Analyst
European markets continue to remain in a downward trend. The Stoxx 600 index is on a seven-day decline following another drop in German industrial production for July, suggesting potential recession risks for Europe's largest economy. Germany's Industrial Production witnessed a steeper drop (-0.8%) than anticipated in July 2023, marking its fourth decline for the year, driven mainly by reductions in capital, consumer, and intermediate goods production.
In Asia, negative sentiment dominates with significant markets, especially China, experiencing declines. Chinese stocks suffer primarily from property developers, and the CNY weakens despite the People’s Bank of China's efforts. In addition to this, Chinese trade data for August revealed a sharper-than-anticipated decline in both exports and imports, pointing to continuous weakening demand globally and domestically. China's trade surplus reduced to $68.36 billion from the previous $80.6 billion, with exports and imports witnessing a consecutive drop. Investors in China anticipate the release of Chinese inflation and PPI data later this week (Sept 9) for more cues on the state of China's economic health.
Japan's July leading indicator index slightly underperformed predictions, and reserve assets fell marginally. The Bank of Japan remains committed to its current monetary policy stance due to uncertain inflation targets.
US equity futures face downward pressure as information emerges about China's intent to restrict iPhones in specific government departments, which could impact Apple. US Treasury yields rise, with two-year yields surpassing 5% after the ISM US services index showed robust growth (54.5 over the 52.5 consensus). As a result, inflation and rate hike concerns increased.
Yesterday, the Bank of Canada maintained a 5.00% policy rate, persisted with quantitative tightening, and expressed readiness to increase rates if necessary to combat inflation (= wait-and-see).
Oil prices observed a slight increase on Thursday, while gold stayed below $1,920 an ounce due to strong US data amplifying rate hike concerns and caused US Treasury yields to rise again.
With global markets experiencing declines, investors await the release of Eurozone GDP data (09:00 UTC+0) and US jobless claims (12:30 UTC+0) later today to give more insights on global economic health.
Key events today:
AUD Balance of Trade - 01:30 UTC+0 (released)
CNY Balance of Trade - 03:00 UTC+0 (released)
EUR Industrial Production - 06:00 UTC+0 (released)
EUR GDP Growth Rate, Employment Change - 09:00 UTC+0
USD Initial Jobless Claims - 12:30 UTC+0
CAD Ivey PMI - 14:00 UTC+0
USD EIA Crude Oil Stocks Change - 15:00 UTC+0
CAD BOC Gov Macklem Speech - 18:10 UTC+0
USD FED Williams, Bostic, Bowman Speech - 19:30 UTC+0 - 20:55 UTC+0
JPY GDP Growth Rate - 23:50 UTC
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