• European bourses are once again on the backfoot as the downtrend in the equity space continues without much in the way of fresh drivers.
• US equity futures are trading on the back foot as sentiment continues to slump, extending the downward price action seen yesterday.
• In FX, DXY is resilient, JPY outperforms on yield dynamics, GBP lags following softer-than-expected UK retail sales, whilst the CNY saw the largest gap between the PBoC fixing and expectations. 
• Bunds are leading the latest recovery rally in core debt, T-note futures continue edging higher as US players enter the market. 
• Looking ahead, highlights include the Trilateral Summit hosting Japanese, South Korean, and US leaders. Earnings from Estee Lauder.

18th August 2023

• Click here for the Newsquawk Week Ahead preview.

EUROPEAN TRADE

EQUITIES

• European bourses are once again on the backfoot as the downtrend in the equity space continues. Selling pressure in stocks picked up after the open without much in the way of fresh drivers behind the move and as such, appears to be a case of “more of the same” with regards to price action.
• Sectors in Europe are lower across the board with underperformance in UK retail names following disappointing UK retail sales data. Elsewhere, other lagging sectors include Basic Resources and Consumer Products and Services.
• Stateside, equity futures are trading on the back foot as sentiment continues to slump, extending the downward price action seen yesterday. Some analysts note that the recent uptick in yields has made equities too expensive and this may have been weighing on the market.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• DXY is resilient after absorbing more pressure from China via various forms of intervention to prop up the Yuan, including the most heavily skewed PBoC midpoint fix for the CNY on record (1000+ pips above expectations in onshore terms), and the index withstood the Yen’s ongoing recovery amidst markedly softer US Treasury yields and ongoing risk aversion.
• GBP reversed to the brink of 1.2700 again and was derailed by dire UK retail sales data, irrespective of the ONS blaming the weather or the fact that the weak consumption figures are highly unlikely to deter the BoE from a 25bps hike in September.
• PBoC sets USD/CNY mid-point at 7.2006 vs exp. 7.3065 (prev. 7.2076)
• Click here for more detail.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Bunds are leading the latest recovery rally in core debt, irrespective of the fact that Gilts may have more fundamental rationale given the magnitude of weakness in UK retail sales against consensus and outright terms.
• T-note is hovering near the top of its 109-28+/14 overnight range and the curve is flatter with the 10-year yield back below the psychological 4.25% level.
• Click here for more detail.

COMMODITIES

• WTI and Brent front-month are choppy within tight ranges and moving between mild gains and mild losses. The crude complex is awaiting the next catalyst which in recent days has been the broader risk sentiment.
• Spot gold is trading flat as the Dollar inches higher in European trade despite a lack of catalysts this morning, with the yellow metal around the USD 1,890/oz mark after printing a range of USD 1,885.9-1,903.43/oz yesterday.
• Base metals are mixed but contained to tight ranges, with 3M LME copper finding resistance at USD 8,300/t before pulling back to the low-USD 8,200/t marks.
• Iran set September Iranian light crude price to Asia at Oman/Dubai + USD 3.45/bbl, according to a Reuters source.
• Australian union said protected industrial action ballots opened at Chevron's Wheatstone downstream and Gorgon facilities in Australia and the protected industrial action ballot will open on Monday at the Wheatstone platform.
• Australian LNG update: Based on industrial rules, the ballot for workers a Chevron's (CVX) Gorgon and the Wheatstone downstream facility must close by Aug. 24. A separate ballot for the Wheatstone offshore platform workers must close by Aug. 28, according to Reuters.
• Italian Energy Minister said Italy's gas storage facility is 90% and they look forward to the winter with more confidence than 2022, via Il Messaggero.
• Russian media suggests a fire broke out at a freight station in Novorossiysk and emergency services arrive at the site, according to Al Jazeera
• NHC said Hurricane Hilary has reached Category 4 intensity, according to Reuters.
• Click here for more detail.

NOTABLE US HEADLINES

• Fed Chair Powell is to speak at the Jackson Hole Symposium on August 25th at 10:05EDT/15:05BST.
• Former President Trump said if he is re-elected to the White House in 2024, he would not reappoint Fed Chair Powell for another term, according to an interview on Fox Business News.

NOTABLE EUROPEAN HEADLINES

• ECB is to write a letter to Italy to object the Italian government's windfall tax on their profits, according to Corriere.

