Morning Report

July 20, 2023

“Today’s reports signal positive economic growth: the ECB’s Current Account exceeded forecasts by 6.6Bn, showing continued expansion. Additionally, the US Unemployment Claims and Eurostat’s Consumer Confidence reports have been encouraging, with figures consistently surpassing expectations”.

Tim Hallinan – Trading Director

Main Headlines

The White House expanded its crackdown on junk fees in the rental housing market, targeted price-fixing in food and agricultural markets, and released draft merger guidelines to support U.S. consumers. While this move gained strong bipartisan and public support, the industry criticized it as “regulatory overreach.” The U.S. Chamber of Commerce expressed concerns about overly prescriptive rules for junk fees and mergers, arguing that government data showed the economy’s concentration hadn’t increased significantly in the past two decades. In other news, In June, U.S. single-family homebuilding declined, but permits for future construction reached a 12-month high. The shortage of previously owned houses for sale is driving new construction. The drop in housing starts partially offset an unusually large 18.7% increase in May, which had boosted single-family housing projects to an 11-month high.

Activision Blizzard and Microsoft extended their $69 billion deal deadline by three months to Oct 18th as they seek UK approval. U.S. regulatory issues and UK restructuring considerations caused the delay from the original July 18 cutoff. To address UK regulator’s concerns, Microsoft may create a separate unit for Game Pass to operate exclusively in the country. In other news, SSE Plc reported a Q1 performance below expectations due to increased planned outages in its thermal plants compared to last year. Dry and calm weather also affected renewable plants, resulting in a 5% shortfall. However, conditions in the second quarter have returned to normal and the company maintains its annual outlook of more than £1.50 for adjusted earnings per share in fiscal year 2024.


Sterling is weaker than most major currencies in the early morning trade. Last night we heard from UK Monetary Policy Committee (MPC) member David Ramsden, who spoke at an event about quantitative tightening at an event hosted by the Money Macro and Finance Society. In this event, he summarised that the MPC will closely monitor overall economic indicators, such as labour market conditions, wage growth, and services price inflation, for signs of persistent inflationary pressures and if such pressures remain, they may consider further tightening in monetary policy. A significant British mortgage rate declined for the first time in almost two months yesterday. After reaching a 15-year high, worries about inflation and Bank of England interest rates eased and the average two-year fixed residential mortgage rate dropped to 6.79% from 6.81%.


The Euro is well bid against most major currencies overnight. Earlier today we received the Current Account report from the European Central Bank, which measures the difference in value between imported and exported goods, services, and other data during the previous month. The past few months reporting has been mostly positive, with only last month being significantly lower than the forecast. This showed to be an anomaly rather than a new trend, as this morning’s report was higher than the forecasted figure by 6.6Bn. Later, we will be receiving the Consumer Confidence reporting from Eurostat which measures the relative level of past and future economic conditions through surveying across the entirety of the Eurozone and is a leading indicator of consumer spending. While the last few months reporting has been consistently in a decline compared to previous years, the gap is growing smaller, with the forecast currently at -16, up from 3 months ago at -19, so we will see if this gap continues to close.


The Dollar is stronger against Sterling and weaker against the Euro this morning. Later today we will be receiving the US Unemployment Claims report from the Department of Labor, a crucial indicator of economic health. Recent reports have been encouraging, with actual figures consistently lower than expected. The current forecast is 239K, so we will see if the positive trend persists. We will also be receiving the Existing Home Sales report from the National Association of Realtors. This report measures the annualized number of residential buildings sold in the previous month, excluding new constructions. Past reports have been varied, with actual figures differing from forecasts on both ends. The current forecast is 4.21 million; let’s see how the trend unfolds this month.


A slide in tech behemoths soured the mood Thursday, while the escalating conflict over Ukrainian grain exports prompted traders to temper relief over easing inflation. Futures on the Nasdaq 100 fell 0.7% as investors digested Netflix Inc.’s missed sales estimates and disappointing third-quarter forecast. Tesla Inc. also fell after profitability shrank in the second quarter; a sign the electric-vehicle maker’s margins are being squeezed. The tech-heavy gauge has climbed 45% this year, outpacing the S&P 500’s 19% rise, on excitement about the potential for artificial intelligence. ASML Holding NV led a selloff in European tech stocks after Taiwan Semiconductor Manufacturing Co. cut its outlook.

Main Economic Data/Central Banks/Government (All Times CET)

9:00 a.m.: ECB’s Villeroy speaks
10:00 a.m.: Poland June PPI, Sold Industrial Output
11:00 a.m.: Croatia June Unemployment
1:00 p.m.: Turkey Rate Decision
4:00 p.m.: Euro-area July Consumer Confidence
4:00 p.m.: US June Existing Home Sales, Leading Index
South Africa Rate Decision

Corporate Events

Earnings include Blackstone, CSX, Capital One, American Airlines, D.R. Horton, Freeport-McMoRan, J&J, KeyCorp, Marsh McLennan, Newmont, Philip Morris, SAP, Temenos


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