European flash PMIs disappoint from declining demand and tariff impacts

Notes/observations

- European Sept Manufacturing PMIs were weak, missing consensus for UK, EU, Germany and France but bit of brightness in German Services PMI, beating estimate and pushing into expansion.

- Waiting on Fed Chair Powell comments at 12:35 ET. Overnight liquidity was lighter as Japan was closed. USD is steady, crude retreats slightly and Bitcoin near two-week low.

- Notable EU Corp News: TUI trading update affirmed guidance on stable bookings, winter pricing slightly positive; Kingfisher H1 adj PBT £368M beats estimates; Orsted wins court injunction on Revolution Wind and avoids ~$15.8M weekly costs.

- Asia closed mixed with Hang Seng underperforming -0.7%. EU indices +0.4-0.9%. US futures +0.1%. Gold +0.8%, DXY 0.0%; Commodity: Brent 0.0%, WTI +0.1%; Crypto: BTC +0.8%, ETH +1.4%.

Asia

- South Korea Aug PPI Y/Y: 0.6% v 0.5% prior.

- Australia Sept Preliminary PMI Manufacturing: 51.6 v 53.0 prior (9th month of expansion).

Europe

- ECB’s Nagel (Germany) not concerned about Euro valuation. Stronger international role for euro was desirable

- Germany Finance Ministry Monthly Report: Aug Tax Rev +2% y/y.

Americas

- Fed's Hammack (non-voter for 2025): Fed is being challenged on both sides of the mandate. Expect another wave of price pressures early in 2026.

- Fed's Miran (FOMC voter, dovish dissenter) stated that he believed the appropriate Fed funds rate was in the mid-2% area, almost 2ppt below the current level; Expected recent inflation to fall from 3.5% now to 1.5% in 2027.

- Pres Trump said to be planning to meet and discuss govt funding with Dem leaders Schumer/Jeffries this week.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.5% at 556, FTSE +0.4% at 9260, DAX +0.7% at 23704, CAC-40 +0.9% at 7902, IBEX-35 +0.5% at 15162, FTSE MIB +0.4% at 4162, SMI +0.1% at 12134, S&P 500 Futures +0.1%].

Market Focal Points/Key Themes: European indices opened higher across the board, but later retreated after disappointing flash PMI figures; among better performing sectors are utilities and consumer discretionary; underperforming sectors include technology and health care; utilities sector supported after US court allows resumption of work on offshore windfarms; tech sector weighed after ASM cut guidance; Heineken to acquire FIFCO’s beverage and retail business; Norma to sell NDS unit to Advanced Drainage Systems; reportedly L’Oreal is considering only Armani’s beauty unit; earnings expected in the upcoming Americas session include Micron and AutoZone.

Equities

- Consumer discretionary: Kingfisher [KGF.UK] +19.0-20.0% (H1 results, raises guidance).

- Energy: Orsted [ORSTED.DK] +6.5% (US judge issues injunction to allow company to continue work on offshore Rhode Island wind project).

- Financials: Argan [ARG.FR] -0.5% (slows debt reduction and lifts 2025 income targets; Sees 2026 revenue outlook more favorable).

- Healthcare: Santhera [SANN.CH] -1.5% (H1 results).

- Industrials: TUI [TUI1.DE] +3.0% (positive trading update); Volkswagen [VOW3.DE] +2.0% (analyst upgrade); Norma Group [NOEJ.DE] -1.5% (divest water management business).

- Technology: ASM International [ASM.NL] -2.5% (cuts FY25 guidance citing lower-than-expected Q4 demand in leading-edge logic/foundry).

Speakers

- Sweden Central Bank Policy Statement noted that Reop Rate to remain at current level for 'some time'. Outlook for inflation and economic activity was uncertain, and there were factors that could lead to a different design of monetary policy going forward.

- Poland Central Bank (NBP) Litwiniuk stated that saw next rate cut in November.

- OECD updated its its economic outlook which raised 2025 global GDP growth forecast from 2.9% to 3.2% while maintaining the 2026 global GDP growth forecast at 2.9%.

- BOK member Hwang stated that saw one more rate cut this year; Difficult to say this time or next time.

Currencies/fixed income

- USD holding steady with focus on Fed Chair Powell speech later today as market participants look for clues on how far and how fast rates will be reduced. Most analysts favoring USD weakness due to renewed Fed easing cycle and question marks around its independence.

- EUR/USD moved under the 1.18 level as the major EU Manufacturing PMIs moved back into contraction territory.

- GBP/USD at 1.3520 by mid-session.

- USD/JPY at 147.75 as various LDP candidates campaign to head up the govt.

- EUR/SEK cross was lower s Riksbank rate decision was deemed a hawkish cut. The central bank noted that the key rate was likely to stay at current level for some time. Cross at 11.00 by mid-session.

- 10-year German Bund yield at 2.74% and 10-year Gilt yield at 4.69% 10-year Treasury yield: 4.13%.

Economic data

- (NL) Netherlands Q2 Final GDP Q/Q: 0.2% v 0.1% prelim; Y/Y: 1.7% v 1.5% prelim.

