GLOBAL CAPITAL MARKETS OVERVIEW:  

The Dax failed to hold on to early gains and underperformed its regional peers on Thursday, falling nearly 0.2%. One of the worst performers (-1.1%), Siemens reported a net shareholder loss for the first time since 2010 and lowered its full-year EPS guidance amid an impairment of Siemens Energy investments. Traders also digested corporate results from other big companies, including Daimler, which said it would struggle to fill truck orders for the rest of the year. Thyssenkrupp cut its full-year profit forecast even though it nearly tripled, and Deutsche Telekom raised its full-year profit forecast and reported a quarterly profit that missed expectations. Meanwhile, other major European stocks were in the green, with the Stoxx 600 up 0.1% on expectations the Federal Reserve will slow the pace of interest rate hikes after U.S. inflation fell more than expected last month. The CAC 40 index closed up 0.3%, or 21 points, at 6,545 on Thursday, its highest since June 6, extending a 0.5% gain in the previous session, as gains in energy and utilities offset health care loss of the company. Oil markets edged higher, with total energy rising more than 2.5%, hoping that central banks would not engage in larger demand destruction. Earlier, the U.S. CPI reading came in below on Wednesday, easing expectations for another 75-basis point rate hike by the Federal Reserve in September. On the other hand, Sanofi fell nearly 3% after a sharp sell-off in the previous session on concerns that a lawsuit in the U.S. for the drug Zantac, which was withdrawn in 2019, could be negatively impacted. The FTSE MIB index extended yesterday's rally, rising 0.7% to 22,860 on Thursday, the highest in more than two months, tracking global equities as lower-than-expected consumer and producer prices spurred the Fed's slowdown in tightening hope. Energy, financials, and technology stocks were among the top gainers in Milan, while consumer discretionary was just above the flat line. Tenaris and Eni tracked a rebound in crude oil prices, rising 2.5% and 1.5%, respectively. Meanwhile, Amplifon and DiaSorin outperformed European healthcare stocks, gaining nearly 3% each. On the other hand, BPER Bank halted gains, falling more than 1%. On Thursday, the FTSE 100 fell 0.6%, or 41 points, to 7,466, snapping a three-day gain dragged by healthcare stocks. In particular, drugmaker GlaxoSmithKline (GSK) fell nearly 10% on concerns that lawsuits in the U.S. for the drug Zantac, which was withdrawn in 2019, could be negatively impacted. Elsewhere, miner Rio Tinto fell more than 3% as it did not receive a dividend. On the other hand, energy stocks followed the oil market, gaining more than 1.5%. Investors continued to digest Wednesday's lower-than-expected U.S. inflation data, which led markets to lower expectations that the Federal Reserve will raise interest rates by another 75 basis points in September. The ruble-based MOEX-Russia index erased earlier gains, closing nearly 1 percent at 2,129, having traded for three straight sessions since the Moscow bourse announced it was delaying the return of foreign investors to Russian equities. Day stays green. At the same time, investors digested the latest inflation data that showed a faster monthly decline in consumer prices, raising bets that the central bank will continue to cut interest rates sharply next month. The prospect of easing policy failed to support the tech sector, with the Yandex index down nearly 3%. Energy stocks posted their biggest losses in the session, with Russia's Gazprom leading a 2.6 percent decline. Meanwhile, Transneft erased yesterday's gains as investors continued to monitor oil flows through the Druzhba pipeline after Hungary's MOL settled its shipping bills. The S&P/TSX Composite rose sharply on Thursday, hovering above 20,000, tracking other North American stocks. U.S. consumer and producer inflation data continued to fall short of expectations, raising hopes that price gains had peaked. Easing fears that the central bank will prolong faster monetary tightening sent technology shares jumping more than 4 percent, with the heavyweight energy sector rising 1.6 percent. Meanwhile, luxury apparel brand Canada Goose rose 