• European bourses are lower across the board with a packed earnings slate dictating, stateside futures mixed post-FOMC and ahead of AAPL & AMZN; META +6%
• USD supported by pressure in GBP ahead of a potential BoE cut with EUR at lows as sentiment in the region deteriorates.
• Gilts lead fixed income pre-BoE, EGBs unaffected by Final PMIs and downbeat commentary from HCOB on Germany
• Crude continues to benefit from geopol. risk premia ahead of the JMMC, metals pressured on the USD and post-Chinese PMI
• Looking ahead, highlights include US PMIs, US IJC, ISM Manufacturing, BoE & CNB Policy Announcements, OPEC+ JMMC, Comments from BoE's Bailey & Pill. Earnings: Amazon, Apple, Coinbase, Intel, Snap, and many more.

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EUROPEAN TRADE

EQUITIES

• European bourses are lower across the board, Stoxx 600 -0.3%, despite the initial modest optimism of futures overnight. Earnings dominate the breakdown this morning.
• Sectors are mixed, no overarching theme with earnings dictating; Retail outperforms on Next earnings, followed closely by Real Estate on the back of Vonovia. While Autos lag after BMW, Daimler Truck and Volkswagen with Banks pressured by BNP Paribas, Credit Agricole and ING all post-earnings.
• DAX 40 lags given the pressure in auto names, CAC 40 hit on SocGen and Credit Ag. While the FTSE 100 is the relative best performer given GBP weakness ahead of the BoE and also as the likes of Rolls-Royce and Shell lift post-earnings.
• Stateside, futures are mixed post-FOMC and into an after-market session with numerous heavyweights due incl. AAPL, AMZN & INTC; ES +0.2%, NQ +0.3%. Post-earnings, Meta +6.3% while QCOM now resides in the red.
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FX

• USD is managing to claw back most of yesterday's FOMC-related selling with DXY up to a 104.37 peak vs. yesterday's 104.53 high.
• USD strength which comes from deteriorating European sentiment, EUR/USD at lows of 1.0779 and Cable below 1.28 to a 1.2764 base into the BoE.
• JPY is one of the best performers across the majors as the combination of a BoJ hike yesterday and Powell paving the way for a September cut acts as a drag on USD/JPY; down to a 148.52 base but since back above 149.00.
• AUD pressured on USD strength and soft Chinese Caixin PMIs, Kiwi also pressured but to a lesser extent.
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FIXED INCOME

• A bullish start for fixed income as the FOMC undertones continue to reverberate through.
• Bunds holding around 134.00 in a 133.85-134.17 band; unreactive to unusually hefty revisions to Final PMIs and a sizeable outlook cut by HCOB on the German economy for the year as a whole.
• Similarly, supply from Spain and France passed with no real reaction.
• Gilts outperform into the BoE, though before this the Manufacturing PMI was revised higher and accompanied by hawkish pricing commentary but not sufficient to knock Gilts which remain at the top-end of 99.49-79 parameters and as such the UK 10yr yield still resides sub-4.0%.
• USTs firmer, and towards the top-end of 112-02+ to 112-10+ parameters, a peak which matches Wednesday’s post-Powell high.
• Spain sells EUR 5.9bln vs exp. EUR 5-6bln 2.50% 2027, 3.45% 2034 & 5.15% 2044 bonds & EUR 0.766bln vs exp. EUR 0.25-0.75bln 0.65% 2027 I/L
• France sells EUR 10.497bln vs exp. EUR 9-10.5bln 3.00% 2034, 1.25% 2038, 2.50% 2043, and 4.00% 2055 OAT Auction
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COMMODITIES

• Crude benchmarks continue to climb with geopolitical risk premium keeping the complex afloat heading into the OPEC+ JMMC.
• WTI Sep trades towards the top of a current USD 78.31-78.88/bbl range with Brent Oct around the upper end of a USD 81.13-81.80/bbl parameter.
• Precious metals pressured amid the recent USD strength, XAU at the lower-end of a USD 2,433.29-2,458.47/oz range vs Wednesday's USD 2,403.94-2,451.01/oz. While base peers have also come off best, with 3M LME Copper at the lower-end of parameters given the USD strength and mentioned surprise contraction in the Chinese Caixin Manufacturing PMI.
• OPEC+ is likely to maintain output policy at the meeting, via Reuters citing sources; meeting has been pushed back to 12:00BST/07:00ET.
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NOTABLE DATA RECAP

