GLOBAL CAPITAL MARKETS OVERVIEW:  

European shares ended mostly higher after opening in negative territory on Monday, falling nearly 3 percent last week as investors braced for a series of central bank meetings later in the week, boosted by optimism in the Americas. U.S. policymakers are expected to raise interest rates by 75 basis points to curb soaring inflation, while central banks in Britain, China, and Japan will also decide on monetary policy. On the corporate front, Volkswagen said it aimed to raise the Porsche IPO valuation to 75 billion euros on Sunday. The DAX 40 rose 0.6%, and the STOXX 600 ended flat, hitting its highest since July. London markets are closed for the funeral of Queen Elizabeth II. The FTSE MIB index closed up 22,140 points on Monday, closing off early losses, tracking a slight improvement in sentiment on Wall Street as investors awaited monetary policy decisions from major central banks. In addition, the Federal Reserve, Bank of England, and Swiss National Bank are expected to raise interest rates sharply in the coming days as monetary authorities continue their efforts to bring down soaring inflation. On the corporate front, gains in the industrials and technology sectors offset losses at energy producers, with CNH industrial and Iveco up 3% and 2%, respectively, while Saipem fell 5.6%. Heavyweight banks closed lower after rebounding last week, matching the continued decline in bond prices. Credit risks in Italy were seen higher a week before Sunday's snap election, with the latest polls showing a broad victory for the right-wing coalition. CAC 40 pared some of its early losses to close on Monday as recession fears lingered ahead of several central bank meetings this week, including a Federal Reserve rate decision on Wednesday. It fell for the fifth session at 6,062, the lowest in more than two weeks. Among individual stocks, the worst performers were Unibail Rodamco (-3.3%), Eurofins Scientifique (-2.5%), Teleperformance (-2.3%) and Schneider Electric (-2%). Shares in TF1 Group fell 2.3%, and M6 fell 3.4% after the collapse of the French TV company's merger plan, which also affected the benchmark index. U.S. stocks rebounded from opening losses on Monday, with the Dow rebounding from a more than 300-point drop to around 30,900 and the S&P 500 and Nasdaq rising as investors reassessed the outlook for monetary policy. Inflation remains high, and the job market remains strong, cementing expectations for a third straight 0.75 percentage point rate hike later this week that would lift the federal funds rate to its target range of 3% to 3.25%. Growing concerns are that cutting inflation to the 2 percent target will tip the U.S. into recession as borrowing costs increase for corporate and individual borrowers. The market moves coincided with another sell-off in the bond market, with the 10-year U.S. government bond yield breaking above 3.5% for the first time since April 2011. Russia's ruble-based MOEX index closed flat at 2,430 on Monday, relatively close to a five-week high hit earlier this month. The little slide in recent sessions has further highlighted the disconnect between Russian financial markets and the global economy, as broad signs of a global slowdown amid tightening global monetary policy have not weighed on Moscow stock markets. Capital controls also prevented worrying selling pressure on domestic data, as the last meeting of Russia's central bank marked the end of its path to rate cuts. Meanwhile, budget figures for August showed an unusually large deficit as lower energy prices and lower European exports hit the country's revenue. Losses in energy stocks offset strong performances in banks and technology stocks, with Novartis and Tate Oil each down 1%, while TCS Group rose nearly 2%. On Monday, the S&P/TSX Composite fell 0.5% to close at 19,300, extending its sharp losses from last week as major central banks are set to raise policy rates this week, adding to aggravation of weak global growth. The Federal Reserve plans to raise its fund's rate by 75 basis points on Wednesday, but investors are extra cautious as markets see a 20% chance of a more aggressive 100 basis point hike. Fears of drastic