• European stock market, economy and companies update (September 01, 2015)

    ***Notes/Observations***
    - Major European and emerging PMI Manufacturing disappoint
    - China official Aug manufacturing PMI fell into contraction territory (49.7 v 49.7e) while Caixin Manufacturing PMI survey confirmed a 6-year low (47.3 v 47.1e)
    - RBA left cash rate steady at 2.0%, as expected, and maintained the cautious dovish tone in its statement
    - Central bank activity will remain the focus this coming week starting with Fed beige book today (Riksbank and ECB meet on Thursday.
    - Fresh declines in Chinese and global stock markets serving to erode Fed tightening expectations
    - Japanese capital investment turns lower (5.6% v 8.8%e)
    - Italy Unemployment falls to 18-month low while Germany registers its 1st improvement in 3 months; Overall Euro Zone dips below 11% for 3 year low


    *** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
    **Equities**
    Indices [Stoxx50 -2.6%, FTSE -2.8% at 6,075, DAX -2.9% at 9,963, CAC-40 -2.5% at 4,534, IBEX-35 -2.8% at 9,973, FTSE MIB -2.4% at 21,409, SMI -2.3% at 8,613, S&P 500 Futures -2.4% at 1,921

    - Market Focal Points/Key Themes: European stocks started lower, with China data weighing on risk sentiment; European PMI data comes in below expectations; commodities returned to the downside, pulling down materials stocks (BHP Billiton BHP.AU -2.1%, Glencore GLEN.UK -5.1%, Anglo American AAL.UK -5.3%); energy stocks haven't managed to benefit much from rising oil prices (BP BP.UK -2.9%, Shell RDSA.NL -2.3%, Repsol REP.ES -1.8%); Luxury brands also affected by China data; British stocks moved lower after extended weekend, processing BOE's Carney comments from Jackson Hole; AstraZeneca and Valeant reach distribution deal

    By Sector:
    - Consumer discretionary [AGA Rangemaster AGA.UK +9.7% (offer from Whirlpool)]
    - Financials [Man Group EMG.UK -5.6% (Chinese investigation)]
    - Healthcare [Elekta EKTAB.SE +6.2% (ups guidance), Astrazeneca AZN.UK -2.4% (deal with Valeant)]
    - Telecom [Altice ATC.NL -6.3% (New COO)]

    **Speakers**
    - IMF's Lagarde: Global economic growth remains moderate but lower than the recent WEO update from July
    - EU's Moscovici: European recovery remains on track; reaffirms 2015 GDP growth of 1.5%. Chinese authorities were taking action for stability
    - German Fin Min Schaeuble: Confident that Spain will maintain its reform path and reiterated that Euro region rules must be respected
    - Spain PM Rajoy: Decline in CPI aids the country's competitiveness
    - Greece Securities Regulator: Extends short selling bank until Sept 30th
    - Hungary Central Bank Dep Gov Nagy: Country facing favorable CPI environment due to global trends
    - Japan Chief Cabinet Sec Suga: G7 is watching market movement carefully
    - Hong Kong Monetary Authority (HKMA) intervened to maintain HKD currency within the 7.75-7.85 trading band; injects HK$6.2B into banking system
    - Bank of Korea (BOK) Aug Minutes: Monitoring Q3 data needed for growth and inflation path. Current uncertainties not enough to justify a rate cut at this time
    - China state planning agency National Development and Reform Commission (NDRC) Vic e Chair Ning reiterated view to pursue active fiscal policy and stable monetary policy. Turbulence in global equities and commodity markets would affect both China and global growth. China needed to work hard to achieve 2015 GDP growth target
    - China NDRC said to cut gasoline price by CNY125/ton and diesel price by CNY120/ton (**Note: would be the 7th cut this year)

    **Currencies**
    - Dealers note that Fed's dilemma of having to balance international risks with domestic needs is unlikely to be made any easier. Fresh declines in Chinese and global stock markets serving to erode Fed tightening expectations. For the time being risk aversion sentiment putting some headwinds into the greenback. EUR/USD higher by 1% by mid-morning above the 1.13 level. Dealers noted that ECB meeting and US payroll data would likely highlight the monetary policy divergence and aid the USD. Comments from ECB officials suggest sensitivity to international developments remained high and Draghi is expected to re-emphasize the dovish stance at this week's meeting. Another headwind for the EUR would be the likely lowering of the ECB staff growth and inflation projections
    - Risk aversion sentiment benefited the JPY currency. USD/JPY at a 5-day low approaching the 119.50 area
    - The GBP/USD was approaching a 3-month low after Aug PMI data missed expectations and hit its lowest level since Apr 2013). The GBP/USD was just above the 1.53 level ahead of the NY morning.

