Trading Tuesday

Market Data

Local

Global

*Data as of 4pm WAT

Market News

Local

Global

Weekly Investment Watchlist

Market Commentary

Asia and Australia:

• Asian equities ended Tuesday with a mixed performance, notably with more underperformance seen in Hong Kong. Hang Seng was dragged lower by property stocks, and mainland real estate names also underperformed.

• China-based property developer Country Garden announced that it had missed payments on two dollar bond coupons worth a combined $22.5 million due on Tuesday. This raises concerns for the Chinese property market and the broader economy, as stimulus measures are not taking effect swiftly enough.

• China’s exports fell by 14.5% YoY in July, worsening from the 12.4% drop in the previous month and marking the weakest performance since February 2020. A significant surprise was a 12.4% contraction in imports, following a 6.8% decline in June. The decline in US-bound shipments by 23.1% led to double-digit declines across much of Asia.

• In Japan, real wages decreased by -1.6% compared to -0.94% the previous month. Real household spending fell to -4.2% YoY, worse than expectations of a -3.8% decline and following a -4.0% drop in May. These numbers suggest that easing measures will likely continue.

• Corporate bankruptcies in Japan surged by 53% YoY in July, marking the fastest pace since early 2020 and the first back-to-back increase in about 23 years.

Europe, Middle East, Africa:

• European equity markets experienced declines and were trading near their worst levels. Banks were under pressure due to an Italian banking tax and Moody’s downgrades of US small/mid banks.

• Italy surprised markets with a 40% windfall tax on profits for domestic lenders, which rattled Europe’s banking sector.

• Germany reported that consumer prices increased by 0.3% MoM in July, in line with expectations and unchanged from June. This translates to 6.2% YoY, in line with expectations, and down from 6.4% in June.

• ECB consumer inflation expectations for the next 12 months declined to 3.4% in June from 3.9% in May.

• BoE’s Pill noted that UK inflation persistence is due to imported goods prices.

• Ukraine announced its intention to target Russian ports and cargoes on the Black Sea, increasing risks in the region.

The Americas:

• Moody’s lowered credit ratings on ten small and midsize banks and warned that it may downgrade US Bancorp, Bank of New York Mellon, State Street, and Trust. This was due to higher funding costs, potential regulatory capital issues, and risks related to exposure to commercial real estate (CRE) and softening demand for office space.

• Meta (formerly Facebook) shifted its focus from blue-sky research to revenue-generating commercial AI projects.

• US Treasuries faced a test from $103 billion in auctions scheduled for the week.

• UPS cut its FY23 revenue guidance by around 4% and operating margin guidance by 100 basis points. This was attributed to macro uncertainty, dampened pricing power, and sticky wage pressures, which raised concerns about consensus expectations for an earnings recovery starting in the second half of the year.

The Week Ahead:

• Monday:

• Tuesday:

  • Exports (China)

• Wednesday:

  • Consumer Price Index (China)

• Thursday:

  • Consumer Price Index (US)

  • Economic Bulleting (EA)

  • Monthly Budget Statement (US)

• Friday:

  • Gross Domestic Product (US)

  • Consumer Price Index (France)

  • Producer Price Index ex. Food & Energy (US)

  • Michigan Consumer Sentiment Index (US)

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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.