demand destruction continued to put downward pressure on crude prices, pushing Toronto's heavyweight energy sector down sharply. Canadian Natural Resources shares were down more than 2 percent in early trading, while Cenovus Energy fell 1.5 percent. Mining stocks were also dragged as gold prices fell further as investors opted for the higher-yielding dollar. On the macroeconomic front, Canadian producer prices fell for the third month. China Shanghai Composite fell 0.35% to end at 3,116. In comparison, Shenzhen shed 0.48% to close at 11,207, its lowest level in nearly four months, with caution prevailing ahead of an important week for the central bank's decision-making. The Fed is expected to raise interest rates sharply. Geopolitical concerns also weighed on sentiment after U.S. President Joe Biden said in an interview on Sunday that the U.S. military would defend Taiwan if China invaded it. Mainland stocks fell even as the People's Bank of China cut borrowing costs for 14-day reverse repos to 2.15% from 2.25% to restore credit and support a weakening economy. In addition, the Chinese city of Chengdu lifted its two-week lockdown on Monday, allowing residents to resume normal life, provided that tests are carried out regularly. Growth-oriented tech and healthcare stocks led losses, with Orient Currency (-4%), Luxembourg Precision (-1%), and Aier Eye Hospital (-3.5%) all down sharply. Australia S&P/ASX 200 index fell 0.15% to settle at 6729, extending last week's losses as investors remained cautious ahead of this week's central bank decision and the market expected the Federal Reserve to act aggressively to fight inflation. Technology stocks led losses, with Computershare (down 4%), Block Inc (down 4%), and Catas falling sharply. com (-2%). Energy companies also fell on weaker oil and coal prices, including Woodside Energy (down 1%), Santos Ltd (down 0.5%), and Whitehaven coal (down 4%). Meanwhile, clean energy-related and gold stocks rose, with Pilbara Mining (4%), Mineral Resources (3%), and Newcrest Mining (2%) up. Elsewhere, shares of Lake Resources rose 11% after the company announced it was continuing a demonstration plant with its partner Lilac Solutions at the Cachi brine project in Argentina. At the same time, Link Administration fell 2% after rejecting a revised takeover offer from Dye & Durham. New Zealand shares fell 48.47 points, or 0.42%, to close at a near three-week low of 11,531.99 at the start of the week, edged up in early trade, and fell for the second session, with caution ahead of the Federal Reserve's monetary policy meeting and decision on Wednesday. Traders are betting on a 75-basis point hike with an 82 percent chance, according to the CME FedWatch tracker. Wall Street extended losses for a third week after FedEx issued a warning, reiterating concerns about a slowing global economic recovery. Investors now await the release of New Zealand's August trade data later this week, as well as September's third-quarter consumer confidence and business sentiment. Shares in energy and minerals, consumer, technology, and distribution services were mostly lower. The biggest laggards include New Talisman Gold Mine (-33.3%), Ampol Ltd (-6.4%), Pacific Edge Ltd (-5.9%), EROAD Ltd (-7.7%) and Savor Ltd (-6.4%) -4.8%). Hongkong Hang Seng Index fell 145 points, or 0.77%, to 18,617 in early Monday trade, near a six-month low, extending losses from the previous week as the housing crisis intensified despite solid data from the People's Bank of China and China's economy in August. But liquidity has improved. At the same time, traders were cautious about an imminent rate hike by the Federal Reserve later this week, with policymakers widely expected to raise rates by 75 basis points for the third straight time. Meanwhile, concerns over tensions between Beijing and Washington resurfaced after President Biden said in a taped interview on Sunday that U.S. troops would defend Taiwan if China invaded. Basic materials led to losses, followed by real estate, industry, and consumers. Developer Country Garden Holdings plunged 6.2%, while Sino Biopharm, Wuxi Biopharm (Cayman Islands), and Alibaba Holdings fell 5.9%, 5.4%, and 3%, respectively.

