European stock market, economy and companies update (July 29, 2015)

***Notes/Observations***
- Risk aversion has receded over the past 24 hours
- Fed Statement in focus in regards to 1st potential rate hike heading either towards September or delaying the move into December


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
**Equities**
Indices [Stoxx50 +0.2%, FTSE 100 +0.6% at 6,594, DAX +0.1% at 11,181, CAC-40 +0.3% at 4,990, IBEX-35 flat at 11,246, FTSE MIB -0.3% at 23,248, SMI +0.6% at 9,333, Athens Stock Exchange closed, S&P 500 Futures +0.1% at 2,089]

- Market Focal Points/Key Themes: Equity markets open higher, adding to Tuesday's gains, with later today US Fed decision in focus; Shanghai Composite closes higher by 3.4%

- Earnings Recap [Schneider Electric cuts revenue forecast; Volkswagen cuts FY deliveries target; Peugeot reports H1 profit; Bayer beats ests and reaffirms FY earnings outlook, amid positive fx impact; Barclays Q2 profits above ests; LVMH H1 sales above ests; Total Q2 profits above ests;

By Sector
- Consumer Discretionary [LVMH MC.FR +3% (H1 sales above ests), British American Tobacco BATS.UK +2.5% (H1 profits above ests, raised dividend), Sky SKY.UK +1.5% (FY results rose)]
- Financials [Quintain Estates QED.UK +22% (takeover offer), Man Group EMG.UK +4% (H1 profits rose), Barclays BARC.UK +3.5% (Q2 profits above ests); EFG International EFGN.CH -15% (net new money declined)]
- Industrials [Italcementi IT.IT +47% (takeover offer), Peugeot UG.FR +3% (H1 profit); HeidelbergCement HEI.DE -3% (acquisition), Volkswagen VOW3.DE -1.5% (cut FY15 deliveries target), Linde LIN.DE -1.5% (cut sales forecast), Schneider Electric SU.FR -1% (cut sales forecast)]
- Technology [Atos ATO.FR +2% (raised free cash flow target)]
- Telecom [Numericable NUM.FR +6% (reported Q2 profit), Altice ATC.NL +4% (Q2 profits rose), KPN KPN.NL +2.5% (Q2 results above ests)]
- Energy [Total FP.FR +1% (Q2 profits above ests); Saipem SPM.IT -8% (H1 net loss)]
- Healthcare [Bayer BAYN.DE +3.5% (Q2 results above ests)]
- Basic Materials/Resources [Antofagasta ANTO.UK -1.5% (cut copper production forecast)]

**Speakers**
- EU's Moscovici: Greece negotiations starting well; Grexit was behind us. Trans-Atlantic Trade and Investment Partnership (TTIP) might not be completed by end of US President Obama's term. Grexit is behind us
- Bavaria PM Seehofer (CSU party chief): Grexit would create utter chaos but would have to accept the situation if reforms not implemented
- Russia Central Bank: To suspend purchases of forex for its reserves from July 28th due to market volatility (**Reminder: On May 14th Russia Central Bank stated that it would purchase FX to boost reserves in amount $100-200M per day. Move not to support the RUB currency (Ruble))
- Thailand Fin Min Sommai reiterated view that rate cut would not help the economy but Gov t spending would clearly lend support beginning in Q4
- China Fin Min Lou Jiwei reiterated govt view of facing downward economic pressure

**Currencies***
- USD putting in a mixed performance ahead of the Fed statement on Wed. There is concern that recent Greece and China troubles might put the Fed off any immediate rate hike. Dealers noting that a sign of early hike might come with a relatively dovish and reassuring statement. Yellen's Fed should have no incentive to diverge from her recent semi-annual testimony to Congress as the data has been mixed.
- EUR/USD steady at 1.1060
- GBP/USD consolidated recent gains. Dealers took not of an IMF comment that pound sterling currency was between 5-15%above the level consistent with fundamentals and desirable policy settings" at the end of 2014. Pair at 1.5617 just ahead of the NY morning
- Emerging market currencies have traded at multi-year lows against the greenback in recent weeks on monetary policy divergence theme

