DAILY US OPENING NEWS: Very quiet start to the week with European equities trading in the red

21st August 2017

ASIA-PACIFIC

Asian equity markets traded mostly lower with the Nikkei 225 down by 0.4% amid geopolitical tensions on the Korean peninsula. Tensions ratcheted up again as the US and South Korea were set to begin military drills. North Korea responded, threatening a “merciless strike” on the US. Nevertheless, the Kospi was relatively resilient, trading lower by just 0.14%. The ASX 200 (-0.37%) had conformed to the downbeat tone in Asia however had been driven by some major earnings throughout the majority of the session with Fortescue Metals rising over 6% after doubling their dividend. Chinese markets were higher, lifted by the telecoms sector after China Unicom confirmed a share placement to tech titans Alibaba, Tencent and Baidu.

JGBs traded marginally higher after the break, after initially trading sideways for much of the morning. Some were pinning the late uptick to JPY 3.13tln of T-bill redemptions on Monday, one of only two lots of redemptions at all in August.

BoJ Governor Kuroda said the BoJ's commitment to achieving the price goal as early as possible remains unchanged. (Mainichi)

 

EUROPE/

Fitch upgraded Greece to B- from CCC; outlook positive. DBRS confirmed Ireland at A (high), stable trend and confirmed Belgium at AA (high), stable trend. (Newswires)

German finance ministry says monthly data suggests further economic expansion; emissions scandal is a medium term risk to the economy. (Newswires)

 

UK

The UK is to publish five news Brexit papers this week covering the jurisdiction of the ECJ, data protection and goods & services, among other topics. (Independent)

UK Rightmove House Price Index (Aug) M/M -0.9% (Prev. 0.1%), Y/Y 3.1% (Prev. 2.8%). (Newswires)

 

EQUITIES

EU bourses trading with minor losses this morning with the Euro Stoxx 50 slipping 0.6%. All sectors trading in the red with financials the notable laggard this morning, BNP shares trading lower by 1.6% amid reports that Belgium could place more shares in the bank. Elsewhere, Fiat Chrysler shares are outperforming after Great Wall Motor announced that they are engaged with talks over a possible offer.

 

FIXED INCOME

Investors paying a close eye on Greek bonds this morning with yields initially edging lower after Fitch became the second rating agency to upgrade it to single B status. Peripheral debt slightly outperforming with Portuguese 10Y spreads tightest within a month against the bund.

 

FX

USD: Calm start to the week given the quiet newsflow thus far, the greenback up marginally by 0.1% to remain within close proximity to  93.50. USD also unfazed by North Korean anger at South Korean and US forces beginning military exercises.

EUR slightly offered this morning ahead of the main risk event in which Draghi is set to speak at the Jackson Hole Symposium later this week, as such positioning for this could see EUR longs reduced. As a reminder, source reports last week indicated that Draghi was set to stick to his dovish stance, which could weigh on EUR/USD. Influence of today’s option expiries could grow with 720mln and 918mln set to roll off at 1.1700 and 1.1795-118.00.

JPY firmer across the board with equities taking a slight dip this morning, USD/JPY now tripping below 109.00 to hover around intra-day lows. More US political concerns with regards Trump’s administration could continue to send USD/JPY lower with a possible move towards the YTD low at 108.11.

PBoC set CNY mid-point at 6.6709 (Prev. 6.6744)

 

COMMODITIES

Oil prices slightly softer this morning, however do remain at elevated levels following a fall in the Baker Hughes rig count on Friday. Focus will shift towards the joint OPEC-Non-OPEC technical committee which is set to convene today.

Libya’s Sharara oil field (280K bpd) has been closed since Saturday because of a pipeline blockade, according to sources. Libya has declared a force majeure on loadings of Sharara crude from the Zawia terminal. (Newswires)

Russian Energy Minister Novak said it is important that OPEC and non-OPEC members honour the oil production commitments they have made. (Interfax)

 

GEOPOLITICS

North Korea has warned that the upcoming US-South Korea military exercises are "reckless behaviour driving the situation into the uncontrollable phase of a nuclear war." (Rodong Sinmun) Rodong Sinmun is the official government newspaper of North Korea.

 

US

The Trump administrations has decided to push hard for tax reform and dial down on a national security investigation into steel imports in a bid to swing Republican support behind the President after recent turmoil, according to White House officials. (FT)

21 Aug 2017 - 11:03- Research Sheet- Source: RANsquawk

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