Futures Rise, Dollar Slides Ahead Of "Dovish" CPI Report

US equity futures and European bourses rebounded from yesterday's slump and are higher into CPI, which may provide clues on the Federal Reserve’s next steps, with slight outperformance from MegaCap Tech. As of 7:45am ET, both S&P and Nasdaq 100 futures were up 0.5%. The Stoxx 600 was up 0.4%, with travel and luxury companies among the biggest gainers on speculation that companies will benefit an increase in Chinese tourism spending after Beijing lifted travel curbs. The dollar dropped against all majors except the yen; bond yields are flat and oil slipped while metals and ags prices are higher. Today’s focus is on the CPI print at 8.30am; there are two Fed speakers this afternoon.

In premarket trading, Disney shares rose 1.6% in premarket trading after saying capital spending and outlays for movies and TV shows are coming in lower than projected; the stock earlier slumped after the company reported only the second ever drop in Disney+ streaming subs: it appears that Disney plans to make up in price what it loses in volume, always a winning strategy. Elsewhere, Capri soared as much as 34% after it was acquired by Tapestry, the parent company of Michael Kors and Versace among others, for $57. Here are some other notable premarket movers:

Plug Power slides 11% after the green- hydrogen company reported results that included a revenue beat but weaker-than-expected margins.
Galera Therapeutics falls as much as 83% after the biopharmaceutical company said it received a complete response letter from the US FDA regarding the company’s new drug application for avasopasem manganese.
Penn Entertainment dips 1.1% after the sports-entertainment company was downgraded to hold from buy at Truist Securities, which said it sees sizable execution risks in its exclusive partnership with Disney’s (DIS US) ESPN.
TaskUS falls as much as 12% after the business process outsourcing services provider cut its revenue guidance for the full year. RBC Capital Markets downgraded the stock to sector perform from outperform.
Trade Desk (TTD US) falls as much as 4.5% after results as analysts said the advertising technology company may not have lived up to high investor expectations.
Sonos jumps 7.4% after the wireless-speaker manufacturer reported third-quarter revenue and adj. Ebitda that Morgan Stanley said “handily beat” their expectations.
Roblox rises as much as 3.1% as Morgan Stanley raised its rating to equal-weight from underweight, noting that the shares now fairly reflect the near- term headwinds.
AppLovin surges as much as 25% in premarket trading on Thursday, after the company reported second-quarter results that beat expectations and gave an outlook seen as strong by analysts.

As previewed earlier, all eyes will be trained on today’s CPI which according to JPM's trading desk will be "more dovish than hawkish", and which is set to show a second consecutive reading on core inflation in line with the Federal Reserve’s target, but the first increase in annual CPI since June 2022. Bloomberg Economics expects CPI, excluding food and energy, to rise by 0.2% for the month, similar to June. “July’s CPI report will show a wave of disinflation hitting the US economy,’’ the team, led by Anna Wong, said. The report will be critical for investors trying to determine whether the Fed will stop raising interest rates.

“A higher-than-expected number would produce some short-term equity and bond volatility,” said Andrew Bell, chief executive officer at Witan Investment Trust. “But I doubt it would change expectations for the peak in Fed rates as there is a weight of evidence pointing to the economy disinflating.” Indeed, historical data shows that CPI days have been largely a snoozer so far in 2023.

One potential pressure point could be commodities, which are rising after a year of falling. Oil traded near the highest level in almost nine months, with West Texas Intermediate futures above $84 a barrel after climbing 3% over the previous two sessions.

