GLOBAL CAPITAL MARKETS OVERVIEW:  

U.S. stocks closed at session highs on Friday, with the Dow up more than 400 points, the S&P 500 up 1.7%, and the Nasdaq up 2.1%. The S&P 500 and Nasdaq posted fourth positives for the week, and the Dow also posted weekly gains. Sentiment last week was buoyed by signs that inflation is peaking, prompting speculation that the Federal Reserve may ease on raising interest rates soon. Both import and export prices fell in July, with producer prices falling for the first time in more than two years and consumer prices slowing more than expected. In addition, the University of Michigan consumer sentiment survey showed that inflation expectations fell in July, and U.S. consumer morale rose to its highest level in three months. However, several Fed policymakers, including San Francisco Federal Bank President Mary Daly, noted that a dovish turn is unlikely. The central bank needs further evidence of peak inflation to change its tightening program. The TSX S&P/TSX Composite rose nearly 1% on Friday, its highest since June 10, after Rogers and Shaw Communications finalized a deal to sell Freedom Mobile to Videotron. The deal aims to resolve competition law issues and finalize a $20 billion merger between the two telecom giants. For the week, the S&P/TSX Composite rose 2.9%. The ruble-based MOEX-Russia index rose 0.7 percent to close at 2,150 on Friday, gaining 4.7 percent every week after the Moscow bourse delayed a decision to allow foreign traders to return to the stock market. Investors are also awaiting the release of second-quarter GDP data highlighting the impact of Western sanctions on the Russian economy since Russia invaded Ukraine. Financials closed in the green, with TCS Group up nearly 4% and Sberbank up 1%. The energy sector was also one of the biggest gainers in the session, with Tatneft up 2%. Transneft shares also rose, extending positive momentum since the restart of the Druzhba-Central Europe pipeline. The index fell last week to its second-lowest close since 2017, sparked by expectations that foreign investors would be allowed to sell their positions for the first time since Feb. 24. European shares rose for a third straight session on Friday, with the Stoxx 600 closing at levels not seen in more than two months, as signs of cooling U.S. inflation prompted investors to reduce expectations for the scale of monetary tightening by the Federal Reserve and the European Central Bank. Shares in Flitter Entertainment rose nearly 15%, leading the Stoxx 600 higher, as the sports betting and gaming company surprised investors with its quarterly results. Domestically, the benchmark DAX 40 rose nearly 1% to close at 13,796, buoyed by gains in the utility sector; the index rose for a fourth straight week. On Friday, the FTSE MIB index rose 0.5% to close at 22,970, its highest in more than two months, and was up 2.3% for the week, supported by the tech, banking, and auto sectors. Next, shares rose 5 percent after Reuters reported that private equity firms had increased interest in taking Europe's largest payments processing company private after falling more than 50 percent last year. Meanwhile, Milan's heavyweight financial sector recovered quickly from yesterday's underperformance, with Banco BPM up 4% and UniCredit up nearly 3%. Investors also focused on Italy's political campaign ahead of next month's snap elections. Telecom Italia shares rose 6 percent after the Brothers of Italia party, now leading the polls, proposed a plan to privatize it. The CAC 40 index rose 16 points, or 0.3%, to 6,561 on Friday, with a weekly gain of more than 1% and close to its highest level since April 22. Healthcare stocks rebounded, with Sanofi up about 1% after a sharp sell-off in the previous session, amid growing concerns about a potential U.S. lawsuit over the recalled heartburn drug Zantac, which was withdrawn in 2019. On the economic data front, French inflation was confirmed to be the highest in 37 years at 6.1% in July. On Friday, the FTSE 100 rose 35 points, or 0.5%, to 7,501, near a two-month high on better-than-expected economic data, while paper and packaging company Mondi agreed to pay $1.56 billion on Friday. The dollar rose more than 10% after it sold its Russian business. Healthcare stocks were the best performer after a sharp drop last week on growth prospects for an imminent U.S. lawsuit over the Zantac drug. Elsewhere, shares of Flitter Entertainment jumped nearly 10% to hit the highest level on the benchmark after the sports betting and gaming company surprised investors with its quarterly results. On the data front, the U.K. economy contracted 0.1% in the second quarter, below market expectations for a 0.2% contraction, and industrial activity declined at a slower-than-expected pace in June. The FTSE 100 rose about 0.8% for the week, it's fourth straight weekly gain. Hong Kong stocks rose for a second straight session on Friday, boosted by gains in materials and energy stocks, with the benchmark Hang Seng closing around 20,150. In corporate news, Reuters said China Tourism Group Duty-Free plans to raise $2.16 billion in a new listing in Hong Kong in the city's most significant share sale in 2022. China Hongqiao Group and Li Ning were among the index's biggest gainers, rising nearly 5 percent. The Hang Seng Index ended the week largely flat. New Zealand NZX 50 index fell 29.49 points, or 0.25%, to settle at 11,730.52 on Friday, reversing gains from the previous session amid uncertainty over the pace of the Federal Reserve's monetary tightening Reuters said, as investors weighed in on the central bank's upcoming meeting. There are differences in strength. Data earlier last week showed U.S. consumer prices slowed in July, while producer prices unexpectedly fell for the first time since April 2020. Locally, food inflation in New Zealand accelerated to a four-month high in July, from 6.6% in June to 7.4% year-on-year. News of a resumption of growth in Chinese factory activity in July failed to lift sentiment as traders jittered over reports of new coronavirus outbreaks in more Chinese cities. Notable losers include Greenfern Industries (-3.6%), Rakon Limited (-3.2%) and Fisher & Paykel Healthcare (-3.3%). Last week, the index was little changed. Japan Nikkei 225 rose 2.62% to close at 28,547 on Friday. In comparison, the broader Topix index rose 2.04% to close at 1,973 in post-holiday trading, both benchmarks hitting new multi-month highs as Sentiment risks dominated markets after weak U.S. inflation data and a cabinet reshuffle in Japan eased fears of political instability. Prime Minister Fumio Kishida is expected to look for the next Bank of Japan governor. Kishida has so far signaled his intention to maintain the aggressive monetary easing stance characteristic of the "Abenomics" era. All sectors were up, with index heavyweights such as Tokyo Electronics (4.5%), Fast Retailing (1.9%), Toyota Motor (2.3%), Nippon Yusen (1.7%), and Cairns (4.4%) all surging. SoftBank Group also rose more than 5% on news that SoftBank Group will boost profits by reducing its stake in Chinese tech giant Alibaba. On Friday, the Shanghai Composite fell 0.16% to close at 3,277, while the Shenzhen Composite fell 0.23% to close at 12,445, but both benchmarks are expected to end the week higher as inflation in the U.S. and domestically rises. There was a higher-than-expected risk of sentiment dominating markets after the data, giving China's central bank room to keep monetary conditions accommodative. Investors also shrugged off worries about repeated coronavirus outbreaks in China, risks to the real estate sector, and tensions with the U.S. over Taiwan. In addition, the U.S. Clean Energy Act and hopes for the government to support Chinese semiconductor companies have sparked a rebound in domestic new energy and technology stocks this week. On Friday, Tongfu Microelectronics (4.3%), Suzhou Haofangzhou (1.1%), and Xinjiang Lixin (10%) rose significantly, while losers included China Baoan (2.3%), Tianqi Lithium (1.5%) and Contemporary Ampere (1.8%).