    **Fixed Income:
    - Bund futures trade at 153.14 up 5 ticks as the Equity selloff and generally worse PMI data out of Europe and Asia put pressure on yields which earlier reached the highest level in 6 weeks. To the downside analysts target 50% retracement at 152.36 next with 151.61 and then trend line support at 151.41 next. To the upside 153.35 high would need to be broken to target 153.50 with 154.00 needing to hold to cap any uptrend.
    Today we see Austria selling 1.3B worth of 5 and 10y RAGBs, equivalent to to 8K Bunds. We also see Italy to repay 18.1B in C&Rs today.
    - UK Gilt futures trades 117.42 up 23 ticks, as weaker UK Mfg PMI data put pressure on Yields. Analysts look for initial resistance at 117.52, with 118.11 next. A break of today's lows have analysts looking for support at 116.36 the recent low with 116.10 needed to be broken to see 115.77.
    - Tuesday's liquidity report showed Monday's excess liquidity rose to 488.3B a rise of 10.3B from 478B prior. This was due to a fall in AFs and MonPol portfolios to a record low of negative 74.7B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to 2.74B from 2.16B prior still at elevated levels.

    **Political/In the Papers:
    - (CN) PBoC to require banks trading currency forwards for clients to hold forex reserves; effective Oct 15th. To ask financial institutions trading in foreign-exchange forwards for clients to hand in 20% of the past month's sales as reserves
    - (UK) UK PM Cameron said to be giving some concessions in EU talks as it dropped demand for full exclusion of UK from EU employment laws

    **Looking Ahead***
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - (RO) Romania Aug International Reserves: No est v $32.4B prior
    - RU) Russia Aug Sovereign Wealth Fun Balances: Reserve Fund: No est v $72.9B prior; Wellbeing Fund: No est v $74.6B prior
    - (BR) Brazil July CNI Capacity Utilization: No est v 80.1% prior
    - (ZA) South Africa Aug Naamsa Vehicle Sales Y/Y: -4.1%e v -6.1% prior
    - (US) Aug Wards Total Vehicle Sales: 17.30Me v 17.46M prior; Domestic Vehicle Sales: 13.70Me v 13.92M prior
    - 05:30 (ZA) South Africa to sell Bonds
    - 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month Bills
    - 05:30 (BE) Belgium Debt Agency to sell 1.7-2.1B in 3-month and 6-month Bills
    - 06:00 (IE) Ireland Aug Unemployment Rate: No est v 9.7% prior
    - 06:45 (US) Daily Libor Fixing
    - 07:45 (US) Goldman Economist Chain Store Sales
    - 08:00 (CZ) Czech Aug Budget Balance (CZK): No est v 25.7B prior
    - 08:00 (DE) German Fin Min Schaeuble with Spain Fin Min de Guindos in Berlin
    - 08:00 (EU) ESM's Dickson in London
    - 08:10 (US) Baltic Dry Bulk Index
    - 08:30 (CA) Canada Jun GDP M/M: +0.2%e v -0.2% prior; Y/Y: 0.4%e v 0.5% prior; Quarterly GDP Annualized: -1.0%e v -0.6% prior
    - 08:55 (US) Weekly Redbook Sales
    - 09:00 (BR) Brazil Aug Manufacturing PMI: No est v 47.2 prior
    - 09:00 (EU) Weekly ECB Forex Reserves
    - 09:00 (DE) German Chancellor Merkel with Spain PM Rajoy
    - 09:30 (CA) Canada Aug Manufacturing PMI: No est v 50.8 prior
    - 09:30 (NZ) Fonterra Global Dairy Trade auction
    - 09:45 (US) Aug Final Markit Manufacturing PMI: 52.9e v 52.9 prelim
    - 10:00 (US) July Construction Spending M/M: 0.6%e v 0.1% prior
    - 10:00 (US) Sept IBD/TIPP Economic Optimism: 47.1e v 46.9 prior
    - 10:00 (US) Aug ISM Manufacturing: 52.5e v 52.7 prior; Prices Paid: 39.0e v 44.0 prior
    - 10:00 (MX) Mexico Weekly International Reserves
    - 10:00 (MX) Mexico July Total Remittances: $2.1Be v $2.2B prior
    - 10:00 (MX) Mexico Central Bank Economist Survey
    - 10:00 (EU) EU's Juncker in Brussels
    - 10:30 (MX) Mexico Aug Manufacturing PMI: No est v 52.9 prior
    - 11:00 (EU) German Fin Min Schaeuble with counterparts Sapin (France), Padoan (Italy) and De Guindos (Spain) at EU Parliament Panel
    - 11:30 (US) Treasury to sell 4-Week Bills
    - 12:00 (IT) Italy Aug New Car Registrations Y/Y: No est v 14.5% prior
    - 12:00 (IT) Italy Aug Budget Balance: No est v -2.2B prior
    - 13:00 (MX) Mexico Aug IMEF Manufacturing Index: 52.9e v 52.7 prior; Non-Manufacturing Index: 51.7e v 51.3 prior
    - 14:00 (BR) Brazil Aug Trade Balance: $2.9Be v $2.4B prior; Total Exports: $15.6Be v $18.5B prior; Total Imports: $12.7Be v $16.2B prior
    - 15:30 (DE) German Econ Min (Vice Chancellor) Gabriel in Cologne
    - 16:30 (US) Weekly API Oil Inventories
    - 19:00 (KR) South Korea July Current Account Balance: No est v $12.2B prior; Balance of Goods (BOP): No est v $13.2B
    - 21:30 (AU) Australia Q2 GDP Q/Q: 0.4%e v 0.9% prior; Y/Y: 2.2%e v 2.3% prior
    - 23:00 (CN) China to sell 5-Year Bonds
    - 23:00 (TH) Thailand to sell THB15B in 2025 and 2044 2020 Bonds


