EUROPEAN CLOSING REPORT
MONDAY – 28TH – AUGUST – 2017
European cash equity markets finished lower (DAX -0.4%, CAC -0.5%, IBEX -0.3%) as the Euro rose to its highest level since the first week of 2015 against the dollar. Basic resources stocks have been the worst performers as investors digested the impact of Hurricane Harvey in the US. Meanwhile, oil prices headed sharply lower and gasoline futures spiked as the storm forced the shutdown of numerous refineries in Texas. In fixed, Bund futures were little changed, with Monday’s session lacking any real risk drivers, as a post Jackson Hole lethargy, lightweight data and the UK bank holiday, saw players elect to wait on US politics to provide some much-needed impetus. There was little fresh news emanated from the third round of Brexit talks either. At a joint press conference in Brussels, the EU’s Barnier said it was impossible to make serious progress on negotiating the UK’s exit from the EU while the British position lacked detail. Meanwhile, the UK’s Davis said he wanted to see flexibility and imagination on both sides at this week’s talks. In terms of data, US wholesale inventories rose 0.4% m/m (f/c 0.3%) with the previous revised to 0.6%, the advance US trade goods deficit widened a tad to -$65.1 Bln and the Dallas Fed manufacturing activity index rose to 17.0 from 16.8 in July, as expected. Looking ahead, the US Treasury continues this week’s coupon supply with a 5-year note auction. Earlier, the 2-year note auction results were defensive with a small tail, lower bid-to-cover and well above average dealer award.
* US Wholesale Inventories M/M (Jul P) +0.4% versus +0.3% expected, previous +0.7% revised to +0.6%
* US Advance Goods Trade Balance (Jul) -$65.1 Bln versus -$64.5 Bln expected, previous -$64.0 Bln
* Dallas Fed Manufacturing Activity Index (Aug) 17.0 versus 17.0 expected, previous 16.8
* ECB Weekly Asset Purchases:
• Public Sector Purchases (PSPP) (Aug 25) +€9.120 Bln, previous +€8.311 Bln
• Corporate Sector Purchases (CSPP) (Aug 25) +€942 Bln, previous +€799 Bln
* UK Brexit Minister Davis said he wants this week’s talks to generate progress on all issues, progress requires flexibility and imagination on both sides. He added that the UK’s goal remains the same: we want to agree a deal that works in the best interests for both the EU and UK and people and businesses right across Europe.
* EU Brexit chief negotiator Barnier said they need UK papers that are clear in order to have constructive negotiations and the sooner they remove the ambiguity, the sooner they will be in a position to discuss the future relationship and the transitional period.
* The IEA said that there was no need for now to release fuel from emergency stockpiles to compensate for disruption caused by Hurricane Harvey because global oil markets were well supplied.