REVIEWING ECONOMIC DATA: 

Looking at the last economic data:

- RU: Preliminary estimates show that Russia's gross domestic product in the second quarter of 2022 fell by 4% from a year earlier, affected by the Russian-Ukrainian war and related international sanctions. Russia's central bank expects the gross domestic product to contract by 4.3 percent in the second quarter, saying it is on track for a 7 percent decline in the third quarter. The central bank forecast in April that GDP would fall by 4%-6% in 2022, with the economy starting to recover in the second half of 2023.

- US: Preliminary estimates show the University of Michigan's consumer confidence in the U.S. rose to 55.1 in August 2022 from 51.5 in July, beating consensus forecasts of 52.5. The expectations index rose to 54.9 from 47.3, but the current economic conditions sub-index fell to 55.5 from 58.1. Inflation expectations for the year ahead fell to 5% from 5.2%, the lowest level since February but still well above the 4.6% a year ago. Meanwhile, five-year inflation expectations increased to 3 percent from 2.9 percent in the previous month.

- US: In July 2022, U.S. import prices fell 1.4% from the previous month, which was higher than the 0.3% increase in the last month, and exceeded market expectations for a 1% decline. It was the first drop in import prices since December 2021, as fuel import prices fell 7.5%, compared with a 6.2% rise in the previous month. Meanwhile, non-fuel import prices fell 0.5%, the third straight decline and an easing from a 0.6% drop in June. U.S. import prices rose 8.8% compared to the same period last year.

- TW: Taiwan's economy expanded by 3.05% year-on-year in the second quarter of 2022, lower than a preliminary estimate of 3.08% and slowing from an upwardly revised 3.72% growth in the previous quarter. Private consumption grew faster (2.89% vs. 0.58% in Q1 2022), while government spending rebounded (5.85% vs. -0.43%). Meanwhile, gross fixed capital formation grew faster (10.73% and 7.71%, respectively). Regarding net trade, exports increased by 4.32% (9.06% in Q1 2022), and imports increased by 8.83% (8.66% in Q1 2022). On a seasonally adjusted quarterly basis, the economy contracted by 1.80% after expanding by 1.60% in the previous quarter. For all of 2022, GDP will grow by 3.76%, 0.15 percentage points lower than the previous estimate, due to a worsening inflation outlook and slowing demand.

- CN: In July 2022, Chinese banks added 679 trillion yuan in new yuan loans, the lowest in three months and far below the 1.08 trillion yuan in the same period last year. The data, which investors had expected to hit 1.1 trillion yuan, also disappointed investors as the containment of the new crown epidemic and the ongoing housing crisis weighed on consumer sentiment and slowed government bond issuance. Growth in outstanding renminbi loans also moderated (11% vs. 11.2% in June), while the M2 money supply rose 12%, up from 11.4% and 11.4% in the previous month.