7% after reporting earnings that beat analysts' forecasts, citing strong demand despite high inflation. Also, despite Manulife's second-quarter earnings beating core expectations, its stock was lackluster. All three major U.S. stock indexes rose more than 1 percent on Thursday, helped by strong performances in the previous session, as investors reassessed the outlook for monetary policy. Data showed that U.S. producer prices fell for the first time in more than two years in July, while analysts expected a rise, suggesting producer inflation may be trending lower. The weaker-than-expected July CPI data on Wednesday sparked speculation that the Federal Reserve may ease raising interest rates. On the corporate front, Disney jumped nearly 10% after the media company reported better-than-expected subscriber numbers in the last quarter and beat earnings and revenue estimates. New Zealand NZX 50 edged up 7.92 points, or less than 0.1%, to settle at 11,760 on Thursday, as traders digested a report on lower-than-expected U.S. inflation data for July, easing fears of a sharp rate hike by the Federal Reserve. According to local data, New Zealand tourist arrivals jumped to pre-pandemic levels in June after signs the latest Covid-19 outbreak had peaked. Meanwhile, the Real Estate Institute of New Zealand (REINZ) said today that New Zealand house prices fell for the first time since 2011 amid a tightening of credit and rising mortgage rates. New Zealand CDL Investments rose 6%, followed by Chatham Phosphate Rock (4.7%) and Evolve Education Group. Meanwhile, shares in New Zealand's Millennium & Copthorne Hotels fell 7.6%, Vulcan Steel Limited fell 3.7%, New Zealand's Precient Properties fell 2.7%, and Vista Group International fell 2.5%. Hongkong Hang Seng rose 320 points, or 1.64%, to 19,931 in early trade on Thursday, reversing losses from the previous three sessions, slowing U.S. inflation more than expected in July, and sparking a waning of Fed rate hikes. After Hope, an overnight rally on Wall Street was tracked. Investors also welcomed the People's Bank of China's statement in its quarterly report on Wednesday that it will closely monitor changes in inflation at home and abroad while balancing economic growth and price stability. Healthcare, technology, and industrial stocks rose across the board. Among individual stocks, Techtronic Industries Co., which makes electrical and electronic products, rose 10.1% after its first-half net profit rose 10%. Meanwhile, Alibaba Holdings, Meituan, and Tencent rose 2.6%, 2.4%, and 1.6%, respectively. China Shanghai Composite rose 0.3 percent to around 3,240, and the Shenzhen Component Index rose 0.6 percent to 12,290, making up some losses from the previous session as a better-than-expected U.S. inflation report sparked less aggressive speculation about the Federal Reserve. And spurred a broad rally in risk assets. Meanwhile, domestic inflation data on Wednesday showed Chinese consumer prices rose to their highest level in two years in July, while producer prices fell to their lowest level in 17 months. Semiconductor and related technology stocks led gains on hopes of more government support for the sector, with Suzhou Ark (6.9%), Gothic (5.6%), and Luxshare Precision (4.6%) gaining strongly. Other heavyweights also rose, including First Air Technology (6.7%), Hexin Silicon (6.6%), and China Securities Regulatory Commission (7.5%). Australia S&P/ASX 200 rose 0.8% on Thursday to close above 7030, its highest level in more than two months, after Wall Street rose overnight, with nearly all sectors participating in gains as weaker-than-expected U.S. inflation data sparked the raised hopes for a less aggressive Fed. High-growth technology and clean energy-related names led to gains, led by Block Inc (8.6%), Seek (5.3%), Xero (2.3%), Lake Resources (12.1%), Pilbara Minerals (4.2%), and Lynas Rare Earths (1.9%) ) strong returns. Other index heavyweights also rose, including BHP Billiton (1.8%), Telstra (0.6%) and ANZ (0.9%). Elsewhere, insurance giant QBE Insurance Group rose 3.8% this year after raising its premium income forecast. James Hardie also rose 3.1% after building materials companies said they were in the final stages of picking a new chief executive.

