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As of Tuesday's stock market close, the Dow Jones (US30) index decreased by 0.51%, while the S&P500 (US500) index lost 0.28%. The Nasdaq Technology Index (US100) closed positive 0.06% yesterday. Yesterday's US economic news was mixed for stocks after July's existing home sales fell more than expected to a 6-month low. Still, the August manufacturing report from the FRB Richmond unexpectedly rose to a 7-month high. The 3-day symposium of the US central bank in Jackson Hole starts as early as tomorrow, where the main focus of investors is directed towards the speeches of US Fed chief Jerome Powell on Friday. Markets rate the odds of a 25bp rate hike at the September 20th FOMC meeting at 16% and a 25bp hike at the First of November FOMC meeting at 49%.

According to economists, Canada is likely sitting on the biggest housing bubble of all time. Canadians' level of debt relative to their income puts many in a precarious position if mortgage rates continue to rise, which is likely. The worst thing for a housing bubble is when a credit bubble forms underneath it, as it did in the United States in 2008.

Equity markets in Europe traded higher yesterday. Germany's DAX (DE40) increased by 0.66%, France's CAC 40 (FR 40) gained 0.59% on Tuesday, Spain's IBEX 35 (ES35) added 0.59%, and the UK's FTSE 100 (UK100) closed up 0.18%. French retail sales in July fell by 2.1% y/y, marking the fourteenth consecutive decline in sales. Today, the Eurozone is expected to publish data on business activity in the manufacturing and services sectors. Analysts expect negative data, which will put additional pressure on the ECB.

Oil prices are falling for the second day in a row, with the price of oil in the US stopping below the critical support of $80 per barrel amid concerns about the economic slowdown in China and the possibility of further rate hikes by the Federal Reserve. The excitement over Saudi Arabia and Russia cutting oil production has receded into the background but is helping the price not to fall too deeply.

Asian markets were mostly up yesterday. Japan's Nikkei 225 (JP225) added 0.92% for the day, China's FTSE China A50 (CHA50) increased by 0.68%, Hong Kong's Hang Seng (HK50) gained 0.95% on Tuesday, and Australia's S&P/ASX 200 (AU200) ended the day positive 0.09%. Concerns about China persisted after the People's Bank disappointed markets with a smaller-than-expected cut in interest rates this week. Additional stimulus measures promised by the government earlier were not announced, which also had a negative impact on Chinese equities.

In New Zealand, total retail sales in June declined by 1% from March. This is the third consecutive quarterly decline, following a 1.6% decline in March and 1.1% in December. Seasonally adjusted retail sales totaled 25 bln. The decline in retail sales indicates that consumers are spending less money in stores and saving more. This usually occurs in recessionary and pre-recessionary scenarios.

In Japan, the business activity level in the manufacturing sector rose from 49.6 to 49.7. The service sector increased from 53.8 to 54.3. Core inflation, which the Bank of Japan monitors, rewrote the highs and amounted to a modest by global standards, but still a record for Japan at 3.3%. According to analysts, the Bank of Japan still controls the situation. Still, when you print yen with one hand and keep the rates around zero, and with the other hand, you try to prevent devaluation - sooner or later, significant problems may arise.

• S&P 500 (F)(US500) 4,387.55 −12.22 (−0.28%)
• Dow Jones (US30) 34,288.83 −174.86 (−0.51%)
• DAX (DE40)  15,705.62 +102.34 (+0.66%)
• FTSE 100 (UK100) 7,270.76 +12.94 (+0.18%)
• USD Index  103.59 +0.29 (+0.28%)
   

Important events for today:

• New Zealand Retail Sales (q/q) at 01:45 (GMT+3);
• Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
• Australia Services PMI (m/m) at 02:00 (GMT+3);
• Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• Japan Services PMI (m/m) at 03:30 (GMT+3);
• Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
• German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• German Services PMI (m/m) at 10:30 (GMT+3);
• Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• UK Services PMI (m/m) at 11:30 (GMT+3);
• Canada Retail Sales (m/m) at 15:30 (GMT+3);
• US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• US Services PMI (m/m) at 16:45 (GMT+3);
• US New Home Sales (m/m) at 17:00 (GMT+3);
• US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

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