 

REVIEWING ECONOMIC DATA: 

Looking at the last economic data:

- US: In September 2022, the U.S. NAHB Housing Market Index fell to 46 for the ninth consecutive month, below the consensus forecast of 47. This is the lowest level since May 2020, as higher interest rates, ongoing supply chain disruptions for building materials, and high house prices continue to weigh on affordability. In addition, current conditions fell three points to 54, sales expectations for the next six months fell one point to 46, and the flow of potential home buyers fell slightly to 31. NAHB Chairman Jerry Conte said: "With high mortgage rates and home prices making it financially impossible for many households to buy new homes, homebuyer traffic has been weak in many markets as more consumers remain Watch.".

- CA: In August 2022, Canadian producer prices fell 1.2% month-on-month, after a revised 2.5% increase in the previous month. This marked the third consecutive decline in producer prices, as energy and petroleum product costs continued to fall (-6.5%), and ammonia and fertilizer costs fell at a record pace (-19.3%). The cost of softwood lumber also fell sharply (-7.5%), and primary ferrous products (-2.1%) lost for the fifth consecutive month. On a yearly basis, producer price inflation slowed to 10.6%, the lowest level since March 2021, after a downward revision to the 11.5% gain last month.

- EU: In July 2022, euro area construction output rose 1.5% year-on-year after rising 1.1% the previous month. Construction activity rose 1.4% (1.1% in June), while civil engineering work rose 1.7% (1.2% in June). On a monthly basis, construction output rose 0.3%, recovering from a 1.2% drop in June.

- HK: In the three months to August 2022, Hong Kong's seasonally adjusted unemployment rate fell to 4.1% from 4.3% in the previous three months. It was the lowest unemployment rate in the three months to January, as the labor market continued to improve with a recovery in domestic economic activity, supported partly by the second phase of the consumer voucher program. Unemployment fell by 6,300 to 161,900, while workers rose by 16,200 to 3,609,300. Unemployment fell in almost all sectors, mainly building decoration, repair and maintenance, and arts, recreation, and entertainment.

- CN: In the first eight months of this year, China's foreign direct investment rose 16.4 percent year-on-year to 892.74 billion yuan ($138.41 billion), data from China's Ministry of Commerce showed. In dollar terms, foreign direct investment rose by 20.2%. In addition, foreign investment in services grew by 8.7%, while FDI inflows in high-tech sectors surged by 33.6%. Among the main investment sources, FDI inflows to China mainly came from South Korea (58.9%), Germany (30.3%), Japan (26.8%), and the United Kingdom (17.2%).

- NZ: New Zealand's Service Performance Index (PSI) climbed sharply to 58.6 in August 2022 from an upwardly revised 52.7 last month. It was the fourth consecutive month of growth in services sector activity, the strongest growth since November 2017 and well above the long-term average of 53.6. Two key sub-indices, new activity/sales (67.1 vs. 54.4, July) and new orders (66.5 vs. 53.4), both rose significantly, while inventories (59.6 vs. 53.7) were at their highest levels since November 2019. Meanwhile, the employment rate (50.8 vs. 49.3) remains slightly subdued, and the birth rate (49.6 vs. 47.6) remains in contraction. Doug Steel, the senior economist at BNZ, said: "Overall, combining August's strong PSI with last week's firmer PMI yields a composite index (PCI) that points to 2022 No. Annual GDP growth will be close to 5% in the third quarter.

- NZ: In early trade on Monday, the ANZ 50 rose 23 points, or 0.2%, to 11,603, after falling 1.5% in the previous week. Reports say that New Zealand's services sector activity rose for the sixth consecutive month in August, the fastest pace since April 2021, as the economy recovered from the Covid-19 pandemic. Meanwhile, flash U.S. data showed consumer sentiment hit a five-month high in September, inflation expectations recently fell to a one-year low, and the outlook for the next five years improved. Gains were limited, however, as investors were on high alert for a rate hike imminent at the Fed's meeting this week. Early winners include Paysause Ltd (5.1%), Metro Performance Glass (4.8%), Radius Residential Care (4.4%), and Accordant Group Ltd (3.3%).

 

LOOKING AHEAD:   

Today, investors will receive the following:

- CAD: CPI m/m, Common CPI y/y, Median CPI y/y, Trimmed CPI y/y, Core CPI m/m, and Gov Council Member Beaudry Speaks.

- USD: Building Permits and Housing Starts.

- EUR: German PPI m/m, Current Account, and ECB President Lagarde Speaks.

- CHF: Trade Balance and SECO Economic Forecasts.

- JPY: National Core CPI y/y.

- AUD: Monetary Policy Meeting Minutes.
- NZD: GDT Price Index.

