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The US stock market did not trade yesterday due to the bank holiday.

Canada's economy unexpectedly contracted in the second quarter, with consumer spending slowing sharply and residential investment falling. Combined with a cooling labor market, this should ease the Bank of Canada's inflation concerns and keep interest rates unchanged at its September 6 meeting.

Equity markets in Europe were mostly down on Monday. Germany's DAX (DE40) fell by 0.10%, France's CAC 40 (FR40) lost 0.24%, Spain's IBEX 35 (ES35) decreased by 0.35%, and the UK's FTSE 100 (UK100) closed negative by 0.16% yesterday.

Growth in the European construction sector is slowing due to weaker demand. High interest rates and soaring construction costs have sharply reduced demand for new buildings in Europe. So far, ongoing projects and increased focus on sustainability have kept construction volumes down, but analysts expect the construction sector to start to decline sharply in 2024.

Switzerland's GDP was flat in the second quarter, but the economy slowed by 0.3% compared to the previous quarter. The country's industry has been hit by the slowdown in the global economy. Although inflationary pressures continue to ease, the Swiss economy is likely to remain sluggish over the next few quarters. The slowdown is primarily due to the decline in manufacturing (-2.9% for the quarter), with cyclical industries suffering from the slowdown in the global economy. In addition, the chemical-pharmaceutical industry is contracting after several years of strong growth. This has a negative impact on Swiss merchandise exports (-1.2% for the quarter). At the same time, the construction sector is suffering from rising interest rates. Investment in construction declined over the quarter (-0.8%), as did investment in capital goods (-3.7%). Against this background, the outcome of the SNB monetary policy meeting scheduled for September 21 remains uncertain. It is possible that the SNB will decide on a final rate hike, focusing on the risks to inflation. However, with inflationary pressures easing and the economy slowing, the likelihood of a further rate hike has clearly diminished.

Asian markets were predominantly rising yesterday. Japan's Nikkei 225 (JP225) increased by 0.70%, China's FTSE China A50 (CHA50) gained 1.72%, Hong Kong's Hang Seng (HK50) jumped by 2.51% on the day, and Australia's S&P/ASX 200 (AU200) was positive by 0.56% on Monday.

Asian markets started the week quite positively after Friday's US data, as well as some developments in China. Economists point to a surge in real estate transactions in Beijing and Shanghai over the weekend after mortgage rates and down payment ratios were cut, and the central government approved the creation of a special bureau within the NDRC to boost the private economy. All of this, combined with expectations of additional stimulus measures and news that distressed real estate developer Country Garden received lenders' approval to extend payments on its onshore private bonds, helped improve market sentiment early in the week.

On Tuesday, the Reserve Bank of Australia, as expected, kept interest rates unchanged at 4.1% and said it would continue to consider further monetary tightening amid strong inflation and labor market activity. It was the last meeting for current chief Philip Lowe. Lowe's term expires on September 18, after which the bank will be led by Deputy Governor Michelle Bullock. Governor Lowe said in a statement that containing inflation remains the bank's top priority and that further monetary tightening may still be needed. At the same time, Lowe noted that he will be largely data-driven in the future, citing growing uncertainty about the outlook for the Australian and global economies.

• S&P 500 (F)(US500) 4,515.77 +8.11 (+0.18%)
• Dow Jones (US30) 34,837.71 +115.80 (+0.33%)
• DAX (DE40)  15,824.85 −15.49 (−0.10%)
• FTSE 100 (UK100) 7,452.76 −11.78 (−0.16%)
• USD Index  104.12 −0.12 (−0.11%)
   

Important events for today:

• China Caixin Services PMI (m/m) at 04:45 (GMT+3);
• Australia RBA Interest Rate Decision (m/m) at 07:30 (GMT+3);
• Australia RBA Rate Statement (m/m) at 07:30 (GMT+3);
• German Service PMI (m/m) at 10:55 (GMT+3);
• Eurozone Service PMI (m/m) at 11:00 (GMT+3);
• UK Service PMI (m/m) at 11:30 (GMT+3);
• Eurozone Producer Price Index (m/m) at 12:00 (GMT+3).

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