**Fixed Income:
- Bund futures trade at 153.76 down 8 ticks on the day in light trading as markets await the FOMC decision. Analysts look for a break of today's high at 153.92 targeting 154.09 to fill today's gap with a break of this seeing a fresh run on July 8th 154.24 high, which also corresponds with the 50% retracement of the April June fall followed by an extension to 155.44. Downside support moves to 153.28, with 153.02 the base, a break of which would make 152.50 the next potential target.
- UK Gilt futures trade 116.82 up 12 ticks on the day, closing yesterday's gap. Analysts see a break of today's highs of 116.86 to clear the way to 117.17 then 117.32. A break above would would target 117.72, the medium term downtrend. To the downside Fridays gap support at 116.25 held as expected, a break below this sees 115.77 next.
- Wednesday's liquidity report showed Tuesday's excess liquidity fell to €407.3B a fall of €2.4B from €409.7B prior. This was due primarily to a rise of €2.4B in AFs and MonPol portfolios to €22.2B. Use of the marginal lending facility rose to €765M from €310M prior.
- Corporate Issuance was active yesterday with roughly $10B in deals to be priced, with $8B coming from financial institutions such as Amex, BMO, RF and GS. This morning has seen another big name coming to market with IBM to sell GBP-denominated 7-year bond.
Analysts expecting $20-25B of corporate issuance this week

**Political/In the Papers:
- (BR) S&P lowered Brazil sovereign outlook to Negative from Stable; affirms BBB- rating
- (NZ) RBNZ Gov Wheeler: Further policy easing "likely" to be required; Further NZD currency (Kiwi) depreciation is necessary

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- 06:00 (UK) July CBI Industrial Reported Sales: 29e v 29 prior
- 06:00 (RO) Romania to sell Bills
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia to sell OFZ Bonds
- 07:00 (US) MBA Mortgage Applications w/e July 24th: No est v +0.1% prior
- 07:00 (IE) Ireland July Consumer Confidence Index: No est v 102.8 prior
- 07:30 (ZA) South Africa Q2 Unemployment Rate: 26.5%e v 26.4%prior
- 08:00 (BR) Brazil Jun PPI Manufacturing M/M: No est v 0.2% prior; Y/Y: No est v 6.1% prior
- 08:15 (US) Baltic Dry Bulk Index
- 10:00 (US) Jun Pending Home Sales M/M: 0.9%e v 0.9% prior; Y/Y: 11.1%e v 8.3% prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:30 (US) Treasury to sell $15B in 2-Year Floating Rate Notes
- 13:00 (US) Treasury to sell $35B in 5-Year Notes
- 14:00 (US) FOMC Interest Rate Rate Decision: expected to leave policy unchanged
- 18:00 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to raise Selic Target Rate by 50bps to 14.25%
- 18:45 (NZ) New Zealand Jun Building Permits M/M: No est v 0.0% prior
- 19:50 (JP) Japan Jun Preliminary Industrial Production M/M: +0.3%e v -2.1% prior; Y/Y: +1.3%e v -3.9% prior
- 20:30 (AU) RBA Gov Stevens in Sydney
- 22:30 (SG) Singapore Q2 Unemployment Rate: No est v 1.8% prior
- 23:35 (JP) Japan to sell 3-Month Bills


**Economic data***
- (JP) Japan July Small Business Confidence: 49.3 v 46.9 prior
- (DE) Germany Aug GfK Consumer Confidence (in line): 10.1 v 10.1e
- (CH) Swiss Jun UBS Consumption Indicator: 1.68 v 1.62 prior
- (FR) France July Consumer Confidence (miss): 93 v 94e
- (SE) Sweden July Consumer Confidence (miss): 96.4 v 98.9e; Manufacturing Confidence (beat): 103.7 v 101.5e; Economic Tendency: 102.7 v 101.6 prior
- (ES) Spain Jun Adjusted Retail Sales Y/Y: 2.3% v 3.6%e; Retail Sales Y/Y: 3.8% v 1.8% prior- 03:00 (HU) Hungary Jun Unemployment Rate: % v 7.0%e
- (NO) Norway May AKU Unemployment Rate: 4.3% v 4.3%e
- (UK) Jun Net Consumer Credit (beat): £1.2B v £1.1Be; Net Lending: £2.6B v £2.0Be
- (UK) Jun Mortgage Approvals (beat): 66.6K v 66.0Ke
- (UK) Jun M4 Money Supply M/M: -0.5% v +0.5% prior; Y/Y: -0.3% v +0.5% prior; M4 Ex IOFCs 3M Annualized: 3.8% v 4.3% prior

Fixed Income Issuance:
- (IN) India sold total INR140B in 3-month and 6-month Bills
- (EU) ECB allotted $308M in 7-day USD Liquidity Tender at fixed 0.63% vs. $358 prior
- (IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 6-month Bills; Avg Yield: 0.007% v 0.060% prior; Bid-to-cover: 1.79x v 1.58x prior

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