In Europe, the Stoxx 600 was up 0.4%, boosted by gains in luxury and travel stocks after China announced plans to relax travel curbs. LVMH and Hermes International added at least 2% after China’s Ministry of Culture and Tourism said it would lift a group travel ban to countries including the US, UK, Australia, South Korea and Japan. Buyers from China account for about 25% of European luxury-goods sales, including purchases made by tourists, according to latest estimates from Goldman Sachs Group Inc. Here are the most notable European movers:

LVMH lead luxury stocks higher in Europe on Thursday, as China lifted a ban on group tours, boosting the case for travelers spending money on high-end watches and fashion
Persimmon rises as much as 5.2% on relief that the UK housebuilder maintained its profit guidance despite weaker sales
Allianz rises as much as 3.9% after the German insurer reported second-quarter results that beat expectations. The results show “underlying quality,” analysts say
Thyssenkrupp shares gain 4.2% after the German industrial company forecasted full-year adjusted Ebit would reach the upper end of its prior profit guidance
Knorr-Bremse shares jump as much as 7.4% after the German braking-systems manufacturer reported a beat for orders and boosted its full- year revenue forecast
H&M gains as much as 2.3% after its founding family’s investment vehicle, Ramsbury Invest, bought about 1.9 million shares in the retailer from August 7-9, according to a filing
Deliveroo gains as much as 4.5% after the food delivery firm raised its FY Ebitda forecast and beat analyst estimates, showing cost cuts and price hikes are bearing fruit
Siemens shares fall as much as 6.1% after its 3Q industrial business profit missed consensus estimates. Jefferies sees investors focusing on digital industries
Novo Nordisk slides as much as 2.3%, dropping for a second day since hitting a record high on Tuesday. Analysts highlighted new guidance is already reflected in current consensus
Spirax drops as much as 7.6% with analysts expecting cuts to consensus Ebit expectations following a weak first half for the UK steam management and pumps manufacturer
Rheinmetall falls as much as 4% after the German defense contractor’s second-quarter earnings missed expectations, weighed down by its non-defense automotive business
Orsted shares fall as much as 2.5% after the Danish power generator’s earnings for the second quarter fell from a year earlier, missing analyst expectations

Earlier in the session, Asian equities traded mixed as strength in energy and industrial shares help limit the impact of a selloff in the technology sector as investors exercised caution ahead of critical US inflation data. The MSCI Asia Pacific Index fell as much as 0.4% before paring the gain. Chipmakers and Chinese internet shares were among the biggest drags as higher US Treasury bond yields and skepticism over the AI-led rally prompted profit-taking. Gains in oil lifted commodities-related stocks. Investors in Asia have been cautious this week as rising yields and China’s economic woes sap risk appetite. The regional benchmark is down 3.6% so far in August after gaining nearly 8% in the previous two months. All eyes are on US monthly inflation data due later Thursday for clues on the Federal Reserve’s next policy move.

“The upcoming US CPI data could dictate the trend over coming weeks, largely seen as key in determining if a September rate hike is needed,” Jun Rong Yeap, market strategist at IG Asia wrote in a note. Meanwhile, China investors are “keeping a lookout for any worst-is-over” scenario, he added.

Hang Seng and Shanghai Comp were pressured after US President Biden’s executive order to ban some new investments in ‘narrow subsets’ of Chinese sensitive technologies such as semiconductors and microelectronics, quantum information technologies and certain AI systems, which drew criticism from China.
Nikkei 225 benefited from yen weakness but was initially choppy after mixed PPI data and with newsflow in Japan dominated by earnings releases which provided the catalysts for the biggest individual stock movers.
ASX 200 was rangebound with notable outperformance in the energy sector with oil prices at a 9-month high and following the recent surge in gas prices amid disruption concerns with strike action planned for Australian LNG, although Woodside Energy has since provided some optimism on the bargaining process in which it noted that positive progress is being made and an in-principle agreement was reached on a number of issues.
Stocks in India declined after the central bank kept borrowing costs unchanged but raised outlook for inflation while announcing a surprise move for curbing excess liquidity. The S&P BSE Sensex fell 0.5% to 65,688.18 in Mumbai, while the NSE Nifty 50 Index declined by a similar magnitude. MSCI Asia Pacific Index climbed 0.3% for the day. The central bank kept the policy rate unchanged at 6.50% for a third straight meeting, in line with a Bloomberg survey of economists. The RBI ordered banks to set aside more cash to mop up excess liquidity as it raised its inflation forecast to 5.4% for the year ending March, from 5.1% in its last review. Banks and consumer staples firms were among key drags in India.

