Weaker-than-expected preliminary second quarter GDP data out of France, Germany and Italy drove European markets into the red this morning. US equity markets made a brief run higher in the first 30 minutes of cash trading but have deteriorated mid-morning. As of writing, the DJIA is up 0.15%, the S&P500 is flat and the Nasdaq is down 0.18%.
After three straight days of depreciation, the PBoC strengthened the yuan 0.5% in its Friday fixing. EUR/USD saw a modest move higher in the US premarket as the pair tested toward the 1.1190 level but fell short and then rapidly dropped back to 1.1110. Crude made a run for $43 around the open of cash equity trading but then fell back to $42.30 mid morning. Brent remains well contained in the $49 handle.
On the surface, the US July industrial production report was decent. The headline figure was better than expected and the June figure was revised slightly higher. A closer analysis shows that the gain was entirely accounted for by a 10.6% spike in the motor vehicles and parts sector, reflecting lighter-than-usual July factory retooling shutdowns. These gains may be reversed in August. The PPI numbers showed incremental gains in producer prices; July CPI is due next Wednesday.
Shares of JC Penny are up 7% after the firm's quarterly loss came in lower than expected on good growth in sales comps and modest y/y revenue growth. The firm raised its FY EBITDA guidance and made very positive comments about its Fall outlook on the conference call. Nordstrom is up 3.5% but off its best levels after a widely beating EPS expectations in its second quarter and adjusting its FY view slightly higher. Tesla increased its share offering by nearly 30% on strong demand. Among the biggest losers is Applied Materials, which offered a weak fourth-quarter forecast despite a relatively solid showing in its third quarter.
Despite the turmoil on Chinese equity markets, the management buyouts of US-listed Chinese firms continue. This morning, WuXi disclosed it reached a deal with a buyout group that includes the firm's CEO and chairman to sell the company for $46/ADS, an 11% premium for its Thursday closing price. Note that the buyout group had offered a non-binding proposal at $46/ADS back in April, although shares of WX have been trading below that level over the last four months, raising doubts about the deal. WX is trading around $43.50.
***Looking Ahead***
- 13:00 (US) Weekly Baker Hughes Rig Count data
- 14:00 (CO) Colombia Central Bank July Monetary Policy Minutes
- 15:00 (AR) Argentina July National Urban CPI M/M: 1.3%e v 1.0% prior; Y/Y: 14.9%e v 15.0% prior
- 15:00 (AR) Argentina July Wholesale Price Index M/M: No est v 1.3% prior; Y/Y: No est v 13.4% prior
- 17:00 (CO) Colombia Jun Retail Sales Y/Y: 3.4%e v 2.7% prior
- 17:00 (CO) Colombia Jun Industrial Production Y/Y: -0.9%e v -3.97% prior
***Economic Data***
- (PT) Portugal Q2 Labour Costs Y/Y: 1.2% v 4.5% prior
- (IE) Ireland Jun Trade Balance: €4.1B v €3.9B prior
- (IL) Israel July CPI M/M: 0.2% v 0.2%e; Y/Y: -0.3% v -0.3%e
- (BR) Brazil Aug FGV Inflation IGP-10 M/M: 0.3% v 0.5%e
- (PL) Poland July CPI Core M/M: 0.2% v 0.0%e; Y/Y: 0.4% v 0.4%e
- (IS) Iceland July Unemployment Rate: 2.6% v 2.6% prior
- (US) July PPI Final Demand M/M: 0.2% v 0.1%e; Y/Y: -0.8% v -0.9%e
- (US) July PPI Ex Food and Energy M/M: 0.3% v 0.1%e; Y/Y: 0.6% v 0.5%e
- (US) July PPI Ex Food, Energy, Trade M/M: 0.2% v 0.1%e; Y/Y: 0.9% v 0.7%e
- (CA) Canada Jun Manufacturing Sales M/M: 1.2% v 2.7%e
- (CA) Canada July Existing Home Sales MoM: -0.4% v -0.8% prior
- (IN) India July Trade Balance: -$12.8B v -$11.1Be; Exports Y/Y: -10.3% v -15.8% prior; Imports Y/Y: -10.3% v -13.4% prior
- (BE) Belgium Jun Trade Balance: €1.9B v €0.5B prior
- (US) July Industrial Production M/M: 0.6% v 0.3%e; Capacity Utilization: 78.0% v 78.0%e; Manufacturing Production: 0.8% v 0.4%e
- (US) Aug Preliminary University of Michigan Confidence: 92.9 v 93.5e