Market Overview: Equity Sentiment, Global Macro Trends, and Upcoming Events

Global Macro and Markets

• Global markets:  Equity sentiment turned sour again on Tuesday. US stocks fell, with consumer finance and regional banks towards the bottom of the pile. The S&P 500 and NASDAQ both fell by more than 1.1% though equity futures suggest a positive open later today. Chinese stocks also fell, despite yesterday’s rate cuts, as activity data turned even worse.  The CSI 300 fell 0.24% while the Hang Seng fell 1.03%.

  US Treasury yields were mixed yesterday. The 2Y yield lost 1.5bp taking it to 4.952%, while the 10Y yield put on 2bp to 4.258%. With yields not doing much aside from intra-day volatility, EURUSD is roughly unchanged from this time yesterday at just over 1.09. The AUD is weaker though, falling to 0.6456, responding to the weaker-than-expected wage-price numbers for 2Q23. Cable is slightly stronger at 1.2701, but the JPY is very slightly softer at 145.63, despite yesterday’s bumper GDP release for 2Q23. Regional Asian FX is weaker across the board. USDCNY jumped higher to 7.2884 on the bad macro news. The THB and VND were the region’s worst performers yesterday, responding to the negative China data.

• G-7 macro:  Yesterday’s US Retail sales figure was much stronger than forecast. Headline sales for July rose 0.7% against expectations for a 0.3% MoM rise. The core (control) figure rose 1.0% MoM. Not even a hint of a slowdown here.

  There was, however, a much weaker US Empire Manufacturing survey and some softer housing data (existing home sales and NAHB housing index). Today, the US releases more housing data (housing starts, building permits and mortgage applications) as well as industrial production. Production is expected to grow 0.3% MoM, with the manufacturing component remaining flat from the previous month.  We also get EU GDP data for 2Q23 – a 0.3% QoQ increase is the consensus forecast. And after stronger wage data yesterday, the UK will publish July CPI inflation numbers.  

• China:  New home price data for July are due out shortly. Last month, prices fell by a very marginal 0.06%. If the decline begins to accelerate, it will feed back on weaker consumer confidence and weigh on already feeble retail sales growth.

• New Zealand: The RBNZ is not expected to raise rates when they meet today, though they are expected to keep up their hawkish rhetoric and signal that rates will remain restrictive until well into 2024, despite the macroeconomy’s worsening situation.

 

What to look out for: Fed minutes and RBNZ meeting

• New Zealand RBNZ policy (16 August)

• US building permits, housing starts and industrial production (16 August)

• US Fed minutes (17 August)

• Japan trade balance (17 August)

• Singapore NODX (17 August)

• Australia employment report (17 August)

• Philippines BSP policy (17 August)

• US initial jobless claims (17 August)

• Japan CPI inflation (18 August)

• Malaysia GDP (18 August)

• Taiwan GDP (18 August)