In FX, the Bloomberg Dollar Spot Index is down 0.2%, falling against all its G-10 rivals except the yen which is down 0.1%; the Swiss Franc led group-of-10 gains rising as much as 0.5%

AUD/USD climbed 0.4%, while NOK/USD rose 0.2%, as potential strikes at major LNG facilities in Australia sent shock-waves through energy markets
MXN/USD steadied ahead of the Mexican Central Bank’s decision where policy is expected to remain unchanged; attention turns to the outlook for rate cuts and longevity of Peso-based carry trades

In rates, Treasuries are slightly lower with the US 10-year yield unchanged at 4.01%. The treasuries curve is marginally steeper with short-end and belly slightly outperforming ahead of July CPI data and $23 billion bond auction. Treasuries price action is rangebound with core European rates underperforming, as July CPI readings are expected to support a pause to the Fed’s hiking cycle for September. The Treasury 2-year yields richer by around 1.5bp on the day with 2s10s and 5s30s spreads steeper by 1bp and 1.5bp vs Wednesday close; 10-year yields around 4% are near flat on the day, with bunds and gilts lagging by 3.5bp and 1.5bp in the sector. Treasury auction cycle concludes with $23b 30-year bond sale at 1pm New York time; demand was robust for 3- and 10-year auctions earlier this week. WI 30-year yield at ~4.165% is around 25.5bp cheaper than July’s stop-out, which tailed by 2bp, and higher than 30-year stops since 2011

In commodities, Crude futures are little changed with WTI trading near $84.40. European natural gas futures fall 5%. Spot gold adds 0.3%.

Looking at today's calendar, we have the all-important CPI print in the US. Aside from this, we will get the latest weekly claims data and monthly budget statement in US. With 90% of S&P 500 companies having now published their Q2 results, upcoming earnings releases are weighted towards Europe with today’s results including Novo Nordisk, Alibaba, Siemens, Deutsche Telekom, Allianz, Tokyo Electron, Orsted, RWE, Rheinmetall and HelloFresh.

Market Snapshot

S&P 500 futures up 0.5% to 4,510.25
MXAP up 0.2% to 165.21
MXAPJ little changed at 521.62
Nikkei up 0.8% to 32,473.65
Topix up 0.9% to 2,303.51
Hang Seng Index little changed at 19,248.26
Shanghai Composite up 0.3% to 3,254.56
Sensex down 0.6% to 65,595.37
Australia S&P/ASX 200 up 0.3% to 7,357.39
Kospi down 0.1% to 2,601.56
STOXX Europe 600 up 0.6% to 463.18
German 10Y yield little changed at 2.53%
Euro up 0.4% to $1.1022
Brent Futures up 0.4% to $87.89/bbl
Gold spot up 0.3% to $1,919.63
U.S. Dollar Index down 0.32% to 102.16

