Analyst
European and Asian equities, commodities and cryptocurrencies, faced downturns due to increasing concerns over China and concerns about more monetary tightening. The Stoxx 600 declined 0.4%, marking its third consecutive weekly drop. Asian equity benchmarks from Japan, China, and South Korea also saw red.
Global markets endured a challenging week with concerns of enduring inflation and bond yields nearing financial crisis (2008) levels. Recent Federal Reserve meeting minutes implied a possible continuation of rate hikes, causing further investor uncertainty.
In the US, major indices faced declines for the third day in a row, as implications from the FOMC meeting suggested more rate hikes due to unexpected US economic resilience. The US 100 (-1.21%), US 500 (-0.8%), and US 30 (-0.75%) saw again sharp declines. Bitcoin plummeted 4.5% amid news of SpaceX's sale, intensifying the cryptocurrency's downturn.
US Treasuries, however, halted their selloff; 10-year bond yields nearly reached a peak last seen in 2007 but see a (likely temporary) decline with some investors fleeing into bonds
UK retail sales dropped 1.2% in July 2023 (vs. expected -0.5%), following a 0.6% increase in June; annual sales are down by 3.2%. The weak UK consumer demand points towards a slowing economy.
In China, policymakers are taking measures to curb the selloff. The People’s Bank of China pushed back against a weakening CNY, while state-owned banks amped up their support for the currency. Signs of China's expanding housing crisis are evident, with impacts even reaching Australian miners due to their reliance on Chinese demand. China’s heavily indebted property developer Evergrande Group filed for Chapter 15 bankruptcy protection in a US bankruptcy court.
Japan's July core inflation slowed to 3.1% from 3.3%, food prices surged by 8.8% (highest since 1976). It reduces pressure on the Bank of Japan for immediate changes after BOJ adjusted its yield curve control previously, allowing the 10-year bond yield to surpass its 0.5% cap amid global rate pressures - which, however, did little to support the JPY.
Oil prices are on track to end a seven-week rally due to China's concerns and the Fed rate outlook. Meanwhile, gold prices increased marginally to shortly moving back to $1,895. Gold received some support from lower US Treasury yields but overall remains under pressure with expectations for more Fed hiking rising.
Key events today:
GBP Retail Sales - 06:00 UTC+0 (released)
EU Inflation Rate / CPI - 09:00 UTC+0
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