REVIEWING ECONOMIC DATA: 

Looking at the last economic data:

- US: Americans filing new jobless claims rose by 14,000 to 262,000 in the week ended Aug. 6, slightly below market expectations of 263,000 but the highest level since November. On a non-seasonally adjusted basis, applications increased by 7,251 from last week's downwardly revised value to 203,619, with significant increases in Massachusetts (+7447) and California (+4399), and Connecticut (-6323), the number of applications dropped significantly. Excluding week-to-week volatility, the four-week moving average was 252,000, an increase of 4,500 from the previous week.

- US: The U.S. producer price index unexpectedly fell 0.5% month-on-month in July 2022, after a downwardly revised 1% gain in June, beating consensus forecasts of 0.2%. It was the first drop in PPI in more than two years, mainly due to a 16.7% drop in gasoline prices. In addition, the cost of diesel, gas, oilseeds, steel scrap, and grain has fallen. In contrast, service costs edged up 0.1%, mainly due to higher margins in fuel and lubricants retailing (12.3%) and transportation and warehousing services (0.4%). In addition, producers paid more for securities brokerage and trading services, hospital outpatient visits, automobiles, auto parts retailing, and passenger transportation. As a result, on an annual basis, producer inflation fell to 9.8%, the lowest level since October, compared with a forecast of 10.4%.

- CN: In July 2022, car sales in China surged 29.7% year on year to 2.42 million units, up from 23.8% the previous month. It was the second straight month of growth in car sales as Covid-19 restrictions eased, boosted by government incentives to support the auto industry and a recovery in production, data from the China Association of Automobile Manufacturers showed. Meanwhile, sales of new energy vehicles, including pure electric vehicles, plug-in hybrids, and hydrogen fuel cell vehicles, rose 120 percent from the previous year. However, in the first seven months of this year, car sales fell 2% from a year earlier.

- UK: 63% of respondents to the RICS UK Residential Market Survey said house prices rose 65% in July 2022, the most since February 2021, as the housing market grapples with a worsening economic outlook and rising interest rates minimum level. Last week, the Bank of England announced its biggest rate hike since 1995 and warned that Britain could enter a prolonged recession. Meanwhile, the July figure was still well above the survey's long-term average of 11% and a larger-than-expected drop to 60%. Looking ahead, July 12-month price expectations slipped to -36% from -21% the previous month, the lowest level since the COVID-19 outbreak in March 2020.

- NZ: In June 2022, visitor arrivals to New Zealand surged 83.5% year-on-year to 94,651, the highest level since Covid-19-related travel and border restrictions were introduced in March 2020. Visitors from Australia (+20900), the United States (+4400), the United Kingdom (+2300), and Singapore (+1900) increased significantly. Visitors from Australia accounted for 74 percent, followed by the US (5 percent), the UK (3 percent), and Singapore (2 percent). Travel to visit family and friends accounted for 52%, followed by vacation (30%) and business (12%).

- RU: In July 2022, annual inflation in Russia fell to 15.1% from 15.9% the previous month, below market expectations of 15.3%. It was the lowest inflation rate since entering double-digit territory in March. However, food prices continued to rise sharply (16.8%), followed by non-food products (16.5%) and finally, services (10.8%). On a month-on-month basis, consumer prices fell 0.39%, extending the 0.35% drop in June and beating expectations for a 0.2% decline. On the other hand, core consumer prices continued to soar faster than headline inflation, rising 18.4% from July 2021.

LOOKING AHEAD:   

Today, investors will receive:

- GBP: GDP m/m, Prelim GDP q/q, Construction Output m/m, Goods Trade Balance, Index of Services 3m/3m, Industrial Production m/m, Manufacturing Production m/m, Prelim Business Investment q/q, and NIESR GDP Estimate.

- USD: Import Prices m/m, Prelim UoM Consumer Sentiment, Mortgage Delinquencies, and Prelim UoM Inflation Expectations.

- EUR: French Final CPI m/m, Italian Trade Balance, and Industrial Production m/m.

- NZD: BusinessNZ Manufacturing Index, and FPI m/m.

KEY EQUITY & BOND MARKET DRIVERS:

- US: The 10-year U.S. Treasury yield fell to a level of 2.70%, near a four-month low of 2.51% hit earlier this month, as signs of cooling inflation prompted investors to reduce expectations that the Federal Reserve will raise interest rates again sharply in September. Data showed that U.S. producer prices fell for the first time in more than two years in July, while analysts expected a rise, suggesting producer inflation may be trending lower. On top of that, U.S. consumer prices rose at an annual rate of 8.5% in July, below expectations for an 8.7% increase, while core inflation surprisingly stagnated. Hopefully, inflation may peak and have prompted investors to reconsider the Fed's dovish policy pivot, backtracking on hawkish bets after last week's hot wage data.

- US: U.S. stock futures, which track the broader market, rose nearly 1 percent on Thursday as investors reassessed the outlook for monetary policy, putting all three major indexes on track to build on the previous session's strong performance. Data showed that U.S. producer prices fell for the first time in more than two years in July, while analysts expected a rise, suggesting producer inflation may be trending lower. In addition, Wednesday's weaker-than-expected July CPI data sparked speculation that the Federal Reserve may ease raising interest rates. On the corporate side, Disney jumped nearly 10% in pre-IPO trading after the media company reported better-than-expected subscriber numbers in the last quarter and beat earnings and revenue estimates.

