CREDIT OPEN: The chips are down
EU stocks will be trying once again today to find a floor in the wake of further losses on Wednesday which made for a three-session losing streak. The jury is currently out though where EU index futures currently point to minor opening losses as concerns over trade tensions and geopolitical worries continue to keep bulls in check.
Having held up comparatively well in the opening two days of the week, S&P500 (-1.39%) and Nasdaq (-2.77%) suffered a sharp stumble Wednesday although the Dow (+0.59%) advanced to another record high as players rotated away from tech amid growing concerns over potential tighter restrictions of chip sales into China.
With that, it's been another tense day over in Asia where tech stocks have pulled the Nikkei over 2% lower.
Ahead for today, there's an almost negligible chance of any policy change from the ECB with markets currently fixated on the September rendezvous as the venue for the governing council to deliver its second cut in the current cycle to follow a 25bps reduction in June. Ahead of today's meeting, futures (via BBG) indicate an 86% probability of a 25bps cut in September.
Prior to the ECB verdict, this morning's remaining European data releases are second tier while later comes US jobless claims that are expected to rise in the latest week.
Already out, UK labour market data showed earnings slowing in May, albeit to a rate that matched the BN survey consensus.
Sovereign auction supply is a significant feature today where Spain and France bring a combined total of up to EUR20.5bn in mostly conventional paper.
Earnings will once again provide a key input where 13 S&P500 firms report later today to follow the 24 Stoxx600 members that are updating investors this morning.
Elsewhere, UK PM Starmer hosts around 45 European leaders at the European Political Community (EPC) summit.
For more on latest developments see the European Breakfast Briefing.
Thursday's supply prospects
ECB days rarely throw up much in the way of single currency supply, but we know that at least two issuers are set to print this time around. German State of Rhineland-Palatinate is likely to price its EUR500m 7yr LSA this morning with this type of deal usually a quick execution, whilst from the HY space we have Sani/Ikos which is to put the finishing touches to a EUR350m 6NC2 secured after a recent roadshow. The latter comes after four other HY names hit the market on Wednesday and contributed to a EUR4.71bn euro day.
** Rhineland-Palatinate EUR500m no grow 7yr LSA
** Sani/Ikos EUR350m 6NC2 secured at 7.5-7.75% IPTs
Morgan Stanley raised USD8bn via a four-part offering of floaters and fixed-to-floating rate notes in the US on Wednesday and along with a handful of other deals brought ex-SSA issuance for the week to USD42bn. That's enough to top not only the lowest estimate of USD30bn, but, for the twenty-first time this year, the average weekly estimate of USD35bn. For more colour, see THE ENDGAME.
What to watch today
** Key Data: US Weekly Initial/Continuing Jobless Claims (13:30), US Jul Philly Fed Business Outlook (13:30) and US Jun Leading Index (15:00)
** Key Events: ECB rate decision (13:15) and President Lagarde holds presser (13:45). Fed's Goolsbee (15:00), Logan (18:45) and Daly (23:05) speak
** Auctions: SP to sell EUR5.5-6.5bn of 2030, 2034 & 2037 Bonds (09:30), FR to sell EUR9.5-11.5bn of 2027, 2030 & 2032 OATS (09:50), as well as EUR1.75-2.5bn 2028, 2029, 2034 & 2053 Linkers (10:50). US to sell USD19bn 10yr TIPS (18:00)
** Earnings: 24 Stoxx600 & 13 S&P500 companies report
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