- IT: Italy posted a trade deficit of 2.17 billion euros in June 2022, a change from a surplus of $5.67 billion in the same period the previous year, marking the seventh consecutive trade deficit for the Italian economy. Imports rose 44.2% to 56.6 billion euros, driven by a surge in energy purchases (102.8%) due to soaring prices. Imports of intermediate goods (33.9%) and consumer goods (22.3%) also rose. Meanwhile, export growth slowed by 21.2% to 54.5 billion euros, as sales of consumer goods (23%), intermediate goods (20.3%), and capital goods (11.5%) rose. Within the EU, Italy has a trade surplus of 840 million euros.

- UK: The UK economy expanded by 2.9% year-on-year in the second quarter of 2022, the slowest pace since the contraction in the first quarter of 2021 and slightly above market forecasts of 2.8%. Household spending slowed sharply (3.6% vs. 12.6% in the first quarter) as high consumer prices played an important role, while gross fixed capital formation remained strong (5.9% vs. 7.1%), namely business investment (5% vs. 8.3%) %).

- UK: In June 2022, UK construction output rose 4.1% year-on-year, after rising 4.9% in the previous month, beating market expectations of 3.3%. All new job activity slowed (2.8% in May vs. 5.1% in May), and housing starts slowed (7.9% vs. 10.8% in May). At the same time, all repairs and maintenance accelerated (6.4% vs. 4.5%). Construction activity fell 1.4% month-on-month in June, the first decline in eight months, after rising 1.8% in May.

- UK: UK manufacturing output fell by 1.6% month-on-month in June 2022, compared with market expectations for a fall of 1.8% and an increase from an upwardly revised 1.7% a month earlier. Production of rubber and plastic products and non-metallic mineral products fell sharply (-6.2% vs. 1.9% in May), followed by electrical equipment (-4.9% and -4.2% respectively in May), base metals and metal products (May -3.1% vs. -0.8% in the month), and other manufacturing and maintenance (-1.2% and -3.2% respectively in May). Manufacturing production rose 1.1% in June from a year earlier, beating consensus estimates of 0.9% and an upwardly revised 2.6% in May.

- EU: In June 2022, industrial production in the eurozone rose by 0.7% month-on-month, after a sharply revised 2.1% gain in May, more than triple the consensus forecast of 0.2%. Capital goods production rose (2.6% vs. 6% in May), energy production rebounded (0.6% vs. -3.4%), but durable goods (1.1% vs. 1%) and nondurable goods (2.3% vs. 2.2%) output both rebounded. decline. Among the euro zone's largest economies, production rose in Germany (0.6%), France (1.1%), and Spain (1) but fell in Italy (2.1%). Industrial production rose 2.4% yearly after rising 1.6% in May.

- FR: Annual inflation in France was confirmed at 6.1% in July 2022, the highest level since July 1985 and up from 5.8% the month before. Prices of services accelerated (3.9% vs. 3.3% in June); food (6.8% vs. 5.8%) and, to a lesser extent, manufactured goods (2.7% vs. 2.5%). Meanwhile, energy prices fell slightly (28.5% vs. 33.1%). Annual core inflation, which excludes volatile items such as unprocessed food and energy, rose to a record high of 4.3% in July. In line with preliminary estimates, monthly consumer prices rose 0.3%, down from a 0.7% gain in the previous month. The unified consumer price index increased by 6.8% year-on-year, the highest level in history, and increased by 0.3% from the previous month.

- FR: Unemployment in France increased to 7.4% in the second quarter of 2022 from 7.3% in the previous quarter, above the consensus forecast of 7. Unemployment rose by 29,000 to 2.3 million. Meanwhile, the unemployment rate among 15-24-year-olds rose by 1.1 percentage points to 17.8% but remains significantly below pre-crisis levels (3.7 percentage points). However, the unemployment rate for those aged 25 to 49 was almost steady at 6.7% (+0.1 point) and fell to 5.2% (-0.3 point) for those aged 50 or older. The employment rate remained unchanged at 68.0%, the latest peak since INSEAD measures employment according to the International Labour Organization's definition. Meanwhile, the activity rate rose 0.1 percentage point to 73.5% from 73.4%, surpassing the previous quarter's highest level.

- SW: Annual inflation in Sweden fell to 8.5% in July 2022 from 8.7% the previous month, below the consensus forecast of 8. However, the figure remains near the highest level since July 1991, driven by higher prices for electricity and fuel, owner-occupied housing, water, residential services, housing, and utilities (9.1% vs. 10.5%). Other pressures come from food and non-alcoholic beverages (11.5% vs. 11.2%); transportation (12.4% vs. 11.9%) amid rising prices for passenger cars and transportation services; entertainment, and culture (3.8% vs. 3.9%); restaurants and hotels (8.9 percent versus 10.1 percent); and miscellaneous goods and services (5.4 percent and 4.6 percent, respectively). Month-on-month consumer prices edged up 0.1% in July, the slowest increase in six months, down from a 1.4% gain in June and below forecasts of 0.3%.

- NZ: Food price inflation in New Zealand accelerated to 7.4% in July 2022 from 6.6% the previous month, the highest level since March. Prices rose faster for fruits and vegetables (10.4% vs. 5.5% in June), meat, poultry, and fish (7.7% vs. 6.8%), and restaurant meals and ready meals (6.6% vs. 6.3%). On the other hand, grocery stores (7.5% vs. 7.6%) and non-alcoholic beverages (4.6% vs. 4.8%) saw lower costs. Monthly food prices rose 2.1%, up from 1.2% in June.