Top Overnight News from Bloomberg

The White House unveiled its long-anticipated order restricting US investment in some Chinese firms, although the measure isn’t as harsh as feared. BBG
China has lifted pandemic-era restrictions on group tours for more countries, including key markets such as the US, Japan, South Korea and Australia in a potential boon for their tourism industries. The decision was announced by China's culture and tourism ministry on Thursday, effective immediately. European luxury stocks climbing higher as a result. RTRS
BABA +3% after reporting strong FQ1/June results. Overall revenue climbed 14% Y/Y to RMB234.1B (solidly ahead of the Street’s RMB223.7B forecast) while EPS surged 48% to RMB17.37/shr (above the Street’s RMB14.14 forecast). RTRS
China's securities watchdog is meeting real estate developers and banks tomorrow, according to people familiar, underscoring growing urgency among regulators to deal with a worsening property crisis. Country Garden was not among those invited. BBG
India’s RBI left rates unchanged, as expected, but took steps to drain liquidity and raised its inflation forecast while expressing concern about a jump in food prices. RTRS
Potential strikes at three major LNG facilities in Australia may disrupt about 10% of global exports and deliver a new energy price shock across Asia and Europe. Yesterday, EUROPEAN GAS FUTURES JUMPED 40%, BIGGEST GAIN SINCE MARCH 2022. Positioning very much exacerbated that move. Reverting lower a bit today. GS GBM
Ecuador declared a state of emergency after a presidential candidate was assassinated less than two weeks before the country's election. Fernando Villavicencio, a journalist known for his crusade against corruption, was polling second to replace President Guillermo Lasso. One suspect also died in a shootout while six others were arrested. BBG
The average U.S. 30-year mortgage rate jumped to a nine-month peak yesterday and hit the second-highest rate since 2001, as interest rates reacted sharply to a downgrading of U.S. government debt. The average 30-year mortgage rate shot up to 7.09% for the week ending Aug. 4, a 16 basis point increase from the previous week's 6.93% rate, according to a weekly report released by the Mortgage Bankers Association. RTRS
Manhattan apartment rents hit fresh all-time highs, up 2.3% M/M to a median of $4,400 (although the number of lease signings fell M/M and Y/Y, signaling a softening in demand). BBG
We expect a 0.15% increase in July core CPI (vs. 0.2% consensus), corresponding to a year-over-year rate of 4.66% (vs. 4.8% consensus). We expect a 0.16% increase in July headline CPI (vs. 0.2% consensus), which corresponds to a year-over-year rate of 3.17% (vs. 3.3% consensus). Going forward, we expect monthly core CPI inflation to remain in the 0.2-0.3% range in the next few months, reflecting continued moderation in shelter inflation, lower used car prices, and slower nonhousing services inflation as labor demand continues to moderate

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mixed with the regional bourses mostly rangebound amid a slew of earnings releases and with the mood tentative ahead of incoming US inflation data, while participants also reflected on US efforts to restrict investment in some Chinese tech.
ASX 200 was rangebound with notable outperformance in the energy sector with oil prices at a 9-month high and following the recent surge in gas prices amid disruption concerns with strike action planned for Australian LNG, although Woodside Energy has since provided some optimism on the bargaining process in which it noted that positive progress is being made and an in-principle agreement was reached on a number of issues.
Nikkei 225 benefitted from yen weakness but was initially choppy after mixed PPI data and with newsflow in Japan dominated by earnings releases which provided the catalysts for the biggest individual stock movers.
Hang Seng and Shanghai Comp were pressured after US President Biden’s executive order to ban some new investments in ‘narrow subsets’ of Chinese sensitive technologies such as semiconductors and microelectronics, quantum information technologies and certain AI systems, which drew criticism from China.

Top Asian News

US President Biden signed an executive order to regulate future US investments in a narrow set of technologies in China, Hong Kong and Macau, while the order is a 'narrow and targeted action' to complement existing export controls and inbound investment screening. Furthermore, US actions will focus on protecting the most critical technologies for military advancement, including semiconductors, quantum computing and certain artificial intelligence, according to Reuters.
There were earlier reports that the White House will detail plans restricting some US investments in China in which the regulations will only affect future investments, not current ones, according to a person briefed on the executive order. Restrictions are expected to be implemented next year after multiple rounds of public comment including an initial 45-day comment period on the proposed rulemaking.
China's MOFCOM said China is gravely concerned about the US order on foreign investment reviews and reserves the right to take measures, while it hopes the US will respect the law of the market economy and the principle of fair competition, according to Reuters.
China's Ministry of Foreign Affairs said China filed a diplomatic complaint against the US regarding the investment curbs, according to Bloomberg.
Chinese Embassy in the US said China is very disappointed the US went ahead with new investment restrictions and it opposes the US overuse of national security on trade, while it added that China will firmly safeguard its rights and interests, according to Reuters.
China’s internet giants rush to order USD 5bln of Nvidia (NVDA) chips to power AI ambitions amid concerns over impending US export controls, according to FT sources.
China Culture and Tourism Bureau released a third list of destination countries for Chinese group tourism including Japan, Australia, Germany, UK and US, while China also permitted group tours to South Korea.

