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At the end of Friday, the Dow Jones Index (US30) fell by 1.51% (for the week -2.28%), and the S&P 500 Index (US500) lost 1.84% (for the week -2.37%). The Nasdaq Technology Index (US100) closed negative 2.43% (for the week -3.83%). On Friday, the US dollar fell to a twenty-week low against a basket of currencies due to weak US jobs data, which heightened fears of a possible recession and raised the stakes for more Fed rate cuts. The US economy added 114,000 jobs in July, which was below market expectations of a 175,000 increase. In addition, the unemployment rate unexpectedly rose to its highest level since 2021, and wage growth slowed more than expected. This followed weak manufacturing data, with the ISM manufacturing PMI showing a larger-than-expected contraction in factory activity. This raised fears of a recession in the US and also increased expectations of a dovish Federal Reserve rate hike. Markets now believe there is a more than 70% chance of a 50 basis point Fed rate cut in September, with a total easing of around 155 basis points this year and next.

Bitcoin fell 10% to below 53,000 on Monday, hitting a more than five-month low, as rising fears of a US recession prompted investors to shed risky assets, including digital currencies, stocks, commodities, and risk-sensitive currencies. The moves came amid weak US jobs data, which heightened fears that the Federal Reserve may already be too late to cut interest rates as the US economy may already be entering recession.

Equity markets in Europe mostly fell on Friday. Germany's DAX (DE40) fell by 2.23% (week ended -4.75%), France's CAC 40 (FR40) closed down by 1.61% (week ended -3.92%), Spain's IBEX 35 (ES35) fell 1.67% (week ended -4.89%), and the UK's FTSE 100 (UK100) closed negative 1.31% (week ended -1.34%).

ECB official Stournaras emphasized that inflation could fall below the 2% target due to problems in the Eurozone economy. As for the data, Eurozone annual inflation unexpectedly accelerated to 2.6% in July, but services inflation fell for the first time in three months. In addition, preliminary estimates suggest that the Eurozone economy grew 0.3% faster than expected in Q2, driven by growth in France, Italy, and Spain. On the other hand, Germany's economy unexpectedly contracted.

WTI crude oil prices fell to $73 a barrel on Monday, declining for the third consecutive session as fears of recession in the US, the world's top oil consumer, outweighed supply risks caused by geopolitical tensions in the Middle East. Markets are also watching the reaction of Iran, which vowed to avenge the assassination of Hamas leader Ismail Haniyeh after an airstrike in Tehran killed a top Hezbollah commander.

Asian markets were mostly down last week. Japan's Nikkei 225 (JP225) fell by 5.85%, China's FTSE China A50 (CHA50) declined 0.86%, Hong Kong's Hang Seng (HK50) lost 2.08% over 5 trading days, while Australia's ASX 200 (AU200) was positive 0.28%.

In Asia, investors await the Reserve Bank of Australia's (RBA) interest rate decision on Tuesday, where a rate hold is widely expected. The probability of an RBA rate cut in November is around 75%, much earlier than previous estimates that suggested a rate cut in April next year. The Melbourne Institute's monthly inflation gauge rose 0.4% in July 2024 after rising 0.3% in the previous two months. It was the fifth straight month of growth and the sharpest reading since December last year.

The overall Caixin China PMI fell to 51.2 in July 2024 from June's reading of 52.8, indicating the lowest since last October and marking the ninth month of expansion in sector activity.

• S&P 500 (US500) 5,346.56 −100.12 (−1.84%)
• Dow Jones (US30) 39,737.26 −610.71 (−1.51%)
• DAX (DE40) 17,661.22 −421.83 (−2.33%)
• FTSE 100 (UK100) 8,174.71 −108.65 (−1.31%)
• USD Index 103.22 −1.20 (−1.15%)
   

Important events today:

• – Japan Monetary Policy Meeting Minutes at 02:50 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – German Services PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – US ISM Services PMI (m/m) at 17:00 (GMT+3).

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