EUROPEAN EQUITY OPEN: European equities start higher; RR/ LN engine component failure; PRA approves BBVA SM control of TSB; RMV LN not received REA approach

EUROPEAN OPEN: European equities are starting Tuesday higher, despite the cautious APAC trading session overnight, ahead of the US traders return after the long-weekend holiday, and today's release of the ISM manufacturing PMI (preview below); we have other key macro events this week, including JOLTs, ADP, Services ISM, and the NFP release on Friday (+160k expected). In data, Swiss CPI eased to 1.1% Y/Y in August (exp. 1.2%, prev. 1.3%); analysts said the release does not change the narrative for another SNB rate cut in September, but will potentially provide the central bank with more confidence on inflation, since it is well below its Q3 forecast of 1.5%, and could potentially result in the SNB allowing the CHF to weaken. Elsewhere, Barclaycard reported UK consumer spending rose by 1.0% Y/Y in August (prev. -0.3%); the BRC reported total sales rose to 1.0% Y/Y (prev. +0.5%), while retail sales were up to +0.8% Y/Y (prev. 0.3%); the BRC said spending on food and drink was fuelled by summery weather conditions.

STOCK SPECIFICS: Cathay Pacific (0293 HK) will inspect Airbus (AIR FP) A350 fleet after a Rolls-Royce (RR/ LN) engine component failure. In M&A, Rightmove (RMV LN) confirmed that it has not received any approach from REA about a possible offer for the company. UK's PRA has approved BBVA’s (BBVA SM) indirect control of Banco Sabadell’s (SAB SM) UK unit TSB; the approval is key for BBVA’s planned acquisition of Sabadell. BP's (BP/ LN) BP Trinidad and Tobago unit is selling its Immortelle, Flamboyant, Amherstia, and Cashima offshore gas fields, including undeveloped Parang resources, to Perenco T&T. In corporate updates, DS Smith (SMDS LN) said that overall trading for the current FY was in line with management expectations; implementation of combination of International Paper (IP) remains on track. Ashtead (AHL LN) said FY results would be in line with its guidance; announced Alex Pease (formerly of Westrock) will join as CFO designate. Watches of Switzerland (WOSG LN) noted that demand for luxury brands remains strong. In autos, Volkswagen (VOW3 GY) is reportedly considering closing factories in Germany due to increasing price pressure from Asian competitors, Reuters reports; but VW's Works Council chief said plant closures were out of the question for them. In notable broker updates, Deutsche Bank (DBK GY) was upgraded at Barclays, Hikma (HIK LN) was upgraded at Berenberg, Novartis (NOVN SW) was downgraded at Jefferies.

TODAY’S AGENDA:

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  DAY AHEAD: Today’s docket includes final US S&P Global manufacturing PMI for August, which will be released around 15 minutes before the ISM manufacturing PMI for the month (see below). US construction spending for July is expected to fall -0.1% M/M after June’s -0.3% M/M. The RCM/TIPP economic optimism release for September is seen rising to 46.2 from 44.5 in August. Elsewhere, the Global Dairy Trade auction results will be out today (prev. change in GDT price index was +5.5% to USD 3,920; Whole Milk Powder previously rose +7.2% to USD 3,482). On the speakers docket, Riksbank’s Theeden, ECB’s supervisory chief Buch, and BoE’s Breeden are scheduled to deliver remarks.


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  PREVIEW - ISM MANUFACTURING (15:00BST/10:00EDT): The consensus looks for a rise to 47.5 in August from 46.8 in July. As a comparison, S&P Global’s flash PMI data for August showed the manufacturing PMI falling from 49.6 to 48.0, signalling a deterioration in business conditions for a second straight month, and the steepest rate of deterioration since December. The report noted that all five components of the PMI weakened in August. “Increased rates of decline for new orders and inventories were accompanied by the first fall in factory production for seven months,” S&P wrote, “employment growth meanwhile slowed to near-stagnation, and suppliers’ delivery times also shortened to the greatest extent since February, in a sign of suppliers being less busy amid weaker demand for raw materials.” It also noted that inventories of finished goods were up sharply for the third time in the last four months, with the recent accumulation on unfinished inventory having been amongst the largest recorded in the history of the survey, often reflecting weaker than expected sales. 

03 Sep 2024 - 08:10- EU Research- Source: Newsquawk