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At Thursday's close, the Dow Jones Index (US30) was up 0.59%, while the S&P 500 Index (US500) closed at its opening price. The Nasdaq Technology Index (US100) closed negative 0.23%. The Dow Jones (US30) rose on signs that the economy continues to expand after US second quarter GDP was revised upward. However, the general market's gains were capped by a drop in Nvidia (NVDA), which came under pressure despite reporting better-than-expected second-quarter earnings.

The US real gross domestic product (GDP) rose by 3.0% year-over-year in the second quarter of 2024, up from 2.8% in the initial estimate and 1.4% in the first quarter. The upward revision was mainly due to an increase in consumer spending (2.9 % vs. 2.3 % in the previous estimate).

Employment figures in the Federal Reserve Bank's fresh regional surveys highlighted risks to the US labor market, prompting the Central Bank to cut interest rates. August indexes in each of the five recently released regional manufacturing reports show factory job declines and service sector employment figures are settling down. Markets rate the odds of a 25 bps rate cut at the September 17–18 FOMC meeting at 100% and a 50 bps rate cut at 34%.

Equity markets in Europe were mostly up yesterday. Germany's DAX (DE40) rose by 0.69%, France's CAC 40 (FR40) closed 0.84% higher, Spain's IBEX 35 (ES35) added 0.23%, and the UK's FTSE 100 (UK100) gained 0.43%.

Wage growth for workers in the Eurozone — a key driver of inflation — will slow sharply in 2025 and 2026, according to Philip Lane, chief economist at the European Central Bank. The second half of this year will still see "abundant wage growth," Lane said at a conference Thursday in Frankfurt, citing the ECB's own wage dynamics tracker. But, he said, "catch-up has already peaked," and growth will be much slower in the next two years. Lane's comments came on the day of the publication of inflation reports in Germany and Spain. Germany's harmonized annual inflation rate (HICP) fell to 2% in August from 2.6% in July, the lowest since March 2021. Spain's harmonized inflation rate also fell to 2.4% in August from 2.9% in July, the lowest since August 2023 and below the estimated 2.5%. The data strengthens the ECB's case for another rate cut on September 12.

WTI crude oil prices rose nearly 2% to around $76 a barrel on Thursday, mainly due to strong economic data from the US and supply disruptions in Libya. The US economy posted slightly stronger growth in the second quarter, boosting investor confidence. Meanwhile, Libya suspended operations at five key export terminals, cutting oil production by more than half and jeopardizing a significant reduction in global supply.

Asian markets were predominantly down yesterday. Japan's Nikkei 225 (JP225) is down 0.02%, China's FTSE China A50 (CHA50) decreased by 0.77%, Hong Kong's Hang Seng (HK50) is up 0.53%, and Australia's ASX 200 (AU200) is down 0.33%.

Japan's government raised its monthly assessment of the economy for the first time in 15 months, citing signs of a recovery in consumption. In its August report on Thursday, the Cabinet said the economy is recovering at a moderate pace, with only parts of the economy stalling. The government raised its estimate of consumer spending for the first time in a year, noting the resilience of spending on goods. The government also revised its estimate of housing construction upward for the first time in two years. The improving economic conditions are a tailwind for the ruling Liberal Democratic Party, which faces a leadership contest next month. A snap general election could follow soon after the selection of Japan's new prime minister. So far, more than 10 names have been put forward as potential candidates.

The New Zealand dollar rose to USD 0.626 after data on improving consumer confidence in the country came out. The ANZ Consumer Confidence Index rose to 92.2 in August from 87.9 in the previous month, although it remained well below the average level over the past decade. The data came a day after ANZ Bank revealed that business confidence rose to its highest level in a decade, briefly pushing the local currency to $0.629. On the monetary policy front, the Reserve Bank of New Zealand has already begun its easing cycle this month and outlined further cuts.

• S&P 500 (US500) 5,591.96 −0.22 (−0.0039%)
• Dow Jones (US30) 41,335.05 +243.63 (+0.59%)
• DAX (DE40) 18,912.57 +130.28 (+0.69%)
• FTSE 100 (UK100) 8,379.64 +35.79 (+0.43%)
• USD Index 101.38 +0.29 (+0.28%)
   

Important events today:

• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+3);
• – Japan Unemployment Rate (m/m) at 02:30 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3);
• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – German Retail Sales (m/m) at 09:00 (GMT+3);
• – Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+3);
• – German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
• – US PCE Price Index (m/m) at 15:30 (GMT+3);
• – Canada GDP (m/m) at 15:30 (GMT+3);
• – US Chicago PMI (m/m) at 16:45 (GMT+3);
• – US Michigan Consumer Expectations (m/m) at 17:00 (GMT+3).

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