LOOKING AHEAD:   

Today, investors will receive:

- CNY: Retail Sales y/y, Fixed Asset Investment ytd/y, Industrial Production y/y, NBS Press Conference, and Unemployment Rate.

- USD: Empire State Manufacturing Index, NAHB Housing Market Index, and TIC Long-Term Purchases.

- CAD: Manufacturing Sales m/m, and Wholesale Sales m/m.

- JPY: Revised Industrial Production m/m.

- EUR: German WPI m/m.
- CHF: PPI m/m.
- AUD: Monetary Policy Meeting Minutes.

KEY EQUITY & BOND MARKET DRIVERS:

- GE: Germany's 10-year bond yield edged up to 1% in mid-August, its highest level in nearly three weeks, as investors continued to assess expectations for a sharp rate hike by the European Central Bank amid a gloomy economic outlook for the eurozone. Markets expect the ECB to raise rates by another 50 basis points in September, extending the central bank's July decision by the same amount. In the U.S., Fed policymakers played down bets that the central bank will slow the tightening path too much after U.S. inflation retreats from its peak. Still, the economic outlook for Germany and the eurozone remains bleak, with recent PMI data showing private sector activity contracted in July and retail sales unexpectedly falling in June.

- US: U.S. stock futures, which track the broader market, rose about 0.5 percent on Friday, putting Wall Street on track for a higher open as investors reassessed the outlook for monetary policy amid signs of cooling inflation. A slew of economic data, including lower-than-expected headline U.S. inflation and the first drop in producer prices in more than two years, fueled speculation that the Federal Reserve may ease monetary policy. However, several Fed policymakers, including San Francisco Federal Bank President Mary Daly, noted that a dovish turn is unlikely and that the central bank needs further evidence that inflation has peaked to change its tightening program. For the week, the Dow and S&P 500 rose about 1.5%, while the tech-heavy Nasdaq gained 1%.

- US: The 10-year U.S. Treasury yield held steady at around 2.90%, a level not seen in three weeks, as markets continued to bet that the Federal Reserve would continue its aggressive tightening program despite signs that inflation was cooling. San Francisco Federal Bank President Mary Daly said that while a 50-basis-point rate hike in September looked appropriate, she left the door open for the most drastic measures to curb high inflation. Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans shared a similar view, arguing that the central bank's tightening cycle is far from over. Market volatility came despite lower-than-expected U.S. headline inflation and producer prices falling for the first time in more than two years.

- UK: Britain's 10-year gilt topped 2.1% in mid-August, close to levels not seen in nearly a month after the latest GDP data showed Britain's economy contracted less than expected in the second quarter. UK GDP contracted 0.1% in the second quarter and only 0.6% in June, both figures on track to hit half of the market forecasts, strengthening the case for the Bank of England to keep raising interest rates to rein in soaring inflation. Inflation remains at levels not seen in 40 years and exacerbates the cost-of-living crisis. China's central bank has raised interest rates six times, totaling 165 basis points, since the tightening cycle began in November, but has warned the economy could slip into recession by the end of the year.

STOCK MARKET SECTORS:

- High: Communication Services, Information Technology, Real Estate, Materials

- Low: n/a

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

- USD: The U.S. dollar index rebounded from its lowest level in more than a month, successfully regaining its footing above 105, as hawkish rhetoric from several Federal Reserve policymakers brought optimism to the bulls. San Francisco Federal Bank President Mary Daly said that while a 50-basis-point rate hike in September looked appropriate, she left the door open for the most drastic measures to curb high inflation. Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans shared a similar view, arguing that the central bank's tightening cycle is far from over. The comments came despite lower-than-expected U.S. headline inflation and producer prices falling for the first time in more than two years. Last week, DXY lost more than 1%.

- CNY: The offshore yuan appreciated more than 6.75 against the dollar, near its highest level in a month, as U.S. consumer and producer price growth slowed in July, fueling speculation of an inflation spike and prompting the Federal Reserve to tighten policy further. This offset weaker-than-expected Chinese inflation data for July, with consumer prices up 2.7%, 20 basis points below forecasts, while producer prices rose 4.2%, 60 basis points below analysts' forecasts. The yuan also found support as the People's Bank of China is expected to keep monetary policy on hold, even as it faces further easing as China continues to grapple with recurring Covid-19 outbreaks, risks to the real estate sector, and tensions with the U.S. over Taiwan. Pressure.

CHART OF THE DAY:

As traders digested the latest GDP data, sterling was little changed near $1.22. The data showed that the UK economy shrank by 0.1% in the second quarter and 0.6% in June, which were half of the market forecasts. While the figures were not as bad as expected, they did little to ease fears of a severe contraction in the UK economy as soaring prices hurt economic activity and demand. Earlier this month, the Bank of England painted a grim economic outlook. It forecasted Britain's longest recession since the global financial crisis while raising interest rates by 50 basis points, the largest rate hike since 1995.

