Oracle slightly higher in premarket

EU mid-market update: Incoming ECB decision and US Aug CPI; Market steady as it waits; Oracle slightly higher in premarket.

Notes/observations

- UK gilt yields and eurozone bonds little changed ahead of ECB decision at 08:15 ET, with rates expected to stay on hold. Also awaiting US CPI data at 08:30 ET, seen as more market-moving for EUR as well. UK RICS House Price Balance was lowest since Jan 2024, little improvement expected in next 12 months. Market sentiment pressured by talk of higher property taxes. Analysts expect subdued conditions until government outlines spending and taxation plans in October.

- Nikkei225 rose 1.2% to a record 44,372. SoftBank climbed 10% after Oracle surged 36% from $300B OpenAI contract; Political shifts support sentiment, with frontrunners Takaichi and Koizumi both viewed as market-friendly.

- Copper holds above $10,000/ton amid Indonesian supply risks and signs of stronger Chinese demand.

- Geopolitical tensions offset by rising U.S. crude inventories which are helping keep crude prices down; After tragic Charlie Kirk's assassination, Pres Trump ordered all American Flags throughout the United States lowered to Half Mast until Sunday evening at 6 P.M.

- BYD’s exec in the interview says China’s EV price war is nearing an end and argues BYD is better insulated as an innovation leader. The company wants to be a top player in Germany, keeps concrete sales targets private, and is pushing plant flexibility and cost cuts, including self-transport of vehicles between sites. In Europe, BYD is weighing a third plant while focusing on two ongoing projects, with its Hungary factory on track to start by year-end and Brazil also in scope.

- Asia closed mixed with Shanghai outperforming +1.7%. EU indices -0.1% to +0.6%. US futures +0.1-0.2%. Gold -0.5%, DXY +0.1%; Commodity: Brent -0.4%, WTI -0.5%; Crypto: BTC +1.6%, ETH +2.4%.

Asia

- Japan Q3 BSI Large All Industry Q/Q: +4.7 v -1.9 prior; BSI Large Manufacturing Q/Q: +3.8 v -4.8 prior.

- Japan Aug PPI (domestic CGPI) M/M: -0.2% v -0.1%e; Y/Y: 2.7% v 2.7%e.

- South Korea Sept 1-10 Exports Y/Y: +3.8% v -4.3% prior; Imports Y/Y: +11.1% v -13.6% prior.

- Australia Sept Consumer Inflation Expectation: 4.7% v 3.9% prior.

- RBNZ Hawkesby noted that central projection for OCR is to fall around 2.50% by the end of 2025, but that could occur faster or slower depending on the data (**Note: OCR currently at 3.00%).

- South Korea Pres Lee confirmed he would not change capital gains tax rules, would leave it to Parliament. Domestic economic indicators were showing signs of pickup.

- BOJ said to be firming up a strategy to unload its ETF holdings; planning to gradually sell into the market.

Europe

- UK Aug RICS House Price Balance: -19% v -10%e.

Americas

- Canada PM Carney stated that would announce Thursday the first wave of major projects to be fast tracked under a new law that shortens regulatory reviews to two years for projects in the national interest.

Trade

- Mexico Fin Min Amador: Raising tariffs on Asian car imports to 50% from 20%, particularly from China.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.15% at 553.12, FTSE +0.42% at 9,264.55, DAX -0.01% at 23,625.13, CAC-40 +0.67% at 7,813.07, IBEX-35 +0.16% at 15,235.70, FTSE MIB +0.53% at 42,281.00, SMI +0.42% at 12,258.78, S&P 500 Futures +0.12%].

Market focal points/key themes: European indices open generally higher but turned around to trade mixed in the early part of the session; markets noting AI hype in the wake of Oracle’s earnings, with the company’s shares rising dramatically for a second day in a row; among better performing sectors are energy and telecom; underperforming sectors include materials and technology; Technip acquires Ecovyst’s Advanced Materials & Catalysts unit; Iberdrola acquires Previ’s stake in Neoenergia; focus ECB rate decision and US CPI later in the day; earnings expected in the upcoming Americas session include Adobe.

Equities

- Consumer discretionary: LVMH [MC.FR] -1.0% (China stimulus chatter), Hays [HAS.UK[ -2.0% (analyst downgrade), THG [THG.UK] +6.0% (earnings).

