Original insights into market moving news

[PODCAST] EU Open Rundown 31st July 2019

  • Asian equity markets followed suit to the negative performance seen across global peers amid trade concerns, looming FOMC decision, mixed Chinese data and earnings
  • Apple gained around 4.5% after-hours due to a beat on both top and bottom lines, Co. missed on iPhone sales but Q4 revenue forecast surpassed Street estimates
  • DXY was flat around the 98.00 level amid a non-committal tone across most major currencies ahead of today’s FOMC meeting
  • Looking ahead, highlights include German Retail Sales & Unemployment Change, EZ CPI (Flash), GDP (Prelim) & Unemployment, Canadian GDP, FOMC Rate Decision & Press Conference, CBRT Inflation Report & Meeting Summary, supply from Germany
  • Earnings: American Tower, Qualcomm, General Electric, ADP, CME Group, Airbus, BNP, Intesa Sanpaolo, BAE Systems, Lloyds, Swiss Re, Credit Suisse, LafargeHolcim


Asian equity markets followed suit to the negative performance seen across global peers amid trade concerns following US President Trump’s Twitter rant regarding China, while the looming FOMC decision, mixed Chinese PMI data and earnings deluge added to the cautious tone. ASX 200 (-0.3%) was dragged lower by losses in utilities and financials but with downside stemmed by strength in the energy sector after a rally in oil prices, while Nikkei 225 (-0.7%) suffered the ill-effects of a firmer currency with the best and worst performers in Tokyo driven by their quarterly results. KOSPI (-0.3%) weakened after North Korea conducted another launch which was said to be a new type of weapon and with earnings also in focus including index heavyweight Samsung Electronics which showed final Q2 oper. profit and revenue topped preliminary results but still suffered a 56% Y/Y drop in profits. Conversely, its main rival Apple saw a different fate with the US tech giant gaining around 4.5% after-hours due to a beat on both top and bottom lines and although it missed on iPhone sales its revenue forecast for next quarter surpassed Street estimates. Elsewhere, Hang Seng (-1.1%) and Shanghai Comp. (-0.5%) conformed to the wide risk averse tone after President Trump’s recent criticism on China and warning of a much tougher deal if China holds out until after the next US elections, with participants also digesting mixed Chinese PMI data in which the headline Manufacturing PMI beat expectations but remained below the 50 benchmark level and Non-Manufacturing PMI missed forecasts. Finally, 10yr JGBs traded relatively flat and were only marginally supported by the risk averse tone as well as the BoJ’s presence in the market for JPY 1.24tln of JGBs with 1yr-10yr maturities.

PBoC skipped open market operations. (Newswires) PBoC set CNY mid-point at 6.8841 (Prev. 6.8862)

Chinese Manufacturing PMI (Jul) 49.7 vs. Exp. 49.6 (Prev. 49.4). (Newswires) Chinese Non-Manufacturing PMI (Jul) 53.7 vs. Exp. 54.0 (Prev. 54.2) Chinese Composite PMI (Jul) 53.1 (Prev. 53.0)

China Global Times Editor Hu Xijin tweeted that China and US negotiators restarted talks and based on what he knows, the atmosphere is good which he hopes indicates that future talks will be smoother than various pessimistic predictions. (Twitter)

Japan and the US reportedly reached a broad agreement on the digital economy where digital products are tariff-free, and businesses can host servers wherever they choose. In other news, the US proposed that Japan and South Korea could consider a standstill agreement to give them time for talks on trade and other issues, according to a senior US official. (Nikkei/Newswires) 


CBI survey showed optimism among small and medium-sized UK manufacturers fell to the lowest since July 2016. (Newswires)

UK GfK Consumer Confidence (Jul) -11.0 vs. Exp. -13.0 (Prev. -13.0). (Newswires) UK BRC Shop Price Index (Jul) Y/Y -0.1% (Prev. -0.1%)


