I]
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