• UK Nationwide house price MM (Jul) 0.3% vs. Exp. 0.1% (Prev. 0.2%); YY 2.1% vs. Exp. 1.8% (Prev. 1.5%)
• EU Unemployment Rate (Jun) 6.5% vs. Exp. 6.4% (Prev. 6.4%)
• German HCOB Manufacturing PMI (Jul) 43.2 vs. Exp. 42.6 (Prev. 42.6); "We are now expecting the overall economy to grow by just 0.2% this year, down from our previous forecast of 0.5%".
• EU HCOB Manufacturing Final PMI (Jul) 45.8 vs. Exp. 45.6 (Prev. 45.6)
• UK S&P Global Manufacturing PMI (Jul) 52.1 vs. Exp. 51.8 (Prev. 51.8); “Inflationary pressures remain a blot on the copybook, however, with input costs rising to the greatest extent in one-and-a-half years." adding “Selling prices are also rising at the quickest rate since mid-2023. Policymakers are likely to take a cautious approach to loosing monetary policy amid these signs that inflationary pressures may be pivoting away from services and towards manufacturing.”

NOTABLE EUROPEAN HEADLINES

• German engineering orders -9% Y/Y in June (Domestic -8%; Orders -10%); Apr-Jun -10% Y/Y (Domestic -20%, Foreign Orders -5%), according to VDMA.

NOTABLE US HEADLINES

• WSJ's Timiraos wrote the Fed cleared the path for a September rate cut and noted officials held rates steady but made an important pivot of highlighting a more balanced focus on employment and inflation goals.
• Arm Holdings (ARM) Q1 2025 (USD): Adj. EPS 0.40 (exp. 0.34), Revenue 939mln (exp. 903mln) Shares fell 10.5% after-market.
• Meta Platforms Corp (META) Q2 2024 (USD): EPS 5.60 (exp. 4.73), Revenue 39.07bln (exp. 38.31bln) Shares rose 7.2% after-market.
• Qualcomm Inc (QCOM) Q2 2024 (USD): adj. EPS 2.33 (exp. 2.25), Revenue 9.39bln (exp. 9.22bln) Shares fell 1.3% after-market.
• China's Industry Minister plans to strengthen supervision and management of "over the air" upgrades. Of note for Tesla (TSLA)

GEOPOLITICS

MIDDLE EAST

• Israel sent messages through diplomatic channels to Lebanon and Iran in which it stated that Israel is ready to go to the point of all-out war if Hezbollah and Iran respond in a way that will severely damage Israel, according to Israel's Channel 12 cited by Faytuks News on X.
• US Deputy Representative to the Security Council said a wider war is neither imminent nor inevitable, according to Al Jazeera.
• Hamas said it targeted a gathering of Israeli soldiers at the Salem military checkpoint west of Jenin with machine guns and achieved direct hits, according to Sky News Arabia.
• Israeli military confirmed death of Hamas military leader Deif in a July strike in Gaza, via a statement.

OTHER

• Chinese Foreign Ministry said China and India are to speed up the negotiation process for the border situation and continue to maintain peace and tranquillity in border areas.
• Chinese military said a Canadian frigate sailed through the Taiwan Strait, while it added that Canada's actions have disrupted and undermined peace and stability across the Taiwan Strait.

CRYPTO

• Bitcoin is softer on the session and potentially suffering from the USD’s advances. BTC sub-65k but off the earlier USD 63.5k base.

APAC TRADE

• APAC stocks traded mixed as participants digested the latest key developments including strong tech earnings, Fed Chair Powell's dovish press conference and disappointing Chinese Caixin Manufacturing PMI data.
• ASX 200 was led higher by strength in the rate-sensitive sectors amid a softer yield environment.
• Nikkei 225 suffered heavy losses and briefly dipped beneath the 38,000 level alongside a firmer currency after the recent BoJ rate hike and as participants also digested earnings releases, while Toyota shares were heavily pressured after Japan's Transport Ministry announced that misconduct was discovered in an additional 7 Toyota models.
• Hang Seng and Shanghai Comp. were subdued after disappointing Caixin Manufacturing PMI which unexpectedly slipped into contraction territory for the first time in 9 months.

NOTABLE ASIA-PAC HEADLINES

• HKMA maintained its base rate unchanged at 5.75%, as expected.
• China NDRC vice head said there is 'sufficient' room for counter-cyclical policy adjustments and that China has the conditions, ability, and confidence to achieve its full-year growth target. Furthermore, China will actively expand domestic demand and put consumption boost in a more striking position, as well as promote effective investment.

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (Jul) 49.8 vs. Exp. 51.5 (Prev. 51.8)
• Australian Trade Balance (AUD)(Jun) 5.59B vs Exp. 5.00B (Prev. 5.77B)
• Australian Exports MM (Jun) 1.7% (Prev. 2.8%)
• Australian Imports MM (Jun) 0.5% (Prev. 3.9%)
• Australian Export Prices (Q2) -5.9% (Prev. -2.1%)
• Australian Import Prices (Q2) 1.0% (Prev. -1.8%)