- GBPUSD - D1, Resistance around ~ 1.23607,  Support around  ~ 1.16553

GLOBAL CAPITAL MARKETS OVERVIEW:   U.S. stocks closed at session highs on Friday, with the Dow up more than 400 points, the S&P 500 up 1.7%, and the Nasdaq up 2.1%. The S&P 500 and Nasdaq posted fourth positives for the week, and the Dow also posted weekly gains. Sentiment last week was buoyed by signs that inflation is peaking, prompting speculation that the Federal Reserve may ease on raising interest rates soon. Both import and export prices fell in July, with producer prices falling for the first time in more than two years and consumer prices slowing more than expected. In addition, the University of Michigan consumer sentiment survey showed that inflation expectations fell in July, and U.S. consumer morale rose to its highest level in three months. However, several Fed policymakers, including San Francisco Federal Bank President Mary Daly, noted that a dovish turn is unlikely. The central bank needs further evidence of peak inflation to change its tightening program. The TSX S&P/TSX Composite rose nearly 1% on Friday, its highest since June 10, after Rogers and Shaw Communications finalized a deal to sell Freedom Mobile to Videotron. The deal aims to resolve competition law issues and finalize a $20 billion merger between the two telecom giants. For the week, the S&P/TSX Composite rose 2.9%. The ruble-based MOEX-Russia index rose 0.7 percent to close at 2,150 on Friday, gaining 4.7 percent every week after the Moscow bourse delayed a decision to allow foreign traders to return to the stock market. Investors are also awaiting the release of second-quarter GDP data highlighting the impact of Western sanctions on the Russian economy since Russia invaded Ukraine. Financials closed in the green, with TCS Group up nearly 4% and Sberbank up 1%. The energy sector was also one of the biggest gainers in the session, with Tatneft up 2%. Transneft shares also rose, extending positive momentum since the restart of the Druzhba-Central Europe pipeline. The index fell last week to its second-lowest close since 2017, sparked by expectations that foreign investors would be allowed to sell their positions for the first time since Feb. 24. European shares rose for a third straight session on Friday, with the Stoxx 600 closing at levels not seen in more than two months, as signs of cooling U.S. inflation prompted investors to reduce expectations for the scale of monetary tightening by the Federal Reserve and the European Central Bank. Shares in Flitter Entertainment rose nearly 15%, leading the Stoxx 600 higher, as the sports betting and gaming company surprised investors with its quarterly results. Domestically, the benchmark DAX 40 rose nearly 1% to close at 13,796, buoyed by gains in the utility sector; the index rose for a fourth straight week. On Friday, the FTSE MIB index rose 0.5% to close at 22,970, its highest in more than two months, and was up 2.3% for the week, supported by the tech, banking, and auto sectors. Next, shares rose 5 percent after Reuters reported that private equity firms had increased interest in taking Europe's largest payments processing company private after falling more than 50 percent last year. Meanwhile, Milan's heavyweight financial sector recovered quickly from yesterday's underperformance, with Banco BPM up 4% and UniCredit up nearly 3%. Investors also focused on Italy's political campaign ahead of next month's snap elections. Telecom Italia shares rose 6 percent after the Brothers of Italia party, now leading the polls, proposed a plan to privatize it. The CAC 40 index rose 16 points, or 0.3%, to 6,561 on Friday, with a weekly gain of more than 1% and close to its highest level since April 22. Healthcare stocks rebounded, with Sanofi up about 1% after a sharp sell-off in the previous session, amid growing concerns about a potential U.S. lawsuit over the recalled heartburn drug Zantac, which was withdrawn in 2019. On the economic data front, French inflation was confirmed to be the highest in 37 years at 6.1% in July. On Friday, the FTSE 100 rose 35 points, or 0.5%, to 7,501, near a two-month high on better-than-expected economic data, while paper and packaging company Mondi agreed to pay $1.56 billion on Friday. The dollar rose more than 10% after it sold its Russian business. Healthcare stocks were the best performer after a sharp drop last week on growth prospects for an imminent U.S. lawsuit over the Zantac drug. Elsewhere, shares of Flitter Entertainment jumped nearly 10% to hit the highest level on the benchmark after the sports betting and gaming company surprised investors with its quarterly results. On the data front, the U.K. economy contracted 0.1% in the second quarter, below market expectations for a 0.2% contraction, and industrial activity declined at a slower-than-expected pace in June. The FTSE 100 rose about 0.8% for the week, it's fourth straight weekly gain. Hong Kong stocks rose for a second straight session on Friday, boosted by gains in materials and energy stocks, with the benchmark Hang Seng closing around 20,150. In corporate news, Reuters said China Tourism Group Duty-Free plans to raise $2.16 billion in a new listing in Hong Kong in the city's most significant share sale in 2022. China Hongqiao Group and Li Ning were among the index's biggest gainers, rising nearly 5 percent. The Hang Seng Index ended the week largely flat. New Zealand NZX 50 index fell 29.49 points, or 0.25%, to settle at 11,730.52 on Friday, reversing gains from the previous session amid uncertainty over the pace of the Federal Reserve's monetary