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At yesterday's stock market close, the Dow Jones Index (US30) increased by 0.62%, while the S&P 500 Index (US500) added 0.63%. The Nasdaq Technology Index (US100) closed positive by 0.84% on Monday. Stocks rose on Monday while bond yields declined thanks to support provided by comments from US Federal Reserve Governor Powell on Friday that the Fed is prepared to continue raising interest rates if needed but "will proceed cautiously" on whether to raise rates again, opening the door for a potential pause in Fed operations. Currently, there is a 23% chance of a 25 bps rate hike at the September 20 FOMC meeting and a 67% chance of a 25 bps rate hike at the November 1 FOMC meeting.

Monday's US economic news was positive for stocks after the August reading of the Dallas Fed's measure of overall business activity in the manufacturing sector rose by 2.8 to a 5-month high of minus 17.2, which was stronger than expectations of minus 19.0.

Shares of 3M Co. rose more than 5% after it agreed to pay $5.5 billion to settle lawsuits related to military earplugs.

Equity markets in Europe were mostly up on Monday. Germany's DAX (DE40) increased by 1.30%, France's CAC 40 (FR40) added 1.32% yesterday, Spain's IBEX 35 (ES35) jumped by 1.93%, and the UK's FTSE 100 (UK100) was not trading due to the bank holiday.

Eurozone money supply unexpectedly declined by 0.4% y/y in July, weaker than expected and the sharpest rate of contraction in 13 years. ECB Governing Council spokesperson Holzmann said the following: "If there are no major surprises, I see grounds for continuing to raise rates without a pause." The next ECB meeting will be held on September 14.

China's actions over the weekend to stimulate its markets have sparked optimism about a possible resumption of economic growth, which is having a positive impact on energy demand and crude oil prices. In addition, gains in US stock markets on Monday boosted confidence in the economic outlook, supporting energy demand. But investors are refraining from taking large oil positions ahead of the release of key economic indicators from the US and China later this week.

Asian markets were also predominantly up yesterday. Japan's Nikkei 225 (JP225) increased by 1.73%, China's FTSE China A50 (CHA50) added 1.21%, Hong Kong's Hang Seng (HK50) was up by 0.97% on Monday's close, and Australia's S&P/ASX 200 (AU200) was positive by 0.63% yesterday.

Asian equities were supported after China took a number of measures to stimulate its markets, including cutting the tax levied on share trading. The People's Bank of China (PBOC) could potentially lower reserve requirement ratios sooner than expected, providing local markets with more liquidity. Chinese officials also talked about potential financial support for the economy.

• S&P 500 (F)(US500) 4,433.31 +27.60 (+0.63%)
• Dow Jones (US30) 34,559.98 +213.08 (+0.62%)
• DAX (DE40)  15,792.61 +160.79 (+1.03%)
• FTSE 100 (UK100) 7,338.58 0 (0%)
• USD Index  104.02 -0.06 (-0.05%)
   

Important events for today:

• German GfK German Consumer Climate (m/m) at 09:00 (GMT+3);
• Australia RBA Gov-Designate Bullock Speaks at 10:40 (GMT+3);
• US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
• US JOLTs Job Openings (m/m) at 17:00 (GMT+3).

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