Morning Report – Friday 17th July

Main Headlines

The EU is worried about Britain’s plans for Northern Ireland after Brexit. After a meeting on the subject yesterday, the European Commission urged London “to further intensify the technical engagement to resolve all outstanding questions, and to take the necessary practical actions, without any delay.” Scottish and Welsh leaders accused London of a “power grab” after seeing plans for Britain’s internal market, the FT reported.

Fed officials warned the U.S. outlook is getting worse and they’re prepared to deal with it. “I’m worried about the downside risks and I think that’s how policy needs to be positioned,” Chicago Fed chief Charles Evans said, advocating a message of “in it to win it.” New York’s John Williams said the economy is at a key inflection point as infections rise. Atlanta Fed President Raphael Bostic noted that weekly jobless claims “seem to be levelling off at still a very high level.”

Shares were sold off in Japan, China and Australia, while equity benchmarks in South Korea and Hong Kong managed small advances. Nasdaq futures clawed back gains after uninspiring results from Netflix earlier upended tech shares, and S&P 500 and EuroStoxx 50 futures edged higher. Treasuries held on to gains, Brent was slightly lower and gold was firm. Copper fell despite a warning from Rio Tinto that a supply crunch could worsen.

Netflix missed by over 50%. The streaming giant said it would add 2.5 million new users in the current quarter, less than half of what was expected. It signed up 10.1 million subscribers in the second quarter to top estimates, but “growth is slowing as consumers get through the initial shock of Covid and social restrictions.”

GBP

Sterling was flat overnight as Europe takes centre stage when European Union leaders meet in Brussels as they seek to overcome their differences over a proposed stimulus package.

EUR

The euro has been well supported by hopes that European officials will agree on fiscal stimulus measures at a meeting starting later today however, comments from the Dutch PM this morning, put chances at “less than 50%”.

USD

The dollar held onto gains against most currencies overnight as worries that a resurgence in the coronavirus is starting to curb economic activity drawing further safe haven flows into the U.S. currency.

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

9:00 a.m.: ECB survey of professional forecasters
9:00 a.m.: Spain May trade balance
9:30 a.m.: ECB’s Schnabel speaks
9:30 a.m.: ECB Vice President Guindos participates in book presentation
10:00 a.m.: Euro-zone June CPI
11:00 a.m.: BOE Governor Bailey speaks
11:00 a.m.: U.K. to sell bonds
2:00 p.m.: Bank of Italy releases Quarterly Economic Bulletin
6:00 p.m.: Baker Hughes rig count
6:30 p.m.: ICE Futures Europe weekly Commitments of Traders report
Leaders of the 27 EU nations meet in Brussels

Corporate Events

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