    **Economic data***
    - (IE) Ireland Aug Manufacturing PMI: 53.6 v 56.7 prior (27th month of expansion but lowest since Feb 2014)
    - (IN) India Aug Manufacturing PMI: 52.3 v 52.7 prior (22nd month of expansion)
    - (JP) Japan Aug Domestic Vehicle Sales Y/Y: +2.3% v -1.3% prior
    - (RU) Russia Aug Manufacturing PMI (miss): 47.9 v 48.3e (9th month of contraction)
    - (SE) Sweden Aug Manufacturing PMI (miss): 53.2 v 55.0e (24th month of expansion)
    - (NL) Netherlands Aug Manufacturing PMI: 53.9 v 56.0 prior (26th month of expansion)
    - (NO) Norway Aug Manufacturing PMI (miss): 43.3 v 45.4e (4th month of contraction)
    - (PL) Poland Aug Manufacturing PMI (miss): 51.1 v 54.2e (11th month of expansion)
    - (TR) Turkey Aug Manufacturing PMI (miss): 49.3 v 50.0e (moves back into contraction)
    - (HU) Hungary Aug Manufacturing PMI (beat): 50.7 v 50.0 prior (moves back into expansion)
    - (ES) Spain Aug Manufacturing PMI (miss): 53.2 v 53.6e (21st month of expansion but lowest since Oct 2014)
    - (CZ) Czech Republic Aug Manufacturing PMI (miss): 56.6v 56.8e (27th month of expansion)
    - (CH) Swiss Aug Manufacturing PMI: 52.2 v 49. (Moves back into expansion)
    - (IT) Italy Aug Manufacturing PMI (miss): 53.8v 55.0e (7th month of expansion but lowest since April)
    - (FR) France Aug Final Manufacturing PMI (miss): 48.3 v 48.6e
    - (DE) Germany Aug Unemployment Change (beat): -7K v -4Ke (1st improvement in 3 months); Unemployment Rate: 6.4% v 6.4%e (matches record low)
    - (DE) Germany Aug Final Manufacturing PMI (beat): 53.3 v 53.2e
    - (EU) Euro Zone Aug Final Manufacturing PMI (miss): 52.3v 52.4e (confirms 26th straight month of growth)
    - (GR) Greece Aug Manufacturing PMI: 39.1 v 30.2 prior (12th month of contraction)
    - (IT) Italy July Preliminary Unemployment Rate (beat): 12.0% v 12.7%e (lowest since July 2013)
    - (IT) Italy Q2 Unemployment Rate: 12.4% v 12.5%e
    - (UK) July Net Consumer Credit: 1.2B v 1.2Be; Net Lending Sec. on Dwellings: 2.7B v 2.7Be
    - (UK) July Mortgage Approvals: 68.8K v 68.1Ke (highest since Feb 2014)
    - (UK) July M4 Money Supply M/M: +1.0% v -0.5% prior; Y/Y: +0.6% v -0.3% prior; M4 Ex IOFCs 3M Annualized: 3.7% v 3.9% prior
    - (UK) Aug Manufacturing PMI: 51.5 v 52.0e (30th month of expansion but lowest since Apr 2013)
    - (EU) July Unemployment Rate (beat): 10.9% v 11.1%e (lowest since Feb 2012)
    - (DK) Denmark Aug Manufacturing PMI: 61.7 v 54.5 prior
    - (ZA) South Africa Aug BER Manufacturing PMI (miss): 48.9 v 51.1e (1st contraction in 4 months)
    - (IT) Italy Q2 Final GDP (beat) Q/Q: 0.3% v 0.2%e; Y/Y: 0.7% v 0.5%e

    Fixed Income Issuance:
    - (AT) Austria Debt Agency (AFFA) sold total 1.43B vs. 1.43B indicated in 2020 and 2025 bonds
    - Sold 770M in 3.9% July 2020 avg yield 0.209% v 2.827% prior; Bid-to-cover: 2.12x v 2.90x prior
    - Sold 660M in 1.20% Oct 2025 RAGB; Avg Yield: 1.076% v 0.863% prior, Bid to cover: 2.12x v 2.13x prior

    Contributed by Trade The News
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