Finance Friday

Market Data

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Global

*Data as of 4pm WAT

Market News

Local

Global

Weekly Investment Watchlist

Market Commentary

Asia and Australia:

• Asian stock markets concluded Friday with losses across the region. The MSCI Asia Pacific ex-Japan index declined by 1.2%, nearly erasing the gains made throughout the week. Steep declines were observed in Greater China markets, particularly led by Hang Seng’s performance.

• China’s housing ministry, PBOC, and NFRA jointly issued new guidelines to ease home mortgage rules. These guidelines stipulate that the mortgage rate offered by commercial banks will be based on the number of homes owned, departing from the prior practice of considering mortgage history. However, market sentiment remains skeptical of this move.

• China has urged financial institutions to increase their stock investments. The CSRC has requested pension funds, large banks, and insurers to enhance their stock investments.

• In Japan, Tokyo’s inflation figures showed a decrease. Tokyo Core CPI rose by 2.8% year-on-year in August, slightly below the consensus forecast of 2.9%. This follows a 3.0% increase in the previous month. Although core inflation has been moderating since its peak in January at 4.3%, ex-fresh food and energy prices remain high at 4%, marking a post-1982 high.

• For Japan’s FY24 general budget requests, a continuation of exceeding JPY110 trillion ($750 billion) is anticipated for the third consecutive year. This trend is driven by expected expansions in debt servicing, defense outlays, and growing welfare costs.

• Minutes from the RBI’s monetary policy committee (MPC) meeting revealed a commitment to monitor factors influencing inflation and to take “necessary action.” However, the committee also expects the recent spike in food prices to have a short-lived impact.

• The yen has overtaken bonds in driving speculation about a possible adjustment in the BOJ’s monetary policy.

Europe, Middle East, Africa:

• European equity markets saw higher trends. Leading sectors include retail, basic resources, and energy while lagging performance came from healthcare and financial services.

• The German Ifo business climate survey highlighted the weakened macroeconomic outlook. The reading for August was 85.7, falling short of the consensus forecast of 86.7 and the previous reading of 87.4. This marks the fourth consecutive month of deteriorating sentiment, surpassing expectations each time.

• Final German GDP figures matched earlier preliminary numbers, indicating that Q2 GDP growth remained at 0% QoQ and -0.2% YoY.

• Despite recession risk, UK firms continued to hire, with new job postings approaching 190,000 at the beginning of the month. This represents a 3.5% increase compared to the end of July.

• UK consumer confidence displayed some improvement. The UK GfK consumer confidence index rose by five points in August to reach -25, surpassing both the consensus forecast of -29 and July’s three-month low of -30.

• The ECB may shift its focus from the peak rate level to the duration of its restrictive policy.

The Americas:

• Fed’s Harker and Collins emphasized that the increase in long-term borrowing costs is aiding in cooling the economy, aligning with policy objectives.

• Middle East allies of Washington, including Saudi Arabia, UAE, and Egypt, are moving closer to China, as they are set to join BRICS.

• Disney’s stock closed at its lowest level in nearly nine years, reflecting bearish investor sentiment.

• Retailer troubles persist as Gap reported mixed results for the second quarter, along with a decline in sales across all of its brands. Nordstrom also issued a warning about a feeble second half due to cautious consumer spending.

The Week Ahead:

• Monday:

  • China PBOC Interest Rate Decision

• Tuesday:

  • US Existing Home Sales Change (MoM)(Jul)

• Wednesday:

  • S&P Global/CIPS Composite PMI (Aug) PREL (UK)

  • Retail Sales (MoM)(Jun) (Canada)

  • S&P Global Manufacturing PMI (Aug) PREL(US)

  • Consumer Confidence (Aug) PREL (EU)

• Thursday:

  • ECB Monetary Policy Meeting Accounts (EU)

  • Durable Goods Orders (Jul)

• Friday:

  • GFK Consumer Confidence (Aug) (UK)

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Disclaimer: The information contained in this report is intended for informational purposes only and should not be considered as investment advice. The information is obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.