- IT: Yields on Italian 10-year BTP fell below 3% in August, in the opposite direction of European peers, and near a two-month low of 2.9% from earlier this month, as investors shrugged off the recent A rating downgrade that weighed on Italy's debt. The European Central Bank is expected to extend its tightening cycle at its next meeting as the eurozone faces record high inflation on the monetary policy front. Meanwhile, investors continued to assess the support the ECB's TPI provides to credit risk in highly indebted economies. On the political front, investors are keeping a close eye on polls supporting the right-wing coalition in next month's snap elections, as any changes in the ongoing reforms could garner more than 200 billion euros in recovery funding. The spread between 10-year British gilts and German bunds was at 205bps, hovering at its lowest level in a month, reflecting a broader decline in perceptions of Italian debt risk.

- CA: Canadian 10-year government bond yields hovered around 2.7, near levels not seen in four months, as investors pared bets on rate hikes after data showed U.S. inflation slowed more than expected. In Canada, headline inflation rose to a 40-year high of 8.1% in June but fell short of market expectations and slowed more than expected on a monthly basis. As a result, the Bank of Canada surprised markets by raising its benchmark interest rate by 100 basis points in July while signaling further tightening to curb sky-high inflation. The Bank of Canada is expected to continue the tightening cycle, with further rate hikes likely before the end of the year.

STOCK MARKET SECTORS:

- High: Energy, Communication Services, Financials, Materials, Industrials.

- Low: Consumer Discretionary, Health Care.

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

- JPY: The yen rallied below 133 yen to the dollar recently, aided by lower-than-expected U.S. inflation data, pulling back from a 24-year low of 139.4 yen set in mid-July, sparking concerns that the Federal Reserve may slow its policy and tighten up the pace of guesswork. On the domestic front, Prime Minister Fumio Kishida has reshuffled his cabinet and appointed lawmakers loyal to the late Prime Minister Shinzo Abe to key positions, a move that could continue Japan's aggressive monetary easing that is part of the "Abenomics" era. Key pillars. Meanwhile, several BOJ officials recently commented that the central bank needs to pull back from its massive stimulus program while arguing that loose monetary conditions are necessary for now as wages must catch up to boost consumption and help Japan's economy recover.

- NZD: The New Zealand dollar held around $0.64, hovering near its highest level in two months, as a weaker-than-expected U.S. inflation report sparked a broad rally in risk assets. Easing U.S. inflation has also raised hopes of less aggressive monetary tightening. Still, Fed officials have dampened those expectations and reiterated that they would continue to raise interest rates to bring inflation down sharply. On the domestic front, New Zealand house prices fell in July as high inflation, and rising interest rates weighed on demand. Recent data also shows that short-term inflation expectations in New Zealand are expected to moderate in the third quarter of 2022. However, the Reserve Bank of New Zealand is widely expected to raise rates by another 50 basis points at its Aug. 17 meeting.

- AUD: The Aussie held just below $0.71, hovering near its highest level in two months, as a weaker-than-expected U.S. inflation report sparked a broad rally in risk assets. Easing U.S. inflation has also raised hopes of less aggressive monetary tightening. Still, Fed officials have dampened those expectations and reiterated that they would continue to raise interest rates to bring inflation down sharply. Meanwhile, the Reserve Bank of Australia raised interest rates for the fourth straight month in July but cut its guidance for future rate hikes amid expectations of a slowing economy. RBA governor Philip Lowe said, "the board expects to take further steps to normalize monetary conditions in the coming months, but this is not a pre-set path," in stark contrast to his previous remarks. In contrast, he has previously said the central bank intends to cut interest rates to a "neutral" level of at least 2.5%.

CHART OF THE DAY:

The U.S. dollar index fell below 105, near its lowest level since late June, as markets reassessed the Fed’s policy outlook after evidence inflation could peak. Data showed that U.S. producer prices fell for the first time in more than two years in July, and analysts expected a rise. However, CPI data on Wednesday came in below expectations suggesting the Federal Reserve may be slowing its aggressive policy tightening plans.