 

KEY EQUITY & BOND MARKET DRIVERS:

- US: U.S. stock futures showed sharp losses on Wall Street on Monday, led by technology and growth-related stocks, as the Federal Reserve expected a 75-basis point rate hike on Wednesday. Investors worry that aggressive rate hikes could dampen the economic outlook and push unemployment amid stubbornly high inflation. Dow Jones and S&P 500 futures were down about 0.5% and 0.7%, respectively, while Nasdaq futures were down 0.9%. Last week, the S&P 500 and Nasdaq posted their worst weekly losses since June.

- US: The 10-year U.S. Treasury yield surged more than 3.5 percent, near its highest level since May 2010, on expectations the Federal Reserve will further accelerate the pace of monetary tightening due to stubbornly high inflation. Last week, data showed U.S. consumer prices rose at an annual rate of 8.3% in August, a weaker-than-expected pace, retail sales beat expectations, and weekly jobless claims fell to their lowest level since May, adding to the Fed's Wednesday report. Hence, a possible 100 basis point bet. The increasingly hawkish expectations raised Treasury yields, with the policy-sensitive 2-year yield surging to a 15-year high of 3.94%, inverting the 2-30-year yield curve to its steepest this century.

- GE: Germany's 10-year bond yield rose to 1.8 percent, its highest level since January 2011, and tracked a fall in global government bond prices as major central banks are expected to continue aggressive rate hikes to curb a surge in inflation. This week, the Federal Reserve, Bank of England, and the Swiss National Bank will raise borrowing costs. Meanwhile, the ECB's chief economist, Lane, said interest rates could continue to rise well into next year, underscoring the need to tighten policy as high demand is now seen as a source of inflation. To make matters worse, ECB Deputy President de Guindos said slowing economic growth was not enough to bring inflation down to healthy levels, adding to the recent emphasis on sharp interest rate hikes.

 

STOCK MARKET SECTORS:

- High: Consumer Discretionary, Industrials, Materials, Financials.

- Low:  Health Care, Real Estate, Energy.

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

- EUR: The euro traded below parity to the dollar ahead of Wednesday's Fed rate decision. U.S. policymakers expected to raise the federal funds rate by at least 75 basis points for the third time, widening the gap with the eurozone. The ECB raised interest rates by an unprecedented 75 basis points in September, following a 50-basis point hike in July, and signaled that it would raise rates further at its next meeting despite recession risks. ECB Deputy President de Guindos said that the ECB does not expect the European economic slowdown to reduce inflation, stressing that interest rates must continue to rise to keep inflation expectations stable and avoid second-round effects. The eurozone has been dealing with an unprecedented energy crisis, and analysts see a recession as inevitable, although the central bank has not signaled a possible tightening.

- USD: The U.S. dollar index steadied at 109.8 on Monday, hovering near its highest level in 20 years, as investors remained on the sidelines a week ahead of a Federal Reserve-led central bank decision expected to raise interest rates again sharply to curb a surge in inflation. Last week's higher-than-expected inflation data and solid U.S. economic data cemented expectations for further Fed tightening, with markets now pricing in a third straight 75 basis point hike, while some analysts are betting on a larger hike. The U.S. economy has also shown relative strength in the face of slowing global growth, making the dollar attractive to safety-seeking investors. Meanwhile, investors remain cautious as other major central banks, such as the Swiss National Bank and the Bank of England, are also expected to raise interest rates this week. A hawkish surprise could spur more currency volatility.

 

CHART OF THE DAY:

Italy's FTSE MIB index closed up 22,140 points on Monday, closing off early losses, tracking a slight improvement in sentiment on Wall Street as investors awaited monetary policy decisions from major central banks. In addition, the Federal Reserve, Bank of England, and Swiss National Bank are expected to raise interest rates sharply in the coming days as monetary authorities continue their efforts to bring down soaring inflation. On the corporate front, gains in the industrials and technology sectors offset losses at energy producers, with CNH industrial and Iveco up 3% and 2%, respectively, while Saipem fell 5.6%. On the other hand, heavyweight banks closed lower after rebounding last week, matching the continued decline in bond prices. Credit risks in Italy were seen higher a week before Sunday's snap election, with the latest polls showing a broad victory for the right-wing coalition.

