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Yesterday, the US stock indices fell sharply after PMI data showed that US private sector activity was weaker than expected in August. On the one hand, this is a sign that the US Federal Reserve might become less aggressive in tightening monetary policy. On the other hand, Fed spokesman Kashkari indicated yesterday that the Fed must continue aggressively tightening monetary policy. Analysts and investors are now waiting for US Federal Reserve Chairman Jerome Powell to speak at the annual economic symposium in Jackson Hole.

At yesterday's stock market close, the Dow Jones Index (US30) decreased by 0.47%, and the S&P 500 Index (US500) lost 0.22%. The Technology Index Nasdaq (US100) closed at the opening level.

Equity markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.27%, French CAC 40 (FR40) was 0.26% lower, Spanish IBEX 35 (ES35) lost 0.71%, British FTSE 100 (UK100) was 0.61% lower on Tuesday. Eurozone manufacturing PMI declined from 49.8 to 49.7, and the services sector PMI decreased from 51.2 to 50.2. France's manufacturing PMI declined from 53.2 to 51, and its services sector PMI decreased from 49.5 to 49. Data in Germany was a bit better. Manufacturing PMI suddenly rose in July from 49.4 to 49.8, while the services sector dropped from 49.7 to 48.2. Rising living costs are hurting households and businesses in the Eurozone, while energy shortage threatens to cut production even more. Consumer confidence in the Eurozone unexpectedly improved in July, but the indicator is still at an all-time low.

Electricity prices soared again to record highs across Europe, putting added pressure on governments to accelerate plans to protect households from expensive bills and rising inflation. Rates rose to record levels in Britain, France, Germany, Italy, and the Scandinavian region. According to Bloomberg, electricity exchange prices in Europe, today are about 13 times higher than the usual seasonal rate.

Germany's gas storage capacity is more than 80% full, and Germany's energy security for this winter is assured, but "the situation cannot be ruled out worsening," the regulator said.

Turkish President Erdogan said yesterday that Turkey does not recognize the annexation of Crimea and considers this step illegal.

Oil prices jumped more than $3 a barrel on Tuesday after Saudi Arabia floated the idea of OPEC+ production cuts to support prices if Iranian oil returns and the prospect of lower US inventories.

As the dollar index fell yesterday, the US government bond yields also fell, boosting gold and silver. But it should be noted that while there is a tightening of the US monetary policy, precious metals have no fundamental drivers for growth, and one should consider gold as a protective instrument against high inflation only for short-term and speculative purposes.

Asian markets were also declining yesterday. Japan's Nikkei 225 (JP225) decreased by 1.16%, Hong Kong's Hang Seng (HK50) ended the day down 0.78%, and Australia's S&P/ASX 200 (AU200) was 1.21% lower. Concerns over power shortages in China are putting pressure on most Asian stocks, given the country's position as the region's trading hub. China is facing a severe heat wave that has dried up several river channels and caused power shortages in regions that depend on hydropower. The power shortage has also affected industrial activity in some parts of the country, as investors fear it could spread to other major transportation hubs.

• S&P 500 (F) (US500) 4,128.73 −9.26 (−0.22%)
• Dow Jones (US30) 32,909.59 −154.02 (−0.47%)
• DAX (DE40) 13,194.23 −36.34 (−0.27%)
• FTSE 100 (UK100) 7,488.11 −45.68 (−0.61%)
• USD Index 108.55 −0.50 (−0.46%)
   

Important events for today:

• US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
• US Pending Home Sales (m/m) at 17:00 (GMT+3);
• US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

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