 

- U.S. dollar index (DXY)- D1, Resistance around ~ 107, Support (target zone) around  ~ 104.774

GLOBAL CAPITAL MARKETS OVERVIEW:   The Dax failed to hold on to early gains and underperformed its regional peers on Thursday, falling nearly 0.2%. One of the worst performers (-1.1%), Siemens reported a net shareholder loss for the first time since 2010 and lowered its full-year EPS guidance amid an impairment of Siemens Energy investments. Traders also digested corporate results from other big companies, including Daimler, which said it would struggle to fill truck orders for the rest of the year. Thyssenkrupp cut its full-year profit forecast even though it nearly tripled, and Deutsche Telekom raised its full-year profit forecast and reported a quarterly profit that missed expectations. Meanwhile, other major European stocks were in the green, with the Stoxx 600 up 0.1% on expectations the Federal Reserve will slow the pace of interest rate hikes after U.S. inflation fell more than expected last month. The CAC 40 index closed up 0.3%, or 21 points, at 6,545 on Thursday, its highest since June 6, extending a 0.5% gain in the previous session, as gains in energy and utilities offset health care loss of the company. Oil markets edged higher, with total energy rising more than 2.5%, hoping that central banks would not engage in larger demand destruction. Earlier, the U.S. CPI reading came in below on Wednesday, easing expectations for another 75-basis point rate hike by the Federal Reserve in September. On the other hand, Sanofi fell nearly 3% after a sharp sell-off in the previous session on concerns that a lawsuit in the U.S. for the drug Zantac, which was withdrawn in 2019, could be negatively impacted. The FTSE MIB index extended yesterday's rally, rising 0.7% to 22,860 on Thursday, the highest in more than two months, tracking global equities as lower-than-expected consumer and producer prices spurred the Fed's slowdown in tightening hope. Energy, financials, and technology stocks were among the top gainers in Milan, while consumer discretionary was just above the flat line. Tenaris and Eni tracked a rebound in crude oil prices, rising 2.5% and 1.5%, respectively. Meanwhile, Amplifon and DiaSorin outperformed European healthcare stocks, gaining nearly 3% each. On the other hand, BPER Bank halted gains, falling more than 1%. On Thursday, the FTSE 100 fell 0.6%, or 41 points, to 7,466, snapping a three-day gain dragged by healthcare stocks. In particular, drugmaker GlaxoSmithKline (GSK) fell nearly 10% on concerns that lawsuits in the U.S. for the drug Zantac, which was withdrawn in 2019, could be negatively impacted. Elsewhere, miner Rio Tinto fell more than 3% as it did not receive a dividend. On the other hand, energy stocks followed the oil market, gaining more than 1.5%. Investors continued to digest Wednesday's lower-than-expected U.S. inflation data, which led markets to lower expectations that the Federal Reserve will raise interest rates by another 75 basis points in September. The ruble-based MOEX-Russia index erased earlier gains, closing nearly 1 percent at 2,129, having traded for three straight sessions since the Moscow bourse announced it was delaying the return of foreign investors to Russian equities. Day stays green. At the same time, investors digested the latest inflation data that showed a faster monthly decline in consumer prices, raising bets that the central bank will continue to cut interest rates sharply next month. The prospect of easing policy failed to support the tech sector, with the Yandex index down nearly 3%. Energy stocks posted their biggest losses in the session, with Russia's Gazprom leading a 2.6 percent decline. Meanwhile, Transneft erased yesterday's gains as investors continued to monitor oil flows through the Druzhba pipeline after Hungary's MOL settled its shipping bills. The S&P/TSX Composite rose sharply on Thursday, hovering above 20,000, tracking other North American stocks. U.S. consumer and producer inflation data continued to fall short of expectations, raising hopes that price gains had peaked. Easing fears that the central bank will prolong faster monetary tightening sent technology shares jumping more than 4 percent, with the heavyweight energy sector rising 1.6 percent. Meanwhile, luxury apparel brand Canada Goose rose 7% after reporting earnings that beat analysts' forecasts, citing strong demand despite high inflation. Also, despite Manulife's second-quarter earnings beating core expectations, its stock was lackluster. All three major U.S. stock indexes rose more than 1 percent on Thursday, helped by strong performances in the previous session, as investors reassessed the outlook for monetary policy. Data showed that U.S. producer prices fell for the first time in more than two years in July, while analysts expected a