 

 

- Italy's FTSE MIB index - D1, Resistance (consolidation) around ~ 23 232, Support (target zone) around  ~ 22074

GLOBAL CAPITAL MARKETS OVERVIEW:   European shares ended mostly higher after opening in negative territory on Monday, falling nearly 3 percent last week as investors braced for a series of central bank meetings later in the week, boosted by optimism in the Americas. U.S. policymakers are expected to raise interest rates by 75 basis points to curb soaring inflation, while central banks in Britain, China, and Japan will also decide on monetary policy. On the corporate front, Volkswagen said it aimed to raise the Porsche IPO valuation to 75 billion euros on Sunday. The DAX 40 rose 0.6%, and the STOXX 600 ended flat, hitting its highest since July. London markets are closed for the funeral of Queen Elizabeth II. The FTSE MIB index closed up 22,140 points on Monday, closing off early losses, tracking a slight improvement in sentiment on Wall Street as investors awaited monetary policy decisions from major central banks. In addition, the Federal Reserve, Bank of England, and Swiss National Bank are expected to raise interest rates sharply in the coming days as monetary authorities continue their efforts to bring down soaring inflation. On the corporate front, gains in the industrials and technology sectors offset losses at energy producers, with CNH industrial and Iveco up 3% and 2%, respectively, while Saipem fell 5.6%. Heavyweight banks closed lower after rebounding last week, matching the continued decline in bond prices. Credit risks in Italy were seen higher a week before Sunday's snap election, with the latest polls showing a broad victory for the right-wing coalition. CAC 40 pared some of its early losses to close on Monday as recession fears lingered ahead of several central bank meetings this week, including a Federal Reserve rate decision on Wednesday. It fell for the fifth session at 6,062, the lowest in more than two weeks. Among individual stocks, the worst performers were Unibail Rodamco (-3.3%), Eurofins Scientifique (-2.5%), Teleperformance (-2.3%) and Schneider Electric (-2%). Shares in TF1 Group fell 2.3%, and M6 fell 3.4% after the collapse of the French TV company's merger plan, which also affected the benchmark index. U.S. stocks rebounded from opening losses on Monday, with the Dow rebounding from a more than 300-point drop to around 30,900 and the S&P 500 and Nasdaq rising as investors reassessed the outlook for monetary policy. Inflation remains high, and the job market remains strong, cementing expectations for a third straight 0.75 percentage point rate hike later this week that would lift the federal funds rate to its target range of 3% to 3.25%. Growing concerns are that cutting inflation to the 2 percent target will tip the U.S. into recession as borrowing costs increase for corporate and individual borrowers. The market moves coincided with another sell-off in the bond market, with the 10-year U.S. government bond yield breaking above 3.5% for the first time since April 2011. Russia's ruble-based MOEX index closed flat at 2,430 on Monday, relatively close to a five-week high hit earlier this month. The little slide in recent sessions has further highlighted the disconnect between Russian financial markets and the global economy, as broad signs of a global slowdown amid tightening global monetary policy have not weighed on Moscow stock markets. Capital controls also prevented worrying selling pressure on domestic data, as the last meeting of Russia's central bank marked the end of its path to rate cuts. Meanwhile, budget figures for August showed an unusually large deficit as lower energy prices and lower European exports hit the country's revenue. Losses in energy stocks offset strong performances in banks and technology stocks, with Novartis and Tate Oil each down 1%, while TCS Group rose nearly 2%. On Monday, the S&P/TSX Composite fell 0.5% to close at 19,300, extending its sharp losses from last week as major central banks are set to raise policy rates this week, adding to aggravation of weak global growth. The Federal Reserve plans to raise its fund's rate by 75 basis points on Wednesday, but investors are extra cautious as markets see a 20% chance of a more aggressive 100 basis point hike. Fears of drastic demand destruction continued to put downward pressure on crude prices, pushing Toronto's heavyweight energy sector down sharply. Canadian Natural Resources shares were down more than 2 percent in early trading, while Cenovus Energy fell 1.5 percent. Mining stocks were also dragged