Market movers today
Today will be a quiet day in terms of economic data releases. From the US, the NFIB Small Business Optimism index will be released for July along with international trade data for June. From Germany, the revised July inflation figures are due for release.
The Fed’s Harker and Barkin are scheduled to give speeches in the afternoon.
Overnight, Chinese July CPI data will be released.
The 60 second overview
Japan: Wages rose 2.3% y/y in July in Japan. It was slower than in June, where wages increased 2.5% y/y, but two straight months of wage growth above 2% could still be a sign that the trend is higher as higher inflation passes through to labour earnings. It is probably not enough to satisfy Bank of Japan and puts monetary tightening on the agenda at the upcoming meeting in September.
China: Foreign trade data for July was dire reading for the global economy as well as the Chinese domestic economy. Exports declined 14.5% y/y – the biggest decline since the pandemic in 2020 – in a sign of slower external demand. Imports plunged 12.4% y/y raising concerns about weaker domestic demand.
FX: USD is higher overnight vs EUR, JPY and CNY amid weaker Chinese trade data and renewed pressure on Asian equities. EUR/USD dropped below the 1.10 mark and USD/JPY jumped above 143. Both SEK and NOK have had some good sessions, when they were supported by positive risk sentiment, but are for the opposite reason slightly on the defensive this morning. EUR/SEK trades around 11.66 and EUR/NOK around 11.19.
Credit: Yesterday, credit markets had a soft day with both CDS indices closing marginally wider with iTraxx Main at 71.2bp (+1.2bp), while iTraxx Crossover closed at 399.2bp (+5.8bp). The primary Eurobond market was still very quiet and according to Bloomberg’s recent survey among primary market participants a slow pace of activity should be expected throughout the week.
Equities: Global equities higher yesterday driven by a lift to US stocks. US sector performance also dominating the global direction with communication service outperforming together with financials. Value outperformed growth for the fourth out five last sessions although energy stocks were underperforming. Not really a macro-driven day but more of a stock-selection day with less appetite for unprofitable tech.
In US Dow +1.2%, S&P 500 +0.9%, Nasdaq +0.6% and Russell 2000 +0.1%.
The lift on Wall Street yesterday spilling over to parts of Asia this morning despite yet another set of weak Chinese trade data. Futures on both sides of the Atlantic are in red this morning.
