Think Thursday

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*Data as of 4pm WAT

Market News

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Weekly Investment Watchlist

Market Commentary

Asia and Australia

• Asian equities showed a mixed performance on Thursday. Nikkei and Hang Seng extended their losses, while ASX and Kospi were also lower. Mainland China stocks, however, closed higher. Taiwan’s market was closed due to a typhoon.

• The People’s Bank of China (PBOC) may cut commercial lenders’ reserve requirement ratio (RRR) as early as this month to boost lending and support economic recovery.

• Caixin services activity in China expanded at a slightly faster pace in July, driven by an increase in the summer travel season.

• Japan’s service sector activity in July expanded at a slightly slower pace as new business growth eased, while cost pressures remained high.

• JGB yields are rising, reaching a nine-year high of 0.625% on Wednesday. However, the yen unexpectedly weakened due to remote prospects for an end to easing.

• Toyota is planning to ramp up its push for electric cars in China through a research and development revamp.

Europe, Middle East, Africa

• European equity markets were softer but improved from their worst levels. Tech, telecom, and autos were the biggest fallers, while banks and retail outperformed.

• The Bank of England raised rates by 25 basis points, as expected, with the leeway provided by softer inflation numbers last month.

• The July PMI for the Eurozone showed business activity contracting at an eight-month low of 48.6, lower than the flash reading of 48.9 and the previous month’s 49.9. The loss of momentum was due to ongoing weakness in manufacturing, while services sector activity also slowed.

• UK services sector growth in July slowed to six-month lows as new order growth continued to ease.

• The Bank of Japan (BOJ) kept its purchase offer amounts unchanged from the previous operation, raising questions about its exit from policy easing.

The Americas

• Brazil surprised the market by cutting its Selic rate by 50 basis points, with the consensus expecting a 25 basis points cut. The current rate is now 13.25%. Further rate cuts are expected this year but not down to drastically low levels.

• Fitch’s downgrade drew attention to Congress’s inability to control the more than $31 trillion in long-term debt.

• Ackman is shorting 30-year Treasuries due to concerns about supply ramp-up, although this is not necessarily a widespread view.

• Qualcomm, the latest chipmaker to report results, announced weaker than expected results. Management expects flat overall handset chip growth quarter-on-quarter for the September quarter (down 27% year-on-year) due to inventory corrections for both Android and iPhone.

The Week Ahead:

• Monday:

  • Large Retailer Sales (Japan)

  • NBS Manufacturing PMI (China)

  • Chicago Purchasing Managers Index (US)

• Tuesday:

  • Unemployment Rate (Japan)

  • Caixin Manufacturing PMI (China)

  • Unemployment Rate (EA)

  • S&P Global Manufacturing PMI (Canada)

  • ISM Manufacturing PMI (US)

• Wednesday:

  • BOJ Monetary Policy Meeting Minutes (Japan)

  • ADP Employment Change (US)

  • U.S Added 324,000 Jobs in July Beating Estmate of +190,000 Jobs

• Thursday:

  • US credit rating downgraded by Fitch Ratings from an AAA to AA+.

  • US Treasury boosts quarterly bond sales for the first time in 2.5 years in order to help finance budget deficits.

  • US ADP nonfarm payrolls for July come in at 324k; est: 190k.

  • Softbank (SFTBY) chip maker ARM is targeting a $60b IPO in September.

• Friday:

  • Retail Sales (EA)

  • Average Hourly Earnings (US)

  • Ivey Purchasing Managers Index (Canada)

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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.