as gold prices fell further as investors opted for the higher-yielding dollar. On the macroeconomic front, Canadian producer prices fell for the third month. China Shanghai Composite fell 0.35% to end at 3,116. In comparison, Shenzhen shed 0.48% to close at 11,207, its lowest level in nearly four months, with caution prevailing ahead of an important week for the central bank's decision-making. The Fed is expected to raise interest rates sharply. Geopolitical concerns also weighed on sentiment after U.S. President Joe Biden said in an interview on Sunday that the U.S. military would defend Taiwan if China invaded it. Mainland stocks fell even as the People's Bank of China cut borrowing costs for 14-day reverse repos to 2.15% from 2.25% to restore credit and support a weakening economy. In addition, the Chinese city of Chengdu lifted its two-week lockdown on Monday, allowing residents to resume normal life, provided that tests are carried out regularly. Growth-oriented tech and healthcare stocks led losses, with Orient Currency (-4%), Luxembourg Precision (-1%), and Aier Eye Hospital (-3.5%) all down sharply. Australia S&P/ASX 200 index fell 0.15% to settle at 6729, extending last week's losses as investors remained cautious ahead of this week's central bank decision and the market expected the Federal Reserve to act aggressively to fight inflation. Technology stocks led losses, with Computershare (down 4%), Block Inc (down 4%), and Catas falling sharply. com (-2%). Energy companies also fell on weaker oil and coal prices, including Woodside Energy (down 1%), Santos Ltd (down 0.5%), and Whitehaven coal (down 4%). Meanwhile, clean energy-related and gold stocks rose, with Pilbara Mining (4%), Mineral Resources (3%), and Newcrest Mining (2%) up. Elsewhere, shares of Lake Resources rose 11% after the company announced it was continuing a demonstration plant with its partner Lilac Solutions at the Cachi brine project in Argentina. At the same time, Link Administration fell 2% after rejecting a revised takeover offer from Dye & Durham. New Zealand shares fell 48.47 points, or 0.42%, to close at a near three-week low of 11,531.99 at the start of the week, edged up in early trade, and fell for the second session, with caution ahead of the Federal Reserve's monetary policy meeting and decision on Wednesday. Traders are betting on a 75-basis point hike with an 82 percent chance, according to the CME FedWatch tracker. Wall Street extended losses for a third week after FedEx issued a warning, reiterating concerns about a slowing global economic recovery. Investors now await the release of New Zealand's August trade data later this week, as well as September's third-quarter consumer confidence and business sentiment. Shares in energy and minerals, consumer, technology, and distribution services were mostly lower. The biggest laggards include New Talisman Gold Mine (-33.3%), Ampol Ltd (-6.4%), Pacific Edge Ltd (-5.9%), EROAD Ltd (-7.7%) and Savor Ltd (-6.4%) -4.8%). Hongkong Hang Seng Index fell 145 points, or 0.77%, to 18,617 in early Monday trade, near a six-month low, extending losses from the previous week as the housing crisis intensified despite solid data from the People's Bank of China and China's economy in August. But liquidity has improved. At the same time, traders were cautious about an imminent rate hike by the Federal Reserve later this week, with policymakers widely expected to raise rates by 75 basis points for the third straight time. Meanwhile, concerns over tensions between Beijing and Washington resurfaced after President Biden said in a taped interview on Sunday that U.S. troops would defend Taiwan if China invaded. Basic materials led to losses, followed by real estate, industry, and consumers. Developer Country Garden Holdings plunged 6.2%, while Sino Biopharm, Wuxi Biopharm (Cayman Islands), and Alibaba Holdings fell 5.9%, 5.4%, and 3%, respectively.   