- (FI) Finland Aug Unemployment Rate: 9.3% v 9.3% prior.

- (ES) Spain July Trade Balance: -€4.0B v -€3.6B prior.

- (MY) Malaysia mid-Sept Foreign Reserves: $122.8B v $122.7B prior.

- (ZA) South Africa July Leading Indicator: 113.7 v 112.7 prior.

- (FR) France Sept Preliminary Manufacturing PMI: 48.1 v 50.1e (moved back into contraction); Services PMI: 48.9 v 49.6e.

- (DE) Germany Sept Preliminary Manufacturing PMI: 48.5 v 50.0e (39th month of contraction); Services PMI: 52.5 v 49.5e.

- (SE) Sweden Central Bank (Riksbank) cut Repo Rate by 25bps to 1.75% (not expected).

- (EU) Euro Zone Sept Preliminary Manufacturing PMI: 49.5 v 50.7e (moved back into contraction); Services PMI: 51.4 v 50.5e.

- (PL) Poland Aug Unemployment Rate: 5.5% v 5.5%e.

- (TW) Taiwan Aug Export Orders Y/Y: 19.5% v 12.8%e.

- (UK) Sept Preliminary Manufacturing PMI: 46.5 v 47.1e (12th month of contraction); Services PMI: 51.9 v 53.5e.

- (IS) Iceland Aug Wage Index M/M: +0.1% v -0.2% prior; Y/Y: 7.7% v 7.6% prior.

Fixed income issuance

- (PT) Portugal Debt Agency (IGCP) opened its book to sell EUR-denominated 2033 and 2054 OT bond via syndicate.

- (NL) Netherlands Debt Agency (DSTA) sold €B vs. €4.0-5.0B indicated range in new 3.50% Jan 2056 DSL Bonds; Avg Yield: %.

- (UK) DMO sold £1.5B in 5.375% Jan 2056 Gilts; Avg Yield: 5.476%; bid-to-cover: 3,07x; Tail: 1.2bps.

- (AT) Austria Debt Agency (AFFA) sold total €1.993B vs. €2.25B indicated in 3-month and 6-month bills.

Looking ahead

- (RO) Romania Aug M3 Money Supply Y/Y: No est v 9.3% prior.

- (NG) Nigeria Central Bank (NBN) Interest Rate Decision.

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

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell €4.0B in 1.90% Sept 2027 Schatz.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2040, 2044 and 2048 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 (IL) Israel to sell bonds.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (BR) Brazil Central Bank (BCB) Sept Minutes.

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 6.50%.

- 08:00 (MX) Mexico July Retail Sales M/M: 0.0%e v -0.4% prior; Y/Y: 1.6%e v 2.5% prior.

- 08:00 (MX) Mexico July IGEA Economic Activity Index (Monthly GDP) M/M: -0.4%e v +0.2% prior; Y/Y: -0.4%e v +1.3% prior.

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

- 08:30 (US) Sept Philadelphia Fed Non-Manufacturing Activity: No est v -17.5 prior.

- 08:30 (US) Q2 Current Account Balance: -$268.0Be v -$450.2B prior.

- (NG) Nigeria Central Bank (NBN) Interest Rate Decision.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (US) Fed’s Bowman.

- 09:30 (BR) Brazil Aug Tax Collections (BRL): No est v 254.2B prior.

- 09:40 (AT) ECB’s Kucher (Austria).

- 09:45 (US) Sept Preliminary S&P Manufacturing PMI: 51.9e v 53.0 prior; Services PMI: 53.9e v 54.5 prior; Composite PMI: No est v 54.6 prior.

- 10:00 (US) Sept Richmond Fed Manufacturing Index: -9e v -7 prior; Business Conditions: No est v 6 prior.

- 10:00 (US) Fed’s Bostic.

- 10:25 (IT) ECB’s Cipollone (Italy).

- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month bills.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 12:35 (US) Fed Chair Powell.

- 13:00 (US) Treasury to sell 2-Year Notes.

- 14:30 (CA) Bank of Canada (BOC) Gov Macklem.

- 16:30 (US) Weekly API Crude Oil Inventories:

- 17:00 (KR) South Korea Sept Consumer Confidence: No est v 111.4 prior.

- 20:30 (JP) Japan Sept Preliminary PMI Manufacturing: No est v 49.7 prior; PMI Services: No est v 53.1 prior; PMI Composite: No est v 52.0 prior.

- 21:30 (AU) Australia Aug CPI Y/Y: 2.9%e v 2.8% prior; CPI Trimmed Mean Y/Y: No est v 2.7% prior.

- 22:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision: Expected to leave Overnight Policy Rate unchanged at 7.75%.

- 22:00 (KR) South Korea Aug Retail Sales Y/Y: No est v 9.1% prior; Department Store Sales Y/Y: No est v 5.1% prior; Discount Store Sales Y/Y: No est v -2.4% prior.

- 23:30 - (TH) Thailand Aug Customs Trade Balance: $0.5Be v $0.3B prior; Exports Y/Y: 7.0%e v 11.0% prior; Imports Y/Y: 8.2%e v 5.1% prior.