DAILY EUROPEAN OPENING NEWS: NOW AVAILABLE IN RESEARCH SECTION – The EU stalls on further sanctions against Russia, but sets a 7-day deadline for Moscow to de-escalate the crisis in eastern Ukraine before additional measures are considered

1st SEPTEMBER 2014

The EU stalls on further sanctions against Russia, but sets a 7-day deadline for Moscow to de-escalate the crisis in eastern Ukraine before additional measures are considered Calls for action against Eurozone deflation peak as French President Hollande is to meet ECB’s Draghi at 1500BST/0900CDT today and EU leaders call for a policy summit in October to address the faltering economy Today’s session looks to be quiet, with all US markets closed for Labor Day. EU data releases include final Eurozone Manufacturing PMIs ASIA

JGBs trade relatively unchanged at 146.23, amid light trading volumes as participants remain side-lined ahead of tomorrow’s monthly 10yr JGB auction. The Nikkei 225 trades up 0.2% underpinned by JPY weakness while both the Hang Seng (+0.2%) and Shanghai Comp (+0.6%) remain higher after disappointing manufacturing PMIs stoked further stimulus speculation. Both the official and HSBC PMI readings missed expectations, the latter printing a 3 month low.


ECB’s Coeure (dove, French) said that the ECB is prepared to alter monetary policy further and boost funding to banks to encourage lending. (Ta Nea) These comments come ahead of this month’s ECB rate decision on Thursday.

French PM Valls has called for more action from the ECB to lower the value of the EUR due to concerns the region might be headed for deflation. (BBG)


Institute of Economic Affairs Shadow Monetary Policy Committee recommended by a 6-3 vote that the Bank Rate should be raised on September 4th, including four votes for a rise of 50bps and two for a rise of 25bps. (David Smith’s Economics Blog)

A slump in export orders has threatened the UK’s economic recovery, after manufacturing export orders turned negative for the first time since the beginning of 2013 – hit by a strong GBP and a weaker Eurozone, according to an EEF/BDO survey. (FT)


USD-index extended on Friday’s gains to trade at levels not seen since July 2013, which has seen EUR/USD, currently trading near a touted option barrier at 1.3100, test its September 2013 levels. NZD remains firm after better than expected NZ terms of trade data while AUD is steady despite disappointing Chinese PMIs and mixed Australian data.

SNB’s Jordan pledged to maintain the EUR/CHF cap amid increasing global economic risks. (NZZ am Sonntag)


The EU has given Russia one week to de-escalate the Ukraine crisis, at which point, the EU must decide how to expand economic sanctions against Moscow, although Ukraine’s President warned that time was running out to prevent a full-scale war. German Chancellor Merkel rejected suggestions that the West could arm Ukraine. (FT) The Russian President Putin called for immediate talks on the ‘statehood’ of Ukraine, indicating that Moscow could favour the formal separation of eastern Ukraine from Kiev.


WTI crude futures trade down USD 0.18 at USD 95.78 amid quiet overnight trade ahead of market closures in the US due to the Labor Day market holiday.


US Treasuries drifted sideways on Friday after opening lower following data which came in weaker than expected and the curve was seen mildly steeper, although a downtick was seen shortly before the close due to a sizeable block seller in 5s At the pit close T-notes settled at 125.25, down 2 ticks. Ahead of the early closure, T-notes trade down 2+ ticks at 125.22+.  




US EQUITY WRAP: Stocks close higher with the S&P 500 finishing above 2000, marking the biggest monthly advance since February

US equities closed the session slightly higher to end the week with gains with the S&P 500 closing above the psychological 2000 level. Today saw numerous data releases from the US with Personal Spending falling for the first time since January which prompted some tier 1 investment banks to cut their forecasts for US GDP and as such aided a move lower in equity markets shortly after the open. However equities moved off worst levels alongside beats in both the Univ of Michigan Confidence and Chicago PMI. Equities continued to grind higher and heading towards the close a large buyside imbalance was observed which saw equities close the session near best levels. Avago was the best performing stock in the S&P 500 after strong earnings report after market on Thursday. Finally, the DJIA finished up 0.11% at 17,078.45, the S&P 500 finished up 0.33% at 2003.37 and the NASDAQ-100 finished up 0.40% at 4082.56.