Stocks Slip Following North Korean Missile Test

Eurozone stock markets are heading south, with the DAX underperforming and down amid a strong EUR and as storms in the U.S. weigh on investor confidence. The U.K. is closed for a holiday, Eurozone peripherals are outperforming, but also down on the day. Investors are waiting for damage assessment from Storm Harvey, which hit Texas’s oil and gas industry. U.S. stock futures are also heading south, after a mixed session in Asia, which saw the Nikkei moving sideways, and the ASX closing with a -0.59% loss, while the Hang Seng managed a 0.05% gain and the CSI 300 outperformed once again and closed up 1.24%, with earnings optimism continuing to add support.

North Korea launched three short-range ballistic missiles Saturday. According to the U.S. Pacific Command, two of the missiles flew 250k; the other apparently failed on liftoff. This will test President Trump’s promise of “fire and fury” and that North Korea should be “very nervous…because things will happen to them like they never thought possible.” Analysts say the launches are likely in response to the joint U.S.-South Korea military exercises taking place through the end of the month.

German IFO Services Improved in August

German Ifo services confidence improved to 110.5 in August from 109.8 in the previous month. Like with the general Ifo business confidence reading, the current conditions indicator actually fell back, but the more forward-looking expectations reading jumped higher to 103.7 from 102.0 in July. More signs then that the German economy remained strong over the summer quarter.

Eurozone M3 growth slows, but credit flows strong. Annual M3 money supply growth came in much lower than expected at just 4.5% year over year in July, down from 5.0% year over year in June. However, the counterparts showed loans to non-financial corporations rose 1.2% year over year, unchanged from June, but with monthly flow data showing a rebound fro 12 from -18 in the previous month. Similarly, flows in loans to households picked up when adjusted for sales and securitizations, while the annual rate remained steady at 2.6% year over year. Consumer credit growth continues to drive the overall improvement though and jumped to 6.6% year over year from 5.9% year over year. Draghi warned last week that regulators need to keep a close eye on developments amid very loose global monetary policies and sharp increases in consumer credit growth are clearly something to keep an eye on not just in the Eurozone.