Eurozone Industrial Production, Labour Cost Index; France, Italy
CPI; U.K. Producer Prices, CPI; House Price Index; OECD Quarterly
National Accounts; updates from Inditex, Merck KGaA,
HeidelbergCement, Tullow Oil, Dixons Carphone, H&M
A downbeat U.S. session and some weak China data will likely
drag on European stocks on Wednesday. In Asia, shares mostly fell,
the dollar held its post-CPI print losses, while Treasury yields
nudged up. In commodities, oil made early gains but gold prices
were under pressure.
Positive momentum for European shares will likely remain elusive
on Wednesday, after losses on Wall Street and as some weak China
data reinforced worries over global growth.
U.S. stocks ended lower on Tuesday, with the Dow down nearly 300
points, as an early lift from the inflation reprieve faded.
"There's more uncomfortable sentiment out there than there are
positive catalysts," Randy Frederick, managing director of trading
and derivatives at Charles Schwab said, though he said expects the
stock market to continue to rise higher this year. "We're about
three weeks out from the next earnings season."
The U.S. stock market is repeating a pattern of mid month
stumbles some analysts tie to options expiration. That dynamic
could be amplified this week ahead of "quadruple witching," the
simultaneous expiration Friday of individual stock options,
stock-index options, stock-index futures and single-stock
"Almost like clockwork, over the past six months the S&P 500
has fallen in the week leading into OpEx, so the risk is we see
this flow repeat and come into play this week, which could mean
weakness into Friday's expiry - although perhaps it's all too
obvious now," said Chris Weston, head of research at
In Asia, most major stock indexes fell early Wednesday, as a
batch of data showed China's economic activity cooled further in
Retail sales, a key gauge of China's consumption, grew 2.5% from
a year earlier in August, down sharply from July's 8.5% growth. The
result was also much lower than the 6.3% growth expected by
economists polled by The Wall Street Journal.
Industrial output in August rose 5.3% from a year earlier,
decelerating from a 6.4% increase in July and below the 5.6% pace
anticipated by the surveyed economists.
And China's fixed-asset investment increased 8.9% in the
January-August period, compared with the 10.3% pace recorded in the
first seven months of the year. Economists expected FAI to grow
The dollar changed little in Asia, having weakened on Tuesday,
after data showed U.S. inflation cooled slightly in August.
The yen strengthened against G-10 and Asian currencies amid
global growth worries, partly caused by the mostly
worse-than-expected Chinese economic data.
The U.K.'s domestic recovery story is "largely supportive" for
the pound, with data showing the U.K.'s unemployment rate inching
down to 4.6% in July, but the benefits are limited, ING said.
Investors remain reluctant to believe that the Bank of England
"will be able to stick to its upbeat view on the economic outlook,"
which may be limiting sterling's scope to gain in the short term,
The 10-year Treasury yield nudged higher in Asia but remained
The slowdown in U.S. inflation doesn't necessarily mean the
Federal Reserve will delay tapering. "Look under the hood and what
we see is cyclical inflation pressure continuing to build," Capital
Economics said. "The latter is what the Fed should be really
worried about, as it means that core inflation will remain above
target for the foreseeable future."
Tradeweb said the yield curve is getting flatter throughout.
"Flattening is even occurring at the front end of the curve. When
yields fall and the curve flattens, it may mean that markets are
pricing in less tightening in the next few years."
The Bank of England is unlikely to start sounding more urgent
about the timing of when it will raise interest rates at its Sept.
23 policy decision, preferring to wait until more clarity on growth
and inflation dynamics emerge, JPMorgan said.
"Inflation pressures are building, raising risks of a more
persistent inflation overshoot, however weaker-than-expected growth
adds some uncertainty to the BOE's reaction function," JPMorgan
Once the central bank starts raising the bank rate from 0.1%,
JPMorgan expects "a faster pace of hikes after lift-off than
currently priced" in the gilt market. In their view, 10-year gilt
yields look cheap versus the Sterling Overnight Indexed Average
[Sonia] interest rate swap curve.
Oil prices were back on the rise in Asia after stalling on
Tuesday, as concerns eased over the impact of Tropical Storm
Nicholas on crude and natural-gas production in the Gulf of
Although storm-related power outages briefly shut U.S.'s largest
pipeline which sends oil from Houston to the Northeast, its impact
on offshore output was relatively limited, ANZ said.
U.S. crude-oil stockpiles are expected to decrease from the
previous week in data due Wednesday from the Energy Department,
according to a survey of analysts and traders by The Wall Street
Journal. Estimates showed inventories are projected to have fallen
by 2.5 million barrels in the week ended Sept. 10.