tightening Reuters said, as investors weighed in on the central bank's upcoming meeting. There are differences in strength. Data earlier last week showed U.S. consumer prices slowed in July, while producer prices unexpectedly fell for the first time since April 2020. Locally, food inflation in New Zealand accelerated to a four-month high in July, from 6.6% in June to 7.4% year-on-year. News of a resumption of growth in Chinese factory activity in July failed to lift sentiment as traders jittered over reports of new coronavirus outbreaks in more Chinese cities. Notable losers include Greenfern Industries (-3.6%), Rakon Limited (-3.2%) and Fisher & Paykel Healthcare (-3.3%). Last week, the index was little changed. Japan Nikkei 225 rose 2.62% to close at 28,547 on Friday. In comparison, the broader Topix index rose 2.04% to close at 1,973 in post-holiday trading, both benchmarks hitting new multi-month highs as Sentiment risks dominated markets after weak U.S. inflation data and a cabinet reshuffle in Japan eased fears of political instability. Prime Minister Fumio Kishida is expected to look for the next Bank of Japan governor. Kishida has so far signaled his intention to maintain the aggressive monetary easing stance characteristic of the "Abenomics" era. All sectors were up, with index heavyweights such as Tokyo Electronics (4.5%), Fast Retailing (1.9%), Toyota Motor (2.3%), Nippon Yusen (1.7%), and Cairns (4.4%) all surging. SoftBank Group also rose more than 5% on news that SoftBank Group will boost profits by reducing its stake in Chinese tech giant Alibaba. On Friday, the Shanghai Composite fell 0.16% to close at 3,277, while the Shenzhen Composite fell 0.23% to close at 12,445, but both benchmarks are expected to end the week higher as inflation in the U.S. and domestically rises. There was a higher-than-expected risk of sentiment dominating markets after the data, giving China's central bank room to keep monetary conditions accommodative. Investors also shrugged off worries about repeated coronavirus outbreaks in China, risks to the real estate sector, and tensions with the U.S. over Taiwan. In addition, the U.S. Clean Energy Act and hopes for the government to support Chinese semiconductor companies have sparked a rebound in domestic new energy and technology stocks this week. On Friday, Tongfu Microelectronics (4.3%), Suzhou Haofangzhou (1.1%), and Xinjiang Lixin (10%) rose significantly, while losers included China Baoan (2.3%), Tianqi Lithium (1.5%) and Contemporary Ampere (1.8%). REVIEWING ECONOMIC DATA:  Looking at the last economic data: - RU: Preliminary estimates show that Russia's gross domestic product in the second quarter of 2022 fell by 4% from a year earlier, affected by the Russian-Ukrainian war and related international sanctions. Russia's central bank expects the gross domestic product to contract by 4.3 percent in the second quarter, saying it is on track for a 7 percent decline in the third quarter. The central bank forecast in April that GDP would fall by 4%-6% in 2022, with the economy starting to recover in the second half of 2023. - US: Preliminary estimates show the University of Michigan's consumer confidence in the U.S. rose to 55.1 in August 2022 from 51.5 in July, beating consensus forecasts of 52.5. The expectations index rose to 54.9 from 47.3, but the current economic conditions sub-index fell to 55.5 from 58.1. Inflation expectations for the year ahead fell to 5% from 5.2%, the lowest level since February but still well above the 4.6% a year ago. Meanwhile, five-year inflation expectations increased to 3 percent from 2.9 percent in the previous month. - US: In July 2022, U.S. import prices fell 1.4% from the previous month, which was higher than the 0.3% increase in the last month, and exceeded market expectations for a 1% decline. It was the first drop in import prices since December 2021, as fuel import prices fell 7.5%, compared with a 6.2% rise in the previous month. Meanwhile, non-fuel import prices fell 0.5%, the third straight decline and an easing from a 0.6% drop in June. U.S. import prices rose 8.8% compared to the same period last year. - TW: Taiwan's economy expanded by 3.05% year-on-year in the second quarter of 2022, lower than a preliminary estimate of 3.08% and slowing from an upwardly revised 3.72% growth in the previous quarter. Private consumption grew faster (2.89% vs. 0.58% in Q1 2022), while government spending rebounded (5.85% vs. -0.43%). Meanwhile, gross fixed capital formation grew faster (10.73% and 7.71%, respectively). Regarding net trade, exports increased by 4.32% (9.06% in Q1 2022), and imports increased by 8.83% (8.66% in Q1 2022). On a seasonally adjusted quarterly basis, the economy contracted by 1.80% after expanding by 1.60% in the previous quarter. For all of 2022, GDP will grow by 3.76%, 0.15 percentage points lower than the previous estimate, due to a worsening inflation outlook and slowing demand. - CN: In July 2022, Chinese banks added 679 trillion yuan in new yuan loans, the lowest in three months and far below the 1.08 trillion yuan in the same period last year. The data, which investors had expected to hit 1.1 trillion yuan, also disappointed investors as the containment of the new crown epidemic and the ongoing housing crisis weighed on consumer sentiment and slowed government bond issuance. Growth in outstanding renminbi loans also moderated (11% vs. 11.2% in June), while the M2 money supply rose 12%, up from 11.4% and 11.4% in the previous month. - IT: Italy posted a trade deficit of 2.17 billion euros in June 2022, a change from a surplus of $5.67 billion