- Industrials: Rheinmetall [RHM.DE] +0.5% (NATO assumes drones which penetrated Polish airspace earlier this week intended hit Poland logistics hub), Volkswagen [VOW3.DE] -1.0% (BYD interview).

- Technology: ASML [ASML.NL] -1.0% (pull back after US AI stocks rally following Oracle), Trainline [TRN.UK] +10% (trading update), Playtech [PTEC.UK] +4.5% (earnings).

- Materials: Covestro [1COV.DE] +5.5% (ADNOC reportedly close to finalizing EU remedies for Covestro deal - press).

Speakers

- German BGA exporters association noted that 2025 German exports seen down 2.5%; imports seen up 4.5%; situation remained fragile. Tariffs made business 'impossible' for some exporters- Ukraine Finance Ministry stated that it had completed policy discussions with IMF on 2025 and 2026 budgets and structural reforms.

- IEA Monthly Oil Report raised the 2025 global oil demand growth from 685K to 737K while maintaining 2026 global oil demand growth at 698K. IEA raised the 2025 global oil supply growth from 2.5M to 2.7M and raised the 2026 global oil supply growth from 1.9M to 2.1M.

- Indonesia Fin Min Purbaya Yudhi stated that would give more allocation in the 2026’s budget for regional governments.

- China govt said to be considering asking state lenders and policy banks including China Development Bank to lend to local authorities with $1.0T in bills so they could make the payments in arrears.

Currencies/fixed income

- USD price action was contained within tight ranges with focus on ECB rate decision and US CPI data later in the session. Inflation expected to have accelerated in Aug with YoY climbing to 2.9% but the Fed was still expected to enact a 25bps cut at next week’s meeting.

- EUR/USD holding below the 1.17 level. ECB appeared poised to keep its policy rates steady and updated Staff Projection likely to have moderate adjustments. ECB also to likely continue to cite a meeting-by-meeting, data-dependent approach on policy.

- USD/JPY inched higher back towards 148 area despite surveys seeing BOJ again hiking rates before year end. Dealers did note that decline in US yields underpinned support for the yen with most of the attention on Fed dynamics. A softer than expected PPI further solidified September Fed rate cut expectations. Dealers noted that political shifts supported soft yen sentiment, with frontrunners Takaichi and Koizumi both viewed as market-friendly.

- 10-year German Bund yield at 2.66% and 10-year Gilt yield at 4.63% 10-year Treasury yield: 4.05%.

Economic data

- (SE) Sweden Aug PES Unemployment Rate: 3.9% v 4.0% prior.

- (NL) Netherlands July Trade Balance: €8.5B v €10.3B prior; Exports Y/Y: 2.4% v 2.7% prior; Imports Y/Y: 4.7% v 5.0% prior.

- (FI) Finland July Current Account Balance: €1.5B v €1.2B prior.

- (SE) Sweden Aug Final CPI M/M: -0.4% v -0.4% prelim; Y/Y: 1.1% v 1.1% prelim.

- (SE) Sweden Aug Final CPIF M/M: -0.2% v -0.2% prelim; Y/Y: 3.3% v 3.3% prelim.

- (SE) Sweden Aug Final CPIF (ex-energy) M/M: -0.5% v -0.5% prelim; Y/Y: 2.9% v 2.9% prelim; CPI Level:418.13 v 419.75 prior.

- (RO) Romania Aug CPI M/M: 2.1% v 2.0%e; Y/Y: 9.9% v 9.4%e.

- (TR) Turkey July Retail Sales Y/Y: 13.0% v 15.0% prior.

- (NO) Norway Q3 Regional Network Survey: Output Current Quarter Q/Q: 0.4% v 0.4% prior; Next Quarter Q/Q: 0.4% v 0.4% prior.

- (ZA) South Africa Q2 Current Account Balance (ZAR): -83B v -62Be.

Fixed income issuance

- (UK) DMO sold £1.0B in 4.25% Jun 2032 Gilts via tender; Avg Yield: 4.206% v 4.161% prior; bid-to-cover: 3.72x v 4.42x prior.

(IT) Italy Debt Agency (Tesoro) sold total €4.75B vs. €4.0-4.75B indicated range in 3-year and 7-year BTP bonds.

Looking ahead

- (IE) Ireland Debt Agency (NTMA) to sell €1.0-1.5B in 2034 and 2043 IGB bonds.