EUROPEAN DATA RECAP

• UK Retail Sales YY* (Jul 2023) -3.2% vs. Exp. -2.1% (Prev. -1.0%)
• UK Retail Sales MM* (Jul 2023) -1.2% vs. Exp. -0.5% (Prev. 0.7%)
• UK Retail Sales Ex-Fuel YY* (Jul 2023) -3.4% vs. Exp. -2.2% (Prev. -0.9%)
• UK Retail Sales Ex-Fuel MM* (Jul 2023) -1.4% vs. Exp. -0.7% (Prev. 0.8%)
• EU HICP-X tobacco YY (Jul 2023) 5.3% (Prev. 5.5%)
• EU HICP-X Tobacco MM (Jul 2023) -0.1% (Prev. 0.2%)
• EU HICP-X F&E Final YY (Jul 2023) 6.6% vs. Exp. 6.6% (Prev. 6.6%)
• EU HICP Final YY (Jul 2023) 5.3% vs. Exp. 5.3% (Prev. 5.3%)
• EU HICP Final MM (Jul 2023) -0.1% vs. Exp. -0.1% (Prev. 0.3%)
• EU HICP-X F,E,A&T Final YY (Jul 2023) 5.5% vs. Exp. 5.5% (Prev. 5.5%)
• EU HICP-X F, E, A, T Final MM (Jul 2023) -0.1% vs. Exp. -0.1% (Prev. -0.1%)

GEOPOLITICS

• Russia's military said Ukraine attacked Russian warships near Crimea with an unmanned boat, while Russian warships destroyed the boat and repelled the attack, according to TASS and Reuters.
• Russian air defences shot down a Ukrainian drone in Moscow, while reports also noted that a building was damaged by the Ukrainian drone attack, according to Reuters.
• US approved sending F-16s to Ukraine from Denmark and Netherlands as soon as pilot training is completed.
• Russian Defence Ministry said Russian and Chinese navy ships are jointly patrolling the Pacific Ocean and held an exercise in the East China Sea.
• Japan Defence Ministry said China and Russia's joint bomber flights, naval passage around Japan is serious concern for Japan's security, according to Reuters.
• Japan, US and Australia are to carry out joint Naval drills in the South China sea on August 23rd, according to Kyodo News.
• Indian Trade Secretary said India plans to hold bilateral trade talks with the UK, EU and Canada on G20 sidelines, according to Reuters.

CRYPTO

• Bitcoin remains subdued after slumping beneath the USD 27,000 level which some attributed to the circulation of a report that SpaceX wrote down the value of its Bitcoin holdings by USD 373 million and sold an unspecified amount.
• US SEC is poised to allow the first ETF based on Ether futures, according to a Bloomberg reporter.

APAC TRADE

• APAC stocks traded mostly lower after the early reprieve from the recent global rout petered out.
• ASX 200 was kept afloat but with price action rangebound amid a lack of pertinent catalysts and with gains in real estate and the commodity-related sectors counterbalanced by losses in tech, telecoms and consumer stocks.
• Nikkei 225 was choppy and briefly clawed back its opening losses as bargain buying kicked in and following the latest inflation data from Japan which printed in line with expectations.
• Hang Seng and Shanghai Comp were subdued with pressure seen in tech names and as property concerns lingered after state-owned developers warned of widespread losses, while Evergrande Real Estate Group filed for Chapter 15 bankruptcy in New York to protect US assets as it works on a restructuring of debts. Participants also await the results of today’s Hang Seng index review, while the losses in the mainland were stemmed after the PBoC’s liquidity efforts resulted in the largest weekly net injection since March.

NOTABLE ASIA-PAC HEADLINES

• China Evergrande (3333 HK) filed for Chapter 15 bankruptcy in New York to protect US assets as it works on a restructuring of debts, according to Bloomberg and Reuters.
• China Evergrande (3333 HK) wishes to clarify pushing forward its offshore debt restructuring as planned; application is a normal procedure for offshore debt restructuring and does not involve bankruptcy petition, according to Reuters.
• Chinese securities regulator says it will steadily defuse bond default risks at large property developers; Will step up communications between government bodies to study measures to boost the market, according to Reuters. China's Shanghai, Shenzhen and Beijing stock exchanges on Friday announced that they will further lower the transaction fees by up to 50% starting from August 28, as a part of broader efforts to revitalize the Chinese stock market, according to Global Times.
• China has reportedly urged buybacks at STAR bourse companies as the market tumbles, according to Bloomberg.

DATA RECAP

• Japanese National CPI YY (Jul) 3.3% vs. Exp. 3.3% (Prev. 3.3%)
• Japanese National CPI Ex. Fresh Food YY (Jul) 3.1% vs. Exp. 3.1% (Prev. 3.3%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Jul) 4.3% vs. Exp. 4.3% (Prev. 4.2%)