As a reminder Last Week Performance :
Dow-5.82% S&P-5.77% Nasdaq-6.78% Russell-4.61% EuroStoxx-6.98% FTSE -5.54% CAC-6.57% Dax-7.83% Ibex-5.58% MIB-6.46% SMI-5.86% Nikkei -5.28% Hang Seng-6.59% Shanghai-11.54%
Risk aversion flows have shifted into an even higher gear as worries over Chinese slowdown, FOMC policy uncertainty, and disinflationary macro environment continue to weigh on sentiment. After last week's 11.5% drop in Shanghai Composite, markets were primed for a more aggressive easing response by the PBoC. Instead, regulators announced that China's national pension fund ($548B net assets) would be able to invest in the stock market. Analysts suggest this may be effective in expanding investor participation and perhaps supporting the local stock market in the longer term, but offers little in terms of immediate boost to lending. There was some speculation that the PBOC is planning to cut RRR ratio by 50bps some time soon, releasing CNY678B into system, but those expectations did not materialize in the immediate term. Shanghai Composite is now negative on the year, falling another 8.5% going into the morning break. Risk off flows also boosted US treasuries, JPY, and Euro at the expense of the USD, commodities, commodity FX, and global stocks. USD/JPY was down some 120pips below 120.80, EUR/USD rose 130pips toward 1.15, AUD/USD fell over 100pips to 6-month low of 0.72, and the yield on US 10-year fell to 4-month lows below 2%. Oil was down another 3% around $39/brl, while US equity futures prints were especially worrisome - S&Ps are down 50pts or 2.5%, Dow Industrials down 415pts or 2.5%, and Nasdaq futures down 3.9% below 4,040. Ahead of the upcoming Jackson Hole summit, there is also more uncertainty and noise around the timing of the Fed liftoff as it relates to the latest spike in volatility. Former US Treasury Sec Summers said raising rates in the near term would be a serious error and "threaten all three of the Fed's major objectives - price stability, full employment and financial stability." Separately, Japan PM Abe's remarks in Parliament downplayed recent speculation of his rift with BOJ Gov Kuroda, as he noted he trusts Kuroda on monetary policy.
Nikkei -4.63% Hang Seng -4.92% Shanghai Comp : -7.80%
Eur$ 1.1447 JPY 121.05 CNY 6.3963 GBP 1.5671 RUB $70.5468 EURCHF 1.0795 WTI $39.33 (-2.77%)
S&P -2.5% EuroStoxx-3.25% Dax -3.2% SMI -3.25%
Macro :
- China’s Central Bank Seen Cutting Lenders’ Reserve Ratios: WSJ
- WTI Crude Plunges Below $40 1st Time Since 2009 Amid Supply Glut
- German Pension Subsidies to Reach Almost EU100b in 2019: Bild
- De Guindos Says Spanish Economy to Grow About 1% in 3Q: EFE
- Donald Kohn Says Fed Will Be Cautious in Rate Decision: El Pais
Keep an eye on :
- AV/ LN : Aviva Could Grow 20% After Long Makeover - Barron's
- BOL FP : Bollore Signs EU1B Rail Contract With Niger, Benin, Echos Says
- BPTY LN : GVC prepared to abandon Bwin takeover attempt
- BT/ LN : Verizon, AT&T Dominance Hurts Competition, BT Says: FT (Earlier)
- CLSO GY : Claas Sees Stable 2015 Sales, Bucking Slower Market: HB
- CON GY : Bosch, Continental Mull Here Mapping Stake: Automobilwoche
- DCEL US : Digicel expected to raise USD 1.5bn in NYSE listing
- ENEL IM : Enel Starts Exclusive Talks With EPH for Slovenske Elektrarne
- FNC IM : Finmeccanica CEO Targets Profit From Ordinary Activities, Focus on Aerospace, Defense, Security
- GKN LN : GKN considers sale of Land Systems unit -Sunday Times
- IFX GY : Infineon May Consider a ‘Fantastic’ Takeover Offer: Handelsblatt
- IFX GY : Infineon could make bolt-on buys - Handelsblatt
- NOK1V FH : Bosch, Continental Mull Here Mapping Stake: Automobilwoche
- NOVN VX : GSK sells ofatumumab for auto-immune indications to Novartis for up to $1bn plus royalties, $300m payable at closing, $200m payable subject to the start of a phase III study in relapsing remitting multiple sclerosis by Novartis; further contingent payments of up to $534m payable on the achievement of certain other development milestones, 12% Royalties.
- ROG VX : Barrons article on Cancer, mentioning Roche as one of the leader on new cancer treatment.
- RDSA NA : Iran Says Shell to Pay $2.3B Oil Debt When Sanctions End: Shana
- RWE GY : German Utilities to Shut 9 More Power Plants Than Planned: Bild
- SUN SW : Sulzer board refrains from issuing recommendation on mandatory offer by Renova
- TSCO LN : Tesco sale value could suffer from weakened Korean won
- TSCO LN : Goldman Drops Bid for Tesco’s Korea Unit: the Bell, 3 Investor Groups to Bid for Tesco’s Korea Unit: Chosun
- WOS LN : Wolseley Chief Ian Meakins Plans to Retire in 2016: Times
- ZURN VX : Zurich Insurance Seeks More Time for GBP5b RSA Offer: FT (Yday)