- (DE) Germany July Current Account: No est v €18.6B prior.

- OPEC Monthly Oil Report.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa July Total Mining Production M/M: No est v 0.2% prior; Y/Y: 3.4%e v 2.4% prior; Gold Production Y/Y: No est v 3.1% prior; Platinum Production Y/Y: No est v 3.0% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (IE) Ireland Aug CPI M/M: No est v 0.1% prior; Y/Y: No est v 1.7% prior.

- 06:00 (IE) Ireland Aug CPI EU Harmonized M/M: No est v 0.2% prior; Y/Y (final): No est v 1.8% prelim.

- 06:00 (IL) Israel Aug Consumer Confidence: No est v 58 prior.

- 06:00 (VN) Vietnam Finance Ministry announcement on upcoming bond issuance (held on Wed).

- 06:00 (RO) Romania to sell RON400M in 6.3% Apr 2028 bonds.

- 06:00 (RO) Romania to sell RON300M in 7.25% 2040 bonds.

- 06:30 (UK) DMO to sell £1.25B in 0.50% Jan 2029 Gilts via tender.

- 07:00 (ZA) South Africa July Manufacturing Production M/M: 0.8%e v 0.0% prior; Y/Y: -0.4%e v +1.9% prior.

- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 200bps to 41.00%.

- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to leave Key Rate unchanged at 15.50%.

- 07:00 (SE) Sweden Central Bank (Riksbank) Gov Thedeen on operational framework.

- 08:00 (BR) Brazil July Retail Sales M/M: -0.3%e v -0.1% prior; Y/Y: 0.8%e v 0.3% prior.

- 08:00 (BR) Brazil July Broad Retail Sales M/M: 0.9%e v -2.5% prior; Y/Y: +1.6%e v -3.0% prior.

- 08:00 (BR) Brazil CONAB Production.

- 08:00 (MX) Mexico July Industrial Production M/M: -0.2%e v -0.1% prior; Y/Y: -0.9%e v -0.4% prior; Manufacturing Production Y/Y: 0.3%e v 0.7% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (EU) ECB Interest Rate Decision: expected to leave Key Rates unchanged: Expected to leave Deposit Rate unchanged at 2.00% (**Note: ECB research estimated the neutral rate between 1.75% and 2.25%); Expected to leave Main 7-Day Refinancing Rate unchanged at 2.15%; Expected to leave Marginal Lending Facility unchanged at 2.40%.

- 08:30 (US) Aug CPI M/M: 0.3%e v 0.2% prior; Y/Y: 2.9%e v 2.7% prior.

- 08:30 (US) Aug CPI (ex-food/energy) M/M: 0.3%e v 0.3% prior; Y/Y: 3.1%e v 3.1% prior.

- 08:30 (US) Aug CPI Index NSA: 323.921e v 323.048 prior; CPI Core Index : 329.640e v 328.656 prior.

- 08:30 (US) Aug Real Avg Hourly Earning Y/Y: No est v 1.3% prior (revised from 1.2%); Avg Weekly Earnings Y/Y: No est v 1.6% prior (revised from 1.4%).

- 08:30 (US) Initial Jobless Claims: 235Ke v 237K prior; Continuing Claims: 1.95Me v 1.940M prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 08:45 (EU) ECB Chief Lagarde post rate decision press conference.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Sept: No est v $685.5B prior.

- 09:00 (RU) Russia July Trade Balance: No est v $9.3B prior; Exports: No est v $32.8B prior; Imports: No est v $23.6B prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (US) Q2 Financial Account Household Change in Net Worth: No est v -$1.595T prior.

- 13:00 (US) Treasury to sell 30-Year Bond Reopening.

- 14:00 (MX) Mexico Central Bank Regional Economy Report.

- 14:00 (US) Aug Federal Budget Balance: -$324.5Be v -$291.1B prior.

- 18:30 (NZ) New Zealand Aug Manufacturing PMI: No est v 52.8 prior.

- 18:45 (NZ) New Zealand Aug Total Card Spending M/M: No est v 0.6% prior; Retail Card Spending M/M: No est v 0.2% prior.

- 19:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to cut Reference Rate by 25bps to 4.25%.

- 22:00 (AU) RBA's Jones on panel.

- 23:30 (JP) Japan to sell 3-Month Bills.