rise, suggesting producer inflation may be trending lower. The weaker-than-expected July CPI data on Wednesday sparked speculation that the Federal Reserve may ease raising interest rates. On the corporate front, Disney jumped nearly 10% after the media company reported better-than-expected subscriber numbers in the last quarter and beat earnings and revenue estimates. New Zealand NZX 50 edged up 7.92 points, or less than 0.1%, to settle at 11,760 on Thursday, as traders digested a report on lower-than-expected U.S. inflation data for July, easing fears of a sharp rate hike by the Federal Reserve. According to local data, New Zealand tourist arrivals jumped to pre-pandemic levels in June after signs the latest Covid-19 outbreak had peaked. Meanwhile, the Real Estate Institute of New Zealand (REINZ) said today that New Zealand house prices fell for the first time since 2011 amid a tightening of credit and rising mortgage rates. New Zealand CDL Investments rose 6%, followed by Chatham Phosphate Rock (4.7%) and Evolve Education Group. Meanwhile, shares in New Zealand's Millennium & Copthorne Hotels fell 7.6%, Vulcan Steel Limited fell 3.7%, New Zealand's Precient Properties fell 2.7%, and Vista Group International fell 2.5%. Hongkong Hang Seng rose 320 points, or 1.64%, to 19,931 in early trade on Thursday, reversing losses from the previous three sessions, slowing U.S. inflation more than expected in July, and sparking a waning of Fed rate hikes. After Hope, an overnight rally on Wall Street was tracked. Investors also welcomed the People's Bank of China's statement in its quarterly report on Wednesday that it will closely monitor changes in inflation at home and abroad while balancing economic growth and price stability. Healthcare, technology, and industrial stocks rose across the board. Among individual stocks, Techtronic Industries Co., which makes electrical and electronic products, rose 10.1% after its first-half net profit rose 10%. Meanwhile, Alibaba Holdings, Meituan, and Tencent rose 2.6%, 2.4%, and 1.6%, respectively. China Shanghai Composite rose 0.3 percent to around 3,240, and the Shenzhen Component Index rose 0.6 percent to 12,290, making up some losses from the previous session as a better-than-expected U.S. inflation report sparked less aggressive speculation about the Federal Reserve. And spurred a broad rally in risk assets. Meanwhile, domestic inflation data on Wednesday showed Chinese consumer prices rose to their highest level in two years in July, while producer prices fell to their lowest level in 17 months. Semiconductor and related technology stocks led gains on hopes of more government support for the sector, with Suzhou Ark (6.9%), Gothic (5.6%), and Luxshare Precision (4.6%) gaining strongly. Other heavyweights also rose, including First Air Technology (6.7%), Hexin Silicon (6.6%), and China Securities Regulatory Commission (7.5%). Australia S&P/ASX 200 rose 0.8% on Thursday to close above 7030, its highest level in more than two months, after Wall Street rose overnight, with nearly all sectors participating in gains as weaker-than-expected U.S. inflation data sparked the raised hopes for a less aggressive Fed. High-growth technology and clean energy-related names led to gains, led by Block Inc (8.6%), Seek (5.3%), Xero (2.3%), Lake Resources (12.1%), Pilbara Minerals (4.2%), and Lynas Rare Earths (1.9%) ) strong returns. Other index heavyweights also rose, including BHP Billiton (1.8%), Telstra (0.6%) and ANZ (0.9%). Elsewhere, insurance giant QBE Insurance Group rose 3.8% this year after raising its premium income forecast. James Hardie also rose 3.1% after building materials companies said they were in the final stages of picking a new chief executive. REVIEWING ECONOMIC DATA:  Looking at the last economic data: - US: Americans filing new jobless claims rose by 14,000 to 262,000 in the week ended Aug. 6, slightly below market expectations of 263,000 but the highest level since November. On a non-seasonally adjusted basis, applications increased by 7,251 from last week's downwardly revised value to 203,619, with significant increases in Massachusetts (+7447) and California (+4399), and Connecticut (-6323), the number of applications dropped significantly. Excluding week-to-week volatility, the four-week moving average was 252,000, an increase of 4,500 from the previous week. - US: The U.S. producer price index unexpectedly fell 0.5% month-on-month in July 2022, after a downwardly revised 1% gain in June, beating consensus forecasts of 0.2%. It was the first drop in PPI in more than two years, mainly due to a 16.7% drop in gasoline prices. In addition, the cost of diesel, gas, oilseeds, steel scrap, and grain has fallen. In contrast, service costs edged up 0.1%, mainly due to higher margins in fuel and lubricants retailing (12.3%) and transportation and