REVIEWING ECONOMIC DATA:  Looking at the last economic data: - US: In September 2022, the U.S. NAHB Housing Market Index fell to 46 for the ninth consecutive month, below the consensus forecast of 47. This is the lowest level since May 2020, as higher interest rates, ongoing supply chain disruptions for building materials, and high house prices continue to weigh on affordability. In addition, current conditions fell three points to 54, sales expectations for the next six months fell one point to 46, and the flow of potential home buyers fell slightly to 31. NAHB Chairman Jerry Conte said: "With high mortgage rates and home prices making it financially impossible for many households to buy new homes, homebuyer traffic has been weak in many markets as more consumers remain Watch.". - CA: In August 2022, Canadian producer prices fell 1.2% month-on-month, after a revised 2.5% increase in the previous month. This marked the third consecutive decline in producer prices, as energy and petroleum product costs continued to fall (-6.5%), and ammonia and fertilizer costs fell at a record pace (-19.3%). The cost of softwood lumber also fell sharply (-7.5%), and primary ferrous products (-2.1%) lost for the fifth consecutive month. On a yearly basis, producer price inflation slowed to 10.6%, the lowest level since March 2021, after a downward revision to the 11.5% gain last month. - EU: In July 2022, euro area construction output rose 1.5% year-on-year after rising 1.1% the previous month. Construction activity rose 1.4% (1.1% in June), while civil engineering work rose 1.7% (1.2% in June). On a monthly basis, construction output rose 0.3%, recovering from a 1.2% drop in June. - HK: In the three months to August 2022, Hong Kong's seasonally adjusted unemployment rate fell to 4.1% from 4.3% in the previous three months. It was the lowest unemployment rate in the three months to January, as the labor market continued to improve with a recovery in domestic economic activity, supported partly by the second phase of the consumer voucher program. Unemployment fell by 6,300 to 161,900, while workers rose by 16,200 to 3,609,300. Unemployment fell in almost all sectors, mainly building decoration, repair and maintenance, and arts, recreation, and entertainment. - CN: In the first eight months of this year, China's foreign direct investment rose 16.4 percent year-on-year to 892.74 billion yuan ($138.41 billion), data from China's Ministry of Commerce showed. In dollar terms, foreign direct investment rose by 20.2%. In addition, foreign investment in services grew by 8.7%, while FDI inflows in high-tech sectors surged by 33.6%. Among the main investment sources, FDI inflows to China mainly came from South Korea (58.9%), Germany (30.3%), Japan (26.8%), and the United Kingdom (17.2%). - NZ: New Zealand's Service Performance Index (PSI) climbed sharply to 58.6 in August 2022 from an upwardly revised 52.7 last month. It was the fourth consecutive month of growth in services sector activity, the strongest growth since November 2017 and well above the long-term average of 53.6. Two key sub-indices, new activity/sales (67.1 vs. 54.4, July) and new orders (66.5 vs. 53.4), both rose significantly, while inventories (59.6 vs. 53.7) were at their highest levels since November 2019. Meanwhile, the employment rate (50.8 vs. 49.3) remains slightly subdued, and the birth rate (49.6 vs. 47.6) remains in contraction. Doug Steel, the senior economist at BNZ, said: "Overall, combining August's strong PSI with last week's firmer PMI yields a composite index (PCI) that points to 2022 No. Annual GDP growth will be close to 5% in the third quarter. - NZ: In early trade on Monday, the ANZ 50 rose 23 points, or 0.2%, to 11,603, after falling 1.5% in the previous week. Reports say that New Zealand's services sector activity rose for the sixth consecutive month in August, the fastest pace since April 2021, as the economy recovered from the Covid-19 pandemic. Meanwhile, flash U.S. data showed consumer sentiment hit a five-month high in September, inflation expectations recently fell to a one-year low, and the outlook for the next five years improved. Gains were limited, however, as investors were on high alert for a rate hike imminent at the Fed's meeting this week. Early winners include Paysause Ltd (5.1%), Metro Performance Glass (4.8%), Radius Residential Care (4.4%), and Accordant Group Ltd (3.3%).   LOOKING AHEAD:    Today, investors will receive the following: - CAD: CPI m/m, Common CPI y/y, Median CPI y/y, Trimmed CPI y/y, Core CPI m/m, and Gov Council Member Beaudry Speaks. - USD: Building Permits and Housing Starts. - EUR: German PPI m/m, Current Account, and ECB President Lagarde Speaks. - CHF: Trade Balance and SECO Economic Forecasts. - JPY: National Core CPI y/y. - AUD: Monetary Policy Meeting Minutes. - NZD: GDT Price Index.   