European bourses are in the green, Euro Stoxx 50 +0.7%, as sentiment inches higher with macro drivers thin; FTSE 100 lags given a large amount of ex-dividend trade. Sectors are primarily bid with only Health Care in the red as Novo Nordisk trims recent gains post-earnings; Insurance outperforms following Allianz and Zurich Insurance with Luxury also bolstered as China continues to reopen. Stateside, futures are in the green as they take impetus from European action and attempt to recover some of the losses felt on Wednesday, ES +0.6%. Action has been relatively contained for US futures after they staged a recovery in APAC hours with drivers since light and the clock counting down to CPI, Fed speak and supply.

Top European News

UK PM Sunak is reportedly facing increasing calls from the Cabinet to put leaving the European Convention on Human Rights at the centre of the Tory election campaign if migrant deportation flights to Rwanda are blocked, according to The Telegraph.
Lloyds of London underwriters are leading insurers in raising rates and cutting cover over Taiwan risks, via Reuters citing sources; some insurers are imposing exclusions on Taiwan in political risk or political violence policies.
ECB Economic Bulletin: Inflation continues to decline but is still expected to remain too high for too long. The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner.
Norges Bank survey of bank lending: Broadly unchanged credit demand and credit standards.

A soft morning thus far for the broader Dollar and index despite the firming in bond yields seen after the European cash close yesterday.
A clear divergence is seen between the traditional havens, with the CHF taking advantage of the receding Dollar whilst the JPY is hampered by recent yield dynamics.
JPY remains on the back foot and on course for a fourth consecutive session of losses. The pair briefly topped 144.00 overnight to a 144.11 high before trimming upside, with an intraday low print at 143.64.
Antipodeans are taking advantage of the softer Dollar alongside the constructive risk mood, albeit they are still some way off WTD bests. The Loonie lags with no obvious fresh fundamental driver this morning.
The Single Currency currently stands as the second-best G10 performer as the Dollar resides around session lows in the run-up to CPI, with fresh newsflow also quiet in summer trading. On that note, amid the quieter condition, it’s worth being aware of large EUR/USD option expiries.
PBoC set USD/CNY mid-point at 7.1576 vs exp. 7.2023 (prev. 7.1588)

Fixed Income

Core benchmarks are in the red, a deterioration that has been very steady in nature and largely a function of the improved but still somewhat tentative risk tone pre-CPI.
Bunds are the incremental laggards trading lower to the tune of 40 ticks but just off of the 132.36 trough. A low below Wednesday’s 132.57 base but someway shy of the WTD 131.33 base that was printed on Monday.
As mentioned, newsflow for the UK/Gilts has been equally dearth aside from the RICS survey that shows continued pressure for the housing market on the back of the ongoing tightening cycle.
USTs are in the red with yields bid across the curve but overall action is very limited in summer conditions and ahead of US CPI. Currently, USTs are at the mid-point of 111.06+ to 111.12+ parameters.

Commodities

WTI and Brent front-month futures hold a positive bias amid the softer Dollar and constructive risk tone in the run-up to US CPI.
There hasn’t been much by way of crude-specific news, but some sectoral support may be felt with the recent rise in LNG prices.
Spot gold is modestly firmer amid the softer Dollar but price action is limited ahead of the US CPI report, with the current intraday range between 1,9414.91-21.31/oz.
Unions representing workers at Woodside and Chevron LNG sites have applied for "protected ballot orders"; FT citing a source reports that a move to vote on action will likely occur early next week unless a resolution is agreed. Elsewhere, Eneos exec. says they are not aware of any significant impact from possible strikes at Australian LNG facilities.