The BoE should hold interest rates at 0.75% and keep its guidance to a minimum this week because it can do little to chart a path through the clouds of uncertainty caused by Brexit, according to the Times Shadow MPC. (Times)




DXY was flat around the 98.00 level amid a non-committal tone across most major currencies ahead of today’s FOMC meeting. The greenback’s transatlantic counterparts were also tentative with EUR/USD contained nearby a large option expiry of EUR 1.4bln at 1.1145 for today’s New York cut, while GBP/USD lingered around short-term support at 1.2150 to provide some respite from its recent Brexit-related rout. Elsewhere, USD/JPY was subdued amid the uninspiring risk tone, while antipodeans traded mixed with NZD/USD suffering following a further deterioration in business survey data and with AUD/USD underpinned after firmer than expected headline Australian CPI data which saw the odds of a cut by the RBA next week drop to 16.00% from 34.75%

Australian CPI (Q2) Q/Q 0.6% vs. Exp. 0.5% (Prev. 0.0%). Australian CPI (Q2) Y/Y 1.6% vs. Exp. 1.5% (Prev. 1.3%) Australian RBA Trimmed Mean CPI (Q2) Q/Q 0.4% vs. Exp. 0.4% (Prev. 0.3%) Australian RBA Trimmed Mean CPI (Q2) Y/Y 1.6% vs. Exp. 1.5% (Prev. 1.6%)

New Zealand ANZ Business Confidence (Jul) -44.3 (Prev. -38.1). (Newswires) New Zealand ANZ Activity Outlook (Jul) 5.0 (Prev. 8.0)


Commodities were mixed with WTI crude futures higher as it extended its rebound from support at USD 57.00/bbl and as the latest API crude inventory report showed a larger than expected drawdown in headline crude stockpiles. Conversely, there were reports that the US is said to be preparing to reissue waivers regarding Iran sanctions although this only briefly dented prices. Gold prices were less inspired with price action contained by a steady greenback and with markets awaiting today’s FOMC, while copper was lacklustre after the prior’s day’s sell-off and alongside the global downbeat risk sentiment.

API Weekly Energy Inventories -6.02mln vs. Exp. -2.60mln (Prev. -10.96mln). (Newswires)

US is said to be preparing to reissue waivers related to Iran nuclear sanctions. (Washington Post)

Libya's Sharara oil field is reportedly shutting down due to a blocked valve on the pipe to the Zawiya terminal, according to sources. (Newswires)



North Korea fired multiple projectiles early on Wednesday which was said to be 2 short-range ballistic missiles and a different type of weapon than previous launches, Following the launch, South Korea convened a national security meeting, while Japan Defense Ministry said no ballistic missiles reached Japan's territory or exclusive economic zone and sees no immediate impact on Japan's security from the North Korea launch. (Newswires/Yonhap)


French President Macron assured Iranian President Rouhani that constructive and active cooperation is needed to reduce tensions in the Gulf, and that Paris will continue efforts to secure interests in the nuclear deal, according to Al Jazeera (Twitter/Al Jazeera)


Treasuries were little changed on the day amid choppy trade on thin volumes. Fixed income was bid higher on disappointing Eurozone data, such as weaker than expected June consumer spending and French Q2 GDP. Some downbeat on China tweets from US President Trump helped the move higher going into the US session, but the T-plex reversed course, where analysts noted CTA and algo selling on a strong July Consumer Sentiment reading (135.7, exp. 125.0). At settlement yields were little changed. US T-note futures (U9) settled 3+ ticks lower at 127-11.

Apple Inc (AAPL) Q3 EPS USD 2.18 vs. Exp. USD 2.10. Q3 revenue USD 53.8bln vs. Exp. USD 53.42bln Q3 Phone net sales USD 25.99bln vs. Exp. USD 26.31bln Sees Q4 Revenue between USD 61bln-64bln vs. Exp. 61bln

Busy week ahead, via Danske: