Finance Friday

Market Data

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Global

*Data as of 4pm WAT

Market News

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Weekly Investment Watchlist

Market Commentary

Asia and Australia:

• Asian equities predominantly closed higher on Friday in a subdued session. Japan reached a fresh 33-year high with the Nikkei index closing in positive territory. However, Australia closed slightly lower, underperforming the region due to the weight of the mining sector. Modest gains were observed in mainland China markets, while Hong Kong remained closed due to a typhoon warning.

• Several major banks, including ICBC, Bank of China, and Agricultural Bank of China, reduced deposit rates. The rate cuts ranged from 10 basis points for 1-year deposits to 1.55% to 25 basis points for 5-year deposits to 2.25%. This move aims to encourage spending, as it is expected that people will save less if they earn lower returns on their savings.

• China’s Caixin manufacturing PMI, released on Friday, echoed the official survey released the previous day, indicating that manufacturing operating conditions had strengthened at the fastest pace in six months. The index rose from 49.2 to 51, entering expansionary territory. New orders showed significant growth, aligning with the official data.

• Manufacturing PMIs across Asia were mixed. South Korea’s PMI slightly worsened to 48.9, while Taiwan’s PMI fell to 44.3 from 44.1, indicating a continued decline in new orders from both overseas and domestic buyers.

• The People’s Bank of China (PBOC) announced a 200 basis point reduction in the reserve requirement ratio (RRR) on foreign exchange deposits, lowering it from 6% to 4%, effective from September 15th. This move is estimated to free up $16.4 billion in foreign exchange, with China’s FX deposits standing at $821.8 billion as of the end of July.

• Chinese President Xi Jinping will not attend the upcoming G20 meeting in New Delhi.

• Chevron Australia LNG workers rejected the company’s offer, potentially risking disruptions to 5% of the global LNG supply.

Europe, Middle East, Africa:

• European equity markets showed strength after a softer close on Thursday. Energy, Basic Resources, and Technology sectors outperformed, while Autos/Parts, Real Estate, and Utilities lagged.

• Eurozone’s final manufacturing PMI was revised down to 43.5, compared to the flash estimate of 43.7, indicating manufacturing operating conditions deteriorated to a 38-month low. The PMI has been below the 50.0 level since July 2022.

• The UK’s manufacturing PMI deepened the sector’s downturn in August, registering a final reading of 43.0, exceeding the flash estimate of 42.5 and the previous reading of 45.3.

• UK house prices experienced their largest decline since July 2009, falling by 5.3% year-on-year, surpassing expectations for a 3.9% drop.

• An advisor to the UK Chancellor urged a reconsideration of the Bank of England’s 2% inflation target.

The Americas:

• Oil prices were supported during the week by concerns about Hurricane Idalia and another week of substantial supply drawdowns in the US.

• Tesla reduced prices for its Model S and Model X in China following the introduction of the new Model 3. Model S prices were cut by 14%, Model X by 18%, Model X Plaid by 20.8%, and Model S Plaid by 19.4%.

• Lululemon beat expectations and raised its outlook, citing exciting growth prospects for the second half of the year.

• Dell reported sales that exceeded estimates, signaling positive momentum in the PC market.

• Broadcom’s earnings beat estimates, but its forecast disappointed investors.

• US airlines faced a slump in August due to rising oil prices, reduced demand, and earnings cuts.

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:

  • US Q2 GDP second print comes in at 2.1%; lower than the previous estimate.

  • US ADP jobs report shows we added 177k jobs; the previous 371k. Smallest gain in five months.

  • US pending home sales rose 0.9% for the month of July.

• 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.