At the end of Tuesday, the Dow Jones Index (US30) decreased by 1.51%, while the S&P 500 Index (US500) fell 2.12%. The NASDAQ Technology Index (US100) closed yesterday negative 3.26%. Stocks fell sharply on Tuesday, with the S&P 500 Index (US500) hitting a 2-week low and the Nasdaq 100 Index hitting a 2-week low. Tuesday's drop in chip company stocks had a negative impact on the overall market. Stocks were also hurt by Tuesday's weaker-than-expected manufacturing activity and construction spending reports from the ISM.

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The ISM manufacturing index for August rose by 0.4 to 47.2, weaker than expectations of 47.5. The ISM Services Price Sub-Index for August unexpectedly rose by 1.1 to 54.0 versus expectations of a decline to 52.0, which was hawkish for Fed policy. US construction spending for July unexpectedly fell by 0.3% m/m, weaker than expectations for a 0.1% m/m rise and the biggest decline in a year. 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 that meeting at 38%.

Boeing (BA) shares are down more than 7% after Wells Fargo Securities downgraded the stock with a $119 price target. Visa (V) shares closed higher by more than 1% after BNP Paribas Exane upgraded the stock to "improved" from "neutral" with a $325 price target.

Canada's GDP grew at a 2.1% annualized rate in the second quarter of 2024, the highest rate since the first quarter of 2023. The figure beat the previous quarter's revised 1.8% growth and expectations of 1.6% growth, easing fears of stagnation and reducing the likelihood of aggressive monetary policy easing by the Bank of Canada. The Bank of Canada will hold a monetary policy meeting today. Canadian overnight index swaps (OIS) indicate that the Bank of Canada (BoC) will cut rates by 0.25% to 4.25% today, and markets now expect two more rate cuts this year after September. There is a 15% chance of a more substantial 50 bps rate cut. A rate cut could hurt the Canadian currency against other currencies.

Equity markets in Europe were declining yesterday. Germany's DAX (DE40) fell by 0.97%, France's CAC 40 (FR40) closed down 0.93%, Spain's IBEX 35 (ES35) lost 1.02%, and the UK's FTSE 100 (UK100) closed down 0.78%.

The S&P Eurozone Manufacturing PMI for August was revised upward by 0.2 to 45.8 from the previously reported 45.6. German retail sales for May fell by 1.1% year over year, weaker than expectations of 0.7% year over year. Swaps discount the odds of a 25 bps ECB rate cut at the September 12 meeting to 99%.

WTI crude oil prices fell more than 4% below $71/bbl on Tuesday, the lowest since early January, as weak demand amplified the impact of relatively ample supply. New data from China added to concerns that economic growth in one of the world's biggest oil consumers is unlikely to recover this year, with key indicators of domestic factory demand falling more than expected in August. In the US, data from the EIA showed US oil consumption in June fell to its lowest seasonal level since 2020. Meanwhile, OPEC signaled it would follow earlier signals to increase OPEC+ production in the fourth quarter, offsetting lower production from Libya.

Asian markets were predominantly down yesterday. Japan's Nikkei 225 (JP225) decreased by 0.04%, China's FTSE China A50 (CHA50) was down 0.22%, Hong Kong's Hang Seng (HK50) lost 0.23% and Australia's ASX 200 (AU200) was positive 0.08%.

Australia's economy grew by 0.2% quarter-on-quarter in the second quarter of 2024, holding steady in the third quarter and falling short of market forecasts of 0.3%. This was the 11th period of quarterly growth, but the pace remained the slowest in the past five quarters.

S&P 500 (US500) 5,528.93 −119.47 (−2.12%)

Dow Jones (US30) 40,936.93 −626.15 (−1.51%)

DAX (DE40) 18,747.11 −183.74 (−0.97%)

FTSE 100 (UK100) 8,298.46 −65.38 (−0.78%)

USD index 101.75 +0.10 (+0.10%)

Important events today:

• – Australia GDP (q/q) at 04:30 (GMT+3);
• – German Services PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+3);
• – Canada Trade Balance (m/m) at 15:30 (GMT+3);
• – US Trade Balance (m/m) at 15:30 (GMT+3);
• – Canada BoC Interest Rate Decision at 16:45 (GMT+3);
• – Canada BoC Rate Statement at 16:45 (GMT+3);
• – US JOLTs Job Openings (m/m) at 17:00 (GMT+3);
• – Canada BoC Press Conference at 17:30 (GMT+3).

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