KEY EQUITY & BOND MARKET DRIVERS: - US: U.S. stock futures showed sharp losses on Wall Street on Monday, led by technology and growth-related stocks, as the Federal Reserve expected a 75-basis point rate hike on Wednesday. Investors worry that aggressive rate hikes could dampen the economic outlook and push unemployment amid stubbornly high inflation. Dow Jones and S&P 500 futures were down about 0.5% and 0.7%, respectively, while Nasdaq futures were down 0.9%. Last week, the S&P 500 and Nasdaq posted their worst weekly losses since June. - US: The 10-year U.S. Treasury yield surged more than 3.5 percent, near its highest level since May 2010, on expectations the Federal Reserve will further accelerate the pace of monetary tightening due to stubbornly high inflation. Last week, data showed U.S. consumer prices rose at an annual rate of 8.3% in August, a weaker-than-expected pace, retail sales beat expectations, and weekly jobless claims fell to their lowest level since May, adding to the Fed's Wednesday report. Hence, a possible 100 basis point bet. The increasingly hawkish expectations raised Treasury yields, with the policy-sensitive 2-year yield surging to a 15-year high of 3.94%, inverting the 2-30-year yield curve to its steepest this century. - GE: Germany's 10-year bond yield rose to 1.8 percent, its highest level since January 2011, and tracked a fall in global government bond prices as major central banks are expected to continue aggressive rate hikes to curb a surge in inflation. This week, the Federal Reserve, Bank of England, and the Swiss National Bank will raise borrowing costs. Meanwhile, the ECB's chief economist, Lane, said interest rates could continue to rise well into next year, underscoring the need to tighten policy as high demand is now seen as a source of inflation. To make matters worse, ECB Deputy President de Guindos said slowing economic growth was not enough to bring inflation down to healthy levels, adding to the recent emphasis on sharp interest rate hikes.   STOCK MARKET SECTORS: - High: Consumer Discretionary, Industrials, Materials, Financials. - Low:  Health Care, Real Estate, Energy.   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  - EUR: The euro traded below parity to the dollar ahead of Wednesday's Fed rate decision. U.S. policymakers expected to raise the federal funds rate by at least 75 basis points for the third time, widening the gap with the eurozone. The ECB raised interest rates by an unprecedented 75 basis points in September, following a 50-basis point hike in July, and signaled that it would raise rates further at its next meeting despite recession risks. ECB Deputy President de Guindos said that the ECB does not expect the European economic slowdown to reduce inflation, stressing that interest rates must continue to rise to keep inflation expectations stable and avoid second-round effects. The eurozone has been dealing with an unprecedented energy crisis, and analysts see a recession as inevitable, although the central bank has not signaled a possible tightening. - USD: The U.S. dollar index steadied at 109.8 on Monday, hovering near its highest level in 20 years, as investors remained on the sidelines a week ahead of a Federal Reserve-led central bank decision expected to raise interest rates again sharply to curb a surge in inflation. Last week's higher-than-expected inflation data and solid U.S. economic data cemented expectations for further Fed tightening, with markets now pricing in a third straight 75 basis point hike, while some analysts are betting on a larger hike. The U.S. economy has also shown relative strength in the face of slowing global growth, making the dollar attractive to safety-seeking investors. Meanwhile, investors remain cautious as other major central banks, such as the Swiss National Bank and the Bank of England, are also expected to raise interest rates this week. A hawkish surprise could spur more currency volatility.   CHART OF THE DAY: Italy's FTSE MIB index closed up 22,140 points on Monday, closing off early losses, tracking a slight improvement in sentiment on Wall Street as investors awaited monetary policy decisions from major central banks. In addition, the Federal Reserve, Bank of England, and Swiss National Bank are expected to raise interest rates sharply in the coming days as monetary authorities continue their efforts to bring down soaring inflation. On the corporate front, gains in the industrials and technology sectors offset losses at energy producers, with CNH industrial and Iveco up 3% and 2%, respectively, while Saipem fell 5.6%. On the other hand, heavyweight banks closed lower after rebounding last week, matching the continued decline in bond prices. Credit risks in Italy were seen higher a week before Sunday's snap election, with the latest polls showing a broad victory for the right-wing coalition.     - Italy's FTSE MIB index - D1, Resistance (consolidation) around ~ 23 232, Support (target zone) around  ~ 22074