Markets React to Economic Concerns and Global Shifts

Global markets experienced a downward trajectory amid escalating concerns about economic stability, international relations, and policy decisions.

Key Factors for Today

• Global equities slide persists, driven by apprehensions about Fed actions and China's economic health.
• S&P 500 grapples with third successive week of losses due to mounting interest rate worries and China-related uncertainties.
• UK retail sales fall short, leading to a dip in the pound as consumer sentiment weakens.
• Euro struggles with a six-day decline post-confirmation of CPI data, while ECB rate hike expectations remain unchanged.
• Chinese intervention fails to arrest yuan's slide as property sector uncertainties persist.
• New Zealand's trade deficit widens, extending the Kiwi's losing streak to nine days.

Market Movers

• The S&P 500 saw a 0.80% drop as escalating yields marked the third week of consecutive losses. Concerns about prolonged higher interest rates and China's ripple effects weighed on investors.
• UK retail sales figures disappointed, reflecting a 1.2% monthly decrease, contrary to earlier consumer optimism. The pound stumbled against the dollar, ending a streak of gains.
• Eurozone's CPI data revealed a 6-day loss for the Euro after confirming a 5.3% annual growth in headline prices. Anticipations of an ECB rate hike in September persisted.
• Despite reported intervention and a stronger PBOC fix, the dollar continued to rise amid concerns about China's property sector, potentially pushing USD/CNY towards 7.35.
• New Zealand's trade deficit expanded to -1.1B, prompting a 9-day losing streak for the Kiwi. The Prime Minister's warnings about budget pressures further dampened sentiment.

Economic Calendar

• German Wholesale Prices
• Japan GDP Growth Rate

The Big News

Global Equities React to Hawkish Concerns and Geopolitical Uncertainties

Global equities faced turbulence as hawkish sentiments and geopolitical uncertainties triggered a market slide. The yield on the 10-year bond receded from a 15-year peak, yet concerns mounted over the possible implications of US economic prowess on the Federal Reserve's stance. Investors remained wary of potential actions by the Fed to curb inflation, leading to a cautious approach in the equities market.

S&P 500's Consecutive Losses Amid Rising Yields and China's Trajectory

The S&P 500 endured its third consecutive week of losses, grappling with rising yields that heightened worries about extended interest rates. The looming possibility of the Fed's continued commitment to higher rates rattled investors, further compounded by uncertainties linked to China's economic trajectory. As the index approached the 4370 level, attention turned towards the support at 4200, with a potential recovery towards 4430 if market sentiment shifts.

UK Retail Sales Data Contradicts Optimism, Pound Slips

UK retail sales data contradicted earlier optimism, revealing a monthly drop of 1.2%. The weaker-than-expected figures added to concerns about the consumer narrative's fragility. Consequently, the pound lost ground against the dollar, reversing gains from the previous days. The cable's movement towards $1.2689 support highlighted the cautious sentiment, with potential for bullish movement towards $1.2766, albeit a hurdle at $1.28.

Euro's Decline After CPI Confirmation and Ongoing ECB Rate Hike Worries

Euro's fortunes took a dip following Eurozone's CPI confirmation of a 5.3% annual growth in headline prices. The 6-day decline for the Euro marked ongoing worries about a potential ECB rate hike, particularly in September. A challenge at the $1.0845 level presented a gateway to potential recovery towards $1.09, while a failure to breach it might push the Euro below $1.08.

China's Interventions Fail to Halt Yuan's Slide Amid Property Sector Concerns

China's interventions failed to halt the yuan's slide, as concerns loomed large over the property sector. State-backed property developers signalled potential losses, driving unease in the market. Amidst such uncertainties, USD/CNY's trajectory pointed towards 7.35 unless China undertakes corrective actions to reclaim 7.30.

New Zealand's Trade Deficit Expansion Fuels Kiwi's Prolonged Losing Streak

New Zealand's trade deficit expansion fuelled a prolonged losing streak for the Kiwi, coupled with warnings about budgetary pressure. The Kiwi's struggle to breach the 60-cent barrier suggested underlying concerns. A potential foothold at $0.5875 support might embolden bullish moves towards $0.5950.