warehousing services (0.4%). In addition, producers paid more for securities brokerage and trading services, hospital outpatient visits, automobiles, auto parts retailing, and passenger transportation. As a result, on an annual basis, producer inflation fell to 9.8%, the lowest level since October, compared with a forecast of 10.4%. - CN: In July 2022, car sales in China surged 29.7% year on year to 2.42 million units, up from 23.8% the previous month. It was the second straight month of growth in car sales as Covid-19 restrictions eased, boosted by government incentives to support the auto industry and a recovery in production, data from the China Association of Automobile Manufacturers showed. Meanwhile, sales of new energy vehicles, including pure electric vehicles, plug-in hybrids, and hydrogen fuel cell vehicles, rose 120 percent from the previous year. However, in the first seven months of this year, car sales fell 2% from a year earlier. - UK: 63% of respondents to the RICS UK Residential Market Survey said house prices rose 65% in July 2022, the most since February 2021, as the housing market grapples with a worsening economic outlook and rising interest rates minimum level. Last week, the Bank of England announced its biggest rate hike since 1995 and warned that Britain could enter a prolonged recession. Meanwhile, the July figure was still well above the survey's long-term average of 11% and a larger-than-expected drop to 60%. Looking ahead, July 12-month price expectations slipped to -36% from -21% the previous month, the lowest level since the COVID-19 outbreak in March 2020. - NZ: In June 2022, visitor arrivals to New Zealand surged 83.5% year-on-year to 94,651, the highest level since Covid-19-related travel and border restrictions were introduced in March 2020. Visitors from Australia (+20900), the United States (+4400), the United Kingdom (+2300), and Singapore (+1900) increased significantly. Visitors from Australia accounted for 74 percent, followed by the US (5 percent), the UK (3 percent), and Singapore (2 percent). Travel to visit family and friends accounted for 52%, followed by vacation (30%) and business (12%). - RU: In July 2022, annual inflation in Russia fell to 15.1% from 15.9% the previous month, below market expectations of 15.3%. It was the lowest inflation rate since entering double-digit territory in March. However, food prices continued to rise sharply (16.8%), followed by non-food products (16.5%) and finally, services (10.8%). On a month-on-month basis, consumer prices fell 0.39%, extending the 0.35% drop in June and beating expectations for a 0.2% decline. On the other hand, core consumer prices continued to soar faster than headline inflation, rising 18.4% from July 2021. LOOKING AHEAD:    Today, investors will receive: - GBP: GDP m/m, Prelim GDP q/q, Construction Output m/m, Goods Trade Balance, Index of Services 3m/3m, Industrial Production m/m, Manufacturing Production m/m, Prelim Business Investment q/q, and NIESR GDP Estimate. - USD: Import Prices m/m, Prelim UoM Consumer Sentiment, Mortgage Delinquencies, and Prelim UoM Inflation Expectations. - EUR: French Final CPI m/m, Italian Trade Balance, and Industrial Production m/m. - NZD: BusinessNZ Manufacturing Index, and FPI m/m. KEY EQUITY & BOND MARKET DRIVERS: - US: The 10-year U.S. Treasury yield fell to a level of 2.70%, near a four-month low of 2.51% hit earlier this month, as signs of cooling inflation prompted investors to reduce expectations that the Federal Reserve will raise interest rates again sharply in September. Data showed that U.S. producer prices fell for the first time in more than two years in July, while analysts expected a rise, suggesting producer inflation may be trending lower. On top of that, U.S. consumer prices rose at an annual rate of 8.5% in July, below expectations for an 8.7% increase, while core inflation surprisingly stagnated. Hopefully, inflation may peak and have prompted investors to reconsider the Fed's dovish policy pivot, backtracking on hawkish bets after last week's hot wage data. - US: U.S. stock futures, which track the broader market, rose nearly 1 percent on Thursday as investors reassessed the outlook for monetary policy, putting all three major indexes on track to build on the previous session's strong performance. Data showed that U.S. producer prices fell for the first time in more than two years in July, while analysts expected a rise, suggesting producer inflation may be trending lower. In addition, Wednesday's weaker-than-expected July CPI data sparked speculation that the Federal Reserve may ease raising interest rates. On the corporate side, Disney jumped nearly 10% in pre-IPO trading after the media company reported better-than-expected subscriber numbers in the last quarter and beat earnings and revenue estimates. - IT: Yields