📰 What’s moving Markets?

Stocks:

• Asia shares are up, with Hang Seng attempting to break a seven-day loss streak. Meanwhile, US futures are down, and European contracts are up.

• The S&P 500 increased by 0.7%, with the Nasdaq 100 rallying 1.7%, supported by tech giant Nvidia's shares rising by 8.5% ahead of its upcoming earnings report tomorrow.

• BHP Group reported a 37% YoY decrease in annual profit due to reduced metal demand from China, Zoom beat earnings.

• British semiconductor and software design company, Arm, is preparing for an IPO on Nasdaq, aiming for the largest US initial offering of the year. The roadshow is expected to begin in September.

Bonds:

• Yields on US Treasuries have reached a 16-year high at 4.35%.

• The upcoming Jackson Hole conference starting on Thursday will be closely watched for clues on the future direction of US monetary policy.

• European bond yields, especially in the UK and Germany, have also seen significant rises, reaching their highest levels in over a decade.

FX:

• China is taking measures to prevent the yuan's value from decreasing, with the PBOC setting a stronger reference rate and increasing offshore market funding costs.

• The Japanese yen is being monitored for potential intervention, trading steady at 146.1 per dollar. The euro is stable at $1.0906.

Commodities:

• Brent crude oil prices declined slightly, settling at $84.46 a barrel, while US West Texas Intermediate dropped by 0.7% to $80.72 a barrel.

• European gas prices surged due to potential strikes at Australian LNG facilities, with Dutch gas prices increasing nearly 50% for August.

📊 Chart of the Day

German Producer Price Index was reported yesterday morning at -6% YoY. Producer prices are a measure of wholesale prices and they typically lead consumer prices (i.e. CPI inflation). This suggests that inflation may start decreasing rapidly in Europe.

Europe PPI and CPI YoY Change

🤿 Deep Dive

You’ve probably heard by now that Chinese Real Estate giant Ever Grande is filing for Chapter 15 bankruptcy in the US. This follows the company’s demise which started in 2021.

What you might not know is the wider context around Ever Grande and the Chinese Real Estate market, and for that, we highly recommend Marc Rubinstein’s post in 2021 on the topic.

(for those who don’t know, Marc Rubinstein is a Wall Street Legend and one of the most well-renowned financial services analysts — he writes a great blog net interest [not affiliated])

If you’re pressed for time, here’s the TL;DR:

• The August market downturn presents an ideal chance to invest in stocks before they rally again, as stated by Fundstrat's Tom Lee.

• The S&P 500's recent 5% decline was influenced by China's weakening economy and the US's unexpected economic growth, causing bond yields to rise.

• Rising interest rates and a robust US economy, signalling more potential hikes, are now primary concerns for investors.

• Central banks have increased interest rates by 525 basis-points; the market anticipates a 33% likelihood of another 25 basis-point rise soon.

• Despite August's typical stock market struggles, Lee remains bullish, predicting the S&P 500 will climb 10% by year-end.

📆 Coming up this Week

Monday 21st August

• German PPI (YoY) consensus: -5.1%, last: 0.1%, actual: -6.0%

Company earnings (EPS): Zoom (beat)

Tuesday 22nd August

• Japan BoJ Core CPI (YoY) consensus: 2.7%, last: 3.0%

• Australia Judo Bank Australia Manufacturing PMI consensus: 49.6, last: 49.6

• Japan au Jibun Bank Japan Manufacturing PMI consensus: 49.5, last: 49.6

Company earnings: Lowe’s, Urban Outfitters

Wednesday 23rd August

• France Manufacturing PMI consensus: 45.2%, last: 45.1

• Germany Manufacturing PMI consensus: 38.6%, last: 38.8

• Eurozone Manufacturing PMI consensus: 42.4%, last: 42.7

• Canada Retail Sales (MoM) consensus: 0.0%, last: 0.2%

• United States S&P Global US Manufacturing PMI consensus: 49.4%, last: 49.0

• Euro Zone Consumer Confidence consensus: -14.0%, last: -15.1

Company earnings: Nvidia, Analog Devices, Snowflake

Thursday 24th August

• United Kingdom GfK Consumer Confidence consensus: -29, last: -30

• Japan Tokyo Core CPI (YoY) consensus: 2.9%, last: 3.0%

• Japan Tokyo CPI (YoY) consensus: 3.0%, last: 3.2%

Company earnings: Intuit

Friday 25th August

• German GDP (YoY) consensus: -0.2%, last: -0.2%