in the same period the previous year, marking the seventh consecutive trade deficit for the Italian economy. Imports rose 44.2% to 56.6 billion euros, driven by a surge in energy purchases (102.8%) due to soaring prices. Imports of intermediate goods (33.9%) and consumer goods (22.3%) also rose. Meanwhile, export growth slowed by 21.2% to 54.5 billion euros, as sales of consumer goods (23%), intermediate goods (20.3%), and capital goods (11.5%) rose. Within the EU, Italy has a trade surplus of 840 million euros. - UK: The UK economy expanded by 2.9% year-on-year in the second quarter of 2022, the slowest pace since the contraction in the first quarter of 2021 and slightly above market forecasts of 2.8%. Household spending slowed sharply (3.6% vs. 12.6% in the first quarter) as high consumer prices played an important role, while gross fixed capital formation remained strong (5.9% vs. 7.1%), namely business investment (5% vs. 8.3%) %). - UK: In June 2022, UK construction output rose 4.1% year-on-year, after rising 4.9% in the previous month, beating market expectations of 3.3%. All new job activity slowed (2.8% in May vs. 5.1% in May), and housing starts slowed (7.9% vs. 10.8% in May). At the same time, all repairs and maintenance accelerated (6.4% vs. 4.5%). Construction activity fell 1.4% month-on-month in June, the first decline in eight months, after rising 1.8% in May. - UK: UK manufacturing output fell by 1.6% month-on-month in June 2022, compared with market expectations for a fall of 1.8% and an increase from an upwardly revised 1.7% a month earlier. Production of rubber and plastic products and non-metallic mineral products fell sharply (-6.2% vs. 1.9% in May), followed by electrical equipment (-4.9% and -4.2% respectively in May), base metals and metal products (May -3.1% vs. -0.8% in the month), and other manufacturing and maintenance (-1.2% and -3.2% respectively in May). Manufacturing production rose 1.1% in June from a year earlier, beating consensus estimates of 0.9% and an upwardly revised 2.6% in May. - EU: In June 2022, industrial production in the eurozone rose by 0.7% month-on-month, after a sharply revised 2.1% gain in May, more than triple the consensus forecast of 0.2%. Capital goods production rose (2.6% vs. 6% in May), energy production rebounded (0.6% vs. -3.4%), but durable goods (1.1% vs. 1%) and nondurable goods (2.3% vs. 2.2%) output both rebounded. decline. Among the euro zone's largest economies, production rose in Germany (0.6%), France (1.1%), and Spain (1) but fell in Italy (2.1%). Industrial production rose 2.4% yearly after rising 1.6% in May. - FR: Annual inflation in France was confirmed at 6.1% in July 2022, the highest level since July 1985 and up from 5.8% the month before. Prices of services accelerated (3.9% vs. 3.3% in June); food (6.8% vs. 5.8%) and, to a lesser extent, manufactured goods (2.7% vs. 2.5%). Meanwhile, energy prices fell slightly (28.5% vs. 33.1%). Annual core inflation, which excludes volatile items such as unprocessed food and energy, rose to a record high of 4.3% in July. In line with preliminary estimates, monthly consumer prices rose 0.3%, down from a 0.7% gain in the previous month. The unified consumer price index increased by 6.8% year-on-year, the highest level in history, and increased by 0.3% from the previous month. - FR: Unemployment in France increased to 7.4% in the second quarter of 2022 from 7.3% in the previous quarter, above the consensus forecast of 7. Unemployment rose by 29,000 to 2.3 million. Meanwhile, the unemployment rate among 15-24-year-olds rose by 1.1 percentage points to 17.8% but remains significantly below pre-crisis levels (3.7 percentage points). However, the unemployment rate for those aged 25 to 49 was almost steady at 6.7% (+0.1 point) and fell to 5.2% (-0.3 point) for those aged 50 or older. The employment rate remained unchanged at 68.0%, the latest peak since INSEAD measures employment according to the International Labour Organization's definition. Meanwhile, the activity rate rose 0.1 percentage point to 73.5% from 73.4%, surpassing the previous quarter's highest level. - SW: Annual inflation in Sweden fell to 8.5% in July 2022 from 8.7% the previous month, below the consensus forecast of 8. However, the figure remains near the highest level since July 1991, driven by higher prices for electricity and fuel, owner-occupied housing, water, residential services, housing, and utilities (9.1% vs. 10.5%). Other pressures come from food and non-alcoholic beverages (11.5% vs. 11.2%); transportation (12.4% vs. 11.9%) amid rising prices for passenger cars and transportation services; entertainment, and culture (3.8% vs. 3.9%); restaurants and hotels (8.9 percent versus 10.1 percent); and miscellaneous goods and services (5.4 percent and 4.6 percent, respectively). Month-on-month consumer prices edged up 0.1% in July, the slowest increase in six months, down from a 1.4% gain in June and below forecasts of 0.3%. - NZ: Food price inflation in New Zealand accelerated to 7.4% in July 2022 from 6.6% the previous month, the highest level since March. Prices rose faster for fruits and vegetables (10.4% vs. 5.5% in June), meat, poultry, and fish (7.7% vs. 6.8%), and restaurant meals and ready meals (6.6% vs. 6.3%). On the other hand, grocery stores (7.5% vs. 7.6%) and non-alcoholic beverages (4.6% vs. 4.8%) saw lower costs. Monthly food prices rose 2.1%, up from 1.2% in June. LOOKING AHEAD:    Today, investors will receive: - CNY: Retail Sales y/y, Fixed Asset Investment ytd/y, Industrial Production y/y, NBS Press Conference, and Unemployment Rate. - USD: Empire State Manufacturing Index, NAHB Housing Market Index, and TIC Long-Term Purchases. - CAD: Manufacturing Sales m/m, and Wholesale Sales m/m. - JPY: Revised Industrial Production m/m. - EUR: German WPI m/m. - CHF: PPI m/m. - AUD: Monetary Policy Meeting Minutes. KEY EQUITY & BOND MARKET DRIVERS: - GE: Germany's 10-year bond yield edged up to 1% in mid-August, its highest level in nearly three weeks, as investors continued to assess expectations for a sharp rate hike by the European Central Bank amid a gloomy economic outlook for the eurozone. Markets expect the ECB to raise rates by another 50 basis points in September, extending the central bank's July decision by the same amount. In the U.S., Fed policymakers played down bets that the central bank will slow the tightening path too much after U.S. inflation retreats from its peak. Still, the economic outlook for Germany and the eurozone remains bleak, with recent PMI data showing private sector activity contracted in July and retail sales unexpectedly falling in June. - US: U.S. stock futures, which track the broader market, rose about 0.5 percent on Friday, putting Wall Street on track for a higher open as investors reassessed the outlook for monetary policy amid signs of cooling inflation. A slew of economic data, including lower-than-expected headline U.S. inflation and the first drop in producer prices in more than two years, fueled speculation that the Federal Reserve may ease monetary policy. However, several Fed policymakers, including San Francisco Federal Bank President Mary Daly, noted that a dovish turn is unlikely and that the central bank needs further evidence that inflation has peaked to change its tightening program. For the week, the Dow and S&P 500 rose about 1.5%, while the tech-heavy Nasdaq gained 1%. - US: The 10-year U.S. Treasury yield held steady at around 2.90%, a level not seen in three weeks, as markets continued to bet that the Federal Reserve would continue its aggressive tightening program despite signs that inflation was cooling. San Francisco Federal Bank President Mary Daly said that while a 50-basis-point rate hike in September looked appropriate, she left the door open for the most drastic measures to curb high inflation. Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans shared a similar view, arguing that the central bank's tightening cycle is far from over. Market volatility came despite lower-than-expected U.S. headline inflation and producer prices falling for the first time in more than two years. - UK: Britain's 10-year gilt topped 2.1% in mid-August, close to levels not seen in nearly a month after the latest GDP data showed Britain's economy contracted less than expected in the second quarter. UK GDP contracted 0.1% in the second quarter and only 0.6% in June, both figures on track to hit half of the market forecasts, strengthening the case for the Bank of England to keep raising interest rates to rein in soaring inflation. Inflation remains at levels not seen in 40 years and exacerbates the cost-of-living crisis. China's central bank has raised interest rates six times, totaling 165 basis points, since the tightening cycle began in November, but has warned the economy could slip into recession by the end of the year. STOCK MARKET SECTORS: - High: Communication Services, Information Technology, Real Estate, Materials - Low: n/a TOP CURRENCY & COMMODITIES MARKET DRIVERS:  - USD: The U.S. dollar index rebounded from its lowest level in more than a month, successfully regaining its footing above 105, as hawkish rhetoric from several Federal Reserve policymakers brought optimism to the bulls. San Francisco Federal Bank President Mary Daly said that while a 50-basis-point rate hike in September looked appropriate, she left the door open for the most drastic measures to curb high inflation. Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans shared a similar view, arguing that the central bank's tightening cycle is far from over. The comments came despite lower-than-expected U.S. headline inflation and producer prices falling for the first time in more than two years. Last week, DXY lost more than 1%. - CNY: The offshore yuan appreciated more than 6.75 against the dollar, near its highest level in a month, as U.S. consumer and producer price growth slowed in July, fueling speculation of an inflation spike and prompting the Federal Reserve to tighten policy further. This offset weaker-than-expected Chinese inflation data for July, with consumer prices up 2.7%, 20 basis points below forecasts, while producer prices rose 4.2%, 60 basis points below analysts' forecasts. The yuan also found support as the People's Bank of China is expected to keep monetary policy on hold, even as it faces further easing as China continues to grapple with recurring Covid-19 outbreaks, risks to the real estate sector, and tensions with the U.S. over Taiwan. Pressure. CHART OF THE DAY: As traders digested the latest GDP data, sterling was little changed near $1.22. The data showed that the UK economy shrank by 0.1% in the second quarter and 0.6% in June, which were half of the market forecasts. While the figures were not as bad as expected, they did little to ease fears of a severe contraction in the UK economy as soaring prices hurt economic activity and demand. Earlier this month, the Bank of England painted a grim economic outlook. It forecasted Britain's longest recession since the global financial crisis while raising interest rates by 50 basis points, the largest rate hike since 1995. - GBPUSD - D1, Resistance around ~ 1.23607,  Support around  ~ 1.16553