The API said late Tuesday its data for the week showed a 5.4
million-barrel decrease in crude supplies, a 2.8 million-barrel
fall in gasoline stocks and a 2.9 million-barrel drop in distillate
inventories, according to a source.
Gold eased lower but remained firmly above $1,800, finding
support from a weaker dollar.
Although bullion has been riding on the lower-than-expected U.S.
CPI print and is back above the key $1,800 level, it remains to be
seen if the dollar will regain strength, capping gold's gains, IG
said. "This may also come as the timeline for Fed tapering may
Aluminum rose on expectations the cuts to Chinese production due
to environmental reasons and to conserve energy will remain, ANZ
It bank doesn't expect the output cuts to ease, with power
shortages likely remaining an issue leading into the winter. This
should support aluminum prices. However, ANZ noted that investor
bullishness may be fading, with the metal having retreated from its
earlier $3,000 a ton high.
TODAY'S TOP HEADLINES
China's Economic Activity Cooled Further in August
China's economic activity cooled further in August, as
coronavirus outbreaks and stringent control measures hurt consumer
demand and factory production.
Retail sales, a key gauge of China's consumption, grew 2.5% from
a year earlier in August, down sharply from July's 8.5% growth,
according to data released Wednesday by the National Bureau of
Statistics. The result was also much lower than the 6.3% growth
expected by economists polled by The Wall Street Journal.
Democrats Put Off Hard Decisions on $3.5 Trillion Spending Plan
WASHINGTON-Democrats on Capitol Hill have hard choices to make
if they want to pass a sprawling package of healthcare, education
and climate-change programs without any GOP support. So far, they
have avoided making them.
Centrist Senate Democrats are raising concerns over Democratic
leaders' plans to assemble a package of $3.5 trillion in spending
and tax cuts, even if offset by other sources of revenue and
savings. Because Democrats cannot afford to lose a single vote from
their own caucus in the evenly-split Senate, that means that
overall spending level will likely have to come down, either by
excluding or shortening the length of some proposed programs.
U.S., EU Seek Global Pledge to Slash Methane Emissions by
Officials in the U.S. and European Union are crafting a pledge
to reduce global methane emissions by nearly a third by 2030, and
pushing several of the world's largest economies to join them,
according to people familiar with the effort.
The agreement would mark the first global commitment to cut
emissions of methane, a gas less prevalent than carbon dioxide in
the atmosphere but far more potent at trapping heat. Dubbed the
Global Methane Pledge, the agreement doesn't call for
country-specific targets, but rather for the signatories to support
an effort to reduce global, human-caused methane emissions by at
least 30% by 2030 compared with 2020 levels, one of the people
U.K. Bets on Covid-19 Booster Shots to Avoid Winter
LONDON-British Prime Minister Boris Johnson presented a suite of
measures including booster Covid-19 vaccinations for people over 50
as he aims to avoid new lockdowns this fall while keeping
social-distancing restrictions to a bare minimum.
In contrast with other European countries that are taking a more
interventionist approach to squash infection rates, Mr. Johnson
plans instead to lean heavily on vaccines to protect the British
population should the virus rapidly spread in the fall.
BHP Says Memorandums of Understanding in Place With Importers
for Jansen Output
SYDNEY--BHP Group Ltd., the world's largest mining company, said
it has non-binding memorandums of understanding with major
importers for up to 100% of future production from its Jansen
project in Canada's Saskatchewan province.
BHP last month approved the first phase of the Jansen project,
which is estimated to cost $5.7 billion to build. Potash is one of
three major fertilizer ingredients, alongside nitrogen and
phosphate, and BHP thinks mining at Jansen could last about 100
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Expected Major Events for Wednesday
06:00/NOR: Aug External trade in goods
06:00/UK: Aug UK producer prices
06:00/UK: Aug UK monthly inflation figures
06:45/FRA: Aug CPI
07:00/HUN: Jul Construction
08:00/POL: Jul Merchandise trade
08:00/POL: Aug CPI
08:00/BUL: Aug CPI
08:00/ITA: Aug CPI
08:30/UK: Jul UK House Price Index
09:00/EU: Jul Industrial Production
09:00/EU: 2Q Labour Cost Index
09:00/GRE: Jul Labour Force Survey
10:00/FRA: 2Q OECD Quarterly National Accounts G20 GDP
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(END) Dow Jones Newswires
September 15, 2021 00:39 ET (04:39 GMT)
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