• Chinese GDP topped estimates on a Q/Q basis at 1.8% vs. Exp. 1.6%, but GDP Y/Y slowed in-line with forecasts to 6.7% vs. Prev. 6.8%
• European equities (Eurostoxx 50 +0.1%) trade with little in the way of firm direction. Deutsche Bank prelim results lift financials
• Looking ahead, highlights include, US retail sales, NY Fed mfg, US President Trump meets with Russian President Putin

ASIA

Asian stocks began the week subdued with the region lacklustre amid the absence of Japanese participants and following a quiet weekend in terms of newsflow, while the region also digested a deluge of mixed Chinese data including a slowdown in Q2 GDP. ASX 200 (-0.4%) was on the backfoot from early trade amid cautiousness prior to the key Chinese releases and with the index dragged by losses in miners and financials. Elsewhere, Shanghai Comp. (-0.6%) and Hang Seng (+0.1%) were initially downbeat after the mixed data in which GDP topped estimates on a Q/Q basis at 1.8% vs. Exp. 1.6%, but GDP Y/Y slowed inline with forecasts to 6.7% vs. Prev. 6.8%. In addition, Retail Sales was better than expected and Industrial Production disappointed, while the lending and money supply data late last week was also varied and added to the uninspired tone. In terms of today’s notable movers, ZTE shares surged after the US confirmed to lift the ban on US sales to the Co. while Xiaomi were on the other side of the spectrum after the Shanghai Stock Exchange banned investors from trading in a dozen of foreign companies and firms with weighted-voting rights via the stock-connect.

Chinese Premier Li reiterated China and EU are to uphold multilateralism and free trade during meeting with EU officials, while EU's Tusk said trade wars can result to hot conflicts and that EU is seeking support for WTO reform. (Newswires)

China Commerce Ministry says that China filed a complaint to WTO regarding the US proposed tariff list on USD 200bln worth of Chinese goods. (Newswires)

Chinese investors are to be banned from trading in shares of a dozen foreign firms and firms with weighted voting rights, as China aims to protect retail investors using HK link from less understood securities. (Newswires)

PBoC injected CNY 170bln via 7-day and CNY 130bln via 14-day reverse repos for a net CNY 300bln daily injection. (Newswires)

PBoC set CNY mid-point at 6.6758 (Prev. 6.6727)

Chinese GDP (Q2) Q/Q 1.8% vs. Exp. 1.6% (Prev. 1.4%). (Newswires)

Chinese GDP (Q2) Y/Y 6.7% vs. Exp. 6.7% (Prev. 6.8%)

Chinese GDP YTD (Q2) Y/Y 6.8% vs. Exp. 6.7% (Prev. 6.8%)

Chinese Industrial Output (Jun) Y/Y 6.0% vs. Exp. 6.5% (Prev. 6.8%)

Chinese Retail Sales (Jun) Y/Y 9.0% vs. Exp. 8.8% (Prev. 8.5%)

EU/UK/US

US President Trump stated that he thinks the EU are a foe regarding what it does to the US on trade, while Trump also stated that China is a foe economically and that Russia is a foe in certain respects. (Newswires)

Eurosceptics have set up a “party within a party” with a highly organised whipping operation among Tory Eurosceptic MPs to try to frustrate Theresa May’s Brexit plans. (Telegraph)

UK PM May’s chances of winning support for her Brexit compromise have been dealt a huge blow as Justine Greening has become the first senior Conservative to support calls for a second referendum. (Times)

BBC journalist tweets "Am hearing the Govt could accept all the Brexiteer / ERG amendments to the Customs Bill". (Twitter)

An editor at PoliticsHome tweeted “Tory Brexiteer MP says they are not sure can get the 48 letters to force a vote of no confidence in Theresa May. And even if they did, chances are she would win and be untouchable for at least a year.”. (Twitter)

ECB’s Weidmann warned the German cabinet to be prepared for tougher times ahead during a meeting earlier this month and stated that the ECB has little scope to act in a slowdown due to policy normalisation. (Handelsblatt)

US rejected calls from the EU to grant exemptions to European companies from Iran sanctions. (Newswires)

US President Trump stated over the weekend that he fully intends to run for re-election in 2020. (Newswires)

EQUITIES

European equities opened relatively flat and since then have traded in no firm direction (Eurostoxx 50 +0.1%). Financials (+0.7%) outperform as Deutsche Bank (+6.5%) ignited a bid in the sector after announcing better than expected Q2 preliminary results. Banks dominate gains in their respective bourses. Meanwhile, Indivior (+27.1%) shares sky-rocketed after a US court blocked Indian competitors from selling a cut-price version of Indivior’s bestselling opioid addiction treatment in the US. Due to the Farnborough Air Show, it may be worth keeping an eye on BAE Systems (BA/ LN), Rolls-Royce (RR/ LN), Leonardo (LDO IM), Boeing (BA) and Airbus (AIR FP).