Geopolitics

Russian Defence Ministry said 11 Ukrainian drones were downed near Sevastopol, according to RIA. It was separately reported that Russian air defence systems shot down two military drones heading towards Moscow.
North Korean leader Kim convened a military meeting and vowed to step up preparation for war, while he called for war drills to be conducted to efficiently operate new weapons, according to Yonhap.
Belarusian Security Council says they will take measures to respond to the militarization of Poland and the Baltic states, according to Al Arabiya.

US Event Calendar

08:30: Aug. Initial Jobless Claims, est. 230,000, prior 227,000
- July Continuing Claims, est. 1.71m, prior 1.7m
08:30: July CPI MoM, est. 0.2%, prior 0.2%
- July CPI YoY, est. 3.3%, prior 3.0%
- July CPI Ex Food and Energy MoM, est. 0.2%, prior 0.2%
- July CPI Ex Food and Energy YoY, est. 4.7%, prior 4.8%
- July Real Avg Hourly Earning YoY, prior 1.2%, revised 1.3%
- July Real Avg Weekly Earnings YoY, prior 0.6%, revised 0.7%
14:00: July Monthly Budget Statement, est. -$135b, prior - $211.1b

DB's Jim Reid concludes the overnight wrap

While it would be hard to say this has been a bad August for markets so far, it seems to be hard to get through a day at the moment without a negative shock of some description. I'll need my holiday from tomorrow to have a lie down. Yesterday’s negativity was from a +27% spike in European natural gas prices (with a +40% intra-day high), the largest percentage increase since early March 2022, albeit still -87% below the peaks back in late August 2022. Oil also edged up above its April highs to the highest levels since last November.

These inflationary moves ironically come ahead of a big US CPI today which has of late been the print to give most encouragement to the soft landing argument. It’s likely too early for any recent commodity increases to show up in the data but we’ll all be watching oil, gas and food prices over the next few weeks and months. As it stands they should help to push up headline inflation shortly before the September FOMC which will be a bit uncomfortable even if core will be the main focus.

In terms of today, consensus expects a +0.2% monthly print for both headline and core inflation. Should this materialise, it would be the second consecutive MoM print close to the 2% annualised target, especially if the decimal roundings are favourable. Our US economists expect a marginally weaker headline reading (+0.17% vs. +0.18% prev.), with core inching up from its 28-month low seen in June (+0.21% vs. +0.16% prev). In terms of the drivers, they ironically see gas prices helping headline inflation lower with core goods also falling but services inflation remaining elevated. In annual terms, they see headline CPI in line with consensus at +3.3% (+3.0% prev.) and core inflation just about staying at +4.8% (consensus +4.7%). You can see our US economists’ full preview of the print here, as well as register for their post-CPI webinar at 9am EST today.

Ahead of today’s data, a risk-off tone dominated US equities, with the S&P 500 down -0.70% after selling off around -0.5% in the final half an hour of trading and closer to the earlier session lows. Banks (-1.57%) posted a second sizeable decline in a row, while tech also underperformed. The NASDAQ closed -1.17% lower with the FANG+ mega cap index down -2.11%, led by chip maker Nividia which saw a -4.72% fall. Energy stocks (+1.22%) rose alongside a strong day for oil prices. S&P and Nasdaq futures are back up +0.36% and +0.39% respectively overnight continuing the down/up nature of the month so far.

US rates saw some reversal of the twist steeping that had played out last week. The 10yr yield fell -1.3bps to 4.01% (+1.04 bps overnight), with the 30yr -3.7bp lower. Bonds were supported by a solid 10yr auction which saw $38bn of bonds sold at a 3.999% yield. On the other hand, the 2yr sold off +5.7bps, with 2s10s slope falling to -80.0bps. The short-end sell off saw Fed pricing for end-24 rise +7.2bps to 4.04%. However, terminal rate pricing for November was unchanged at 5.41%. Indeed, it is remarkable how stable near-term Fed expectations have been in recent weeks, with November pricing staying within a 7bps range since late June. Back in Europe, bunds saw a moderate sell off (2yr +4.4bps, 10yr +3.0bp).