on Italian 10-year BTP fell below 3% in August, in the opposite direction of European peers, and near a two-month low of 2.9% from earlier this month, as investors shrugged off the recent A rating downgrade that weighed on Italy's debt. The European Central Bank is expected to extend its tightening cycle at its next meeting as the eurozone faces record high inflation on the monetary policy front. Meanwhile, investors continued to assess the support the ECB's TPI provides to credit risk in highly indebted economies. On the political front, investors are keeping a close eye on polls supporting the right-wing coalition in next month's snap elections, as any changes in the ongoing reforms could garner more than 200 billion euros in recovery funding. The spread between 10-year British gilts and German bunds was at 205bps, hovering at its lowest level in a month, reflecting a broader decline in perceptions of Italian debt risk. - CA: Canadian 10-year government bond yields hovered around 2.7, near levels not seen in four months, as investors pared bets on rate hikes after data showed U.S. inflation slowed more than expected. In Canada, headline inflation rose to a 40-year high of 8.1% in June but fell short of market expectations and slowed more than expected on a monthly basis. As a result, the Bank of Canada surprised markets by raising its benchmark interest rate by 100 basis points in July while signaling further tightening to curb sky-high inflation. The Bank of Canada is expected to continue the tightening cycle, with further rate hikes likely before the end of the year. STOCK MARKET SECTORS: - High: Energy, Communication Services, Financials, Materials, Industrials. - Low: Consumer Discretionary, Health Care. TOP CURRENCY & COMMODITIES MARKET DRIVERS:  - JPY: The yen rallied below 133 yen to the dollar recently, aided by lower-than-expected U.S. inflation data, pulling back from a 24-year low of 139.4 yen set in mid-July, sparking concerns that the Federal Reserve may slow its policy and tighten up the pace of guesswork. On the domestic front, Prime Minister Fumio Kishida has reshuffled his cabinet and appointed lawmakers loyal to the late Prime Minister Shinzo Abe to key positions, a move that could continue Japan's aggressive monetary easing that is part of the "Abenomics" era. Key pillars. Meanwhile, several BOJ officials recently commented that the central bank needs to pull back from its massive stimulus program while arguing that loose monetary conditions are necessary for now as wages must catch up to boost consumption and help Japan's economy recover. - NZD: The New Zealand dollar held around $0.64, hovering near its highest level in two months, as a weaker-than-expected U.S. inflation report sparked a broad rally in risk assets. Easing U.S. inflation has also raised hopes of less aggressive monetary tightening. Still, Fed officials have dampened those expectations and reiterated that they would continue to raise interest rates to bring inflation down sharply. On the domestic front, New Zealand house prices fell in July as high inflation, and rising interest rates weighed on demand. Recent data also shows that short-term inflation expectations in New Zealand are expected to moderate in the third quarter of 2022. However, the Reserve Bank of New Zealand is widely expected to raise rates by another 50 basis points at its Aug. 17 meeting. - AUD: The Aussie held just below $0.71, hovering near its highest level in two months, as a weaker-than-expected U.S. inflation report sparked a broad rally in risk assets. Easing U.S. inflation has also raised hopes of less aggressive monetary tightening. Still, Fed officials have dampened those expectations and reiterated that they would continue to raise interest rates to bring inflation down sharply. Meanwhile, the Reserve Bank of Australia raised interest rates for the fourth straight month in July but cut its guidance for future rate hikes amid expectations of a slowing economy. RBA governor Philip Lowe said, "the board expects to take further steps to normalize monetary conditions in the coming months, but this is not a pre-set path," in stark contrast to his previous remarks. In contrast, he has previously said the central bank intends to cut interest rates to a "neutral" level of at least 2.5%. CHART OF THE DAY: The U.S. dollar index fell below 105, near its lowest level since late June, as markets reassessed the Fed’s policy outlook after evidence inflation could peak. Data showed that U.S. producer prices fell for the first time in more than two years in July, and analysts expected a rise. However, CPI data on Wednesday came in below expectations suggesting the Federal Reserve may be slowing its aggressive policy tightening plans.   - U.S. dollar index (DXY)- D1, Resistance around ~ 107, Support (target zone) around  ~ 104.774