FIXED INCOME

UK bonds have returned to Liffe lower in line with core counterparts and are testing bids/support ahead of the 123.00 handle within a 123.02-21 range vs last Friday’s 123.30 close after a fleeting uptick at the open. Indeed, Bunds have breached a downside technical area from 162.87-82 having respected near term resistance around 162.98 earlier, and slipped to a fresh 162.71 Eurex low that exposes last Friday’s 162.66 session base, while US Treasuries have ticked down to marginal new overnight troughs with the curve re-steepening a tad. Back to Liffe, the 3 month STIR strip is outperforming and 1-2 ticks above parity ahead of a run of major data starting on Tuesday, and amidst reports that the Government may yield to pressure from Brexiteers and agree to ERG amendments to the customs bill.

FX

DXY - The index is meandering within a narrow 94.558-776 band in line with restrained Dollar movement vs its G10 counterparts after last week’s volatile trade and relatively big swings culminated in the Usd netting decent gains, with the DXY briefly over 95.000 at one stage on Friday. Ahead, some data to provide impetus in the form of retail sales.

JPY - A marginal underperformer after suffering heaviest losses vs the Usd of late and closing below a key 76.4% Fib (112.33) on Friday, However, the absence of Japanese participants due to the Marine Day holiday has impacted trade overnight between 112.20-55.

CHF - Back on a par with the Greenback and still straddling 1.1700 vs the Eur, awaiting the next moves in global trade/tariff wars and anything from Trump’s meeting with Putin.

NZD/AUD - The Kiwi is just about shading it down under and firmly back above 0.6750 vs the Usd ahead of NZ inflation data tonight which is expected to reveal a firmer Q2 CPI y/y rate, while its antipodean counterpart is also extending recover gains vs the Usd over 0.7400, but could be hampered by heavy option expiry interest at the strike this week (3 bn) plus RBA minutes on Tuesday from this month’s policy meeting that was more dovish on balance.

EUR/GBP - Aside from generally lacklustre trade, the single currency could be caught up in option-related flows within 1.1650-1.1700 parameters given over 3 bn expiries in that range running off today. Moreover, the Eur may be drawn to a 1.2 bn expiry vs the Gbp at 0.8800 even though the Pound faces further Brexit risk via the Commons debate and vote on the Customs Bill later. Eur/Gbp currently around 0.8825 and Cable circa 1.3250 with key resistance capping the upside (30 DMA at 1.3260 and 61.8% Fib at 1.3263), while near term support for the latter comes in at 1.3236 (10 DMA).

CAD - The Loonie is pretty level vs its US peer and pivoting 1.3150 ahead of some Canadian data that could impact and/or offset any Usd-led moves in the form of existing home sales.

COMMODITIES

Commodities trade fairly mixed while WTI and Brent continue to leak with losses. Brent has broken below USD 75.00/bbl while WTI has taken out USD 70.00/bbl to the downside in the aftermath of a pullback from last Friday’s settlement amid reports that the Trump administration was said to be considering tapping into the Strategic Petroleum Reserve to rein in prices. Sentiment also hampered by the weekly Baker Hughes rig count showing an increase of 2 rigs in operation compared to the prior week. Meanwhile, in talks with the Saudi’s Energy Minister, Iranian Oil Minister said OPEC decision does not give members the right to raise their production level above targets

Elsewhere, gold (+0.2%) prices are buoyed by the softer USD. London Copper slipped this morning while Chinese Q2 growth printed a slight downtick (yet in-line with expectations), focus continues to remain on China’s response to US tariffs. Steel-linked metals, Nickel and Zinc, are subdued on lower demand expectations amid China’s top steelmaking city ordering steel mills to shut sintering plants for five days due to adverse weather conditions.

Iran warns OPEC it will be less effective if the production cap slip. (Newswires)