In other European news, Italy’s windfall tax on banks continued to drive markets but this time the news we discussed yesterday morning around the Italian government clarifying that there would be a smaller impact than first thought led to a decent sized rally. Italian banks gained +3.65% on the back of the announced cap on the levy. This reversed slightly less than half of their Tuesday’s decline, with the overall Euro banks index (+1.42% after losing -3.54% the day before) also seeing a partial reversal. Meanwhile, we heard from Italy Prime Minister Meloni, who defended the tax claiming that rate hikes were mostly not being matched by increases in bank deposit rates, while also calling the efficacy of ECB rate hikes “questionable”.

The broader European indices reversed a fair amount of Tuesday’s decline. The DAX (+0.49%), CAC (+0.73%), FTSE MIB (+1.31%) and FTSE 100 (+0.80%) all posted solid gains, though this was in large part a catch up to the strong US close the previous day and the better Italian bank news.

As discussed at the top, there were a few stories of note in the commodities space. WTI crude oil (+1.78%) reached a 9-month high at $84.40/bl, though Brent (+1.60% to $87.55) stayed a touch below its YTD highs reached in January. There was no clear driver on the day, but with a preponderance of supply risks supporting a tight oil market narrative. Oil prices are on course to post a seventh consecutive week of gains, which for Brent would be its longest run since early 2022. In Europe, TTF natural gas prices spiked in Europe (+27.2%), as LNG supply risks reared their head with news of a possible strike that could affect LNG export facilities in Australia. Still, at EUR 39.50/MWh prices are at 13% of their peak last August (though around double their pre-Covid levels). And with EU gas storage 88% full, physical supply risks are low. Our economists note that the higher futures pricing for the upcoming winter, at around EUR 55/MWh, is broadly in line with their baseline and will include a degree of seasonal risk premium. So while gas price rises are a risk amid a tight global LNG market, it is the oil story that is more relevant in terms of the immediate impact on inflation. So a more pressing thing to watch for immediate Euro headline inflation.

Elsewhere, copper had seen a sizeable intra-day rebound after recent declines amid increased hopes for more stimulus in China, though it was up a more modest +0.45% at the close. When it comes to China’s outlook, our China economists published their latest chart book yesterday, in which they outline why they see a turning point for policy and growth, although the property sector remains a source of risks. See here for more. Indeed, China’s property woes have been in the headlines this week amid missed coupons by property developer Country Garden.

Asian equity markets are mostly trading lower this morning with Chinese equities leading losses across the region with the Hang Seng (-0.94%) emerging as the biggest underperformer followed by the CSI (-0.49%) and the Shanghai Composite (-0.26%) Additionally, the nation’s property issues continue to dent sentiment as Country Garden, one of the largest non-state-owned developers by sales missed interest payments on two bonds earlier this week, thus undermining confidence in the sector. Elsewhere, the KOSPI (-0.42%) is also losing ground while the Nikkei (+0.45%) managing to stay in the green.

Early morning data showed that Japan’s wholesale inflation (+3.6% y/y) slowed for a seventh consecutive month in July, down from June’s upwardly revised figure of +4.3% (v/s +3.5% expected)

Overnight, in the UK, the RICS house price balance survey for July saw a stronger-than-expected deterioration to -53% (-51% exp, -48% prev.), which marks a new post-GFC low as interest rates rise.

On the data front today, we have the all-important CPI print in the US. Aside from this, we will get the latest weekly claims data and monthly budget statement in US, while in Europe we have the final July CPI prints in France and Italy. With 90% of S&P 500 companies having now published their Q2 results, upcoming earnings releases are weighted towards Europe with today’s results including Novo Nordisk, Alibaba, Siemens, Deutsche Telekom, Allianz, Tokyo Electron, Orsted, RWE, Rheinmetall and HelloFresh.

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