GLOBAL CAPITAL MARKETS OVERVIEW:  

On Tuesday, the Dow fell more than 200 points, while the S&P 500 and Nasdaq each lost nearly 0.9%, as investors held back positions ahead of the results of the Federal Reserve's two-day policy meeting, which begins today. The U.S. central bank is almost certain to raise its key rate by 75 basis points, with money markets currently estimating an 18% chance of a sharp 100 basis point hike. On the corporate front, Ford shares fell more than 5% after warning that supply chain issues would cost the company an additional $1 billion in the third quarter. Meanwhile, Treasury yields continued to rise, hitting new multi-year highs, putting further pressure on tech and other growth-related stocks. Canada's S&P/TSX Composite index fell more than 1% to 19,350 on Tuesday, erasing gains from the previous session as investors digested a better-than-expected CPI report and continued Pressure on low growth concerns as major central banks are set to tighten policy further. In August, annual inflation in Canada was 7%, beating expectations of 7.3% and continuing to slide from a 39-year high of 8.1% hit two months ago. Hopes that inflation may have passed its peak and a sudden rise in unemployment last week made it possible for the Bank of China to curtail the aggressiveness of its rate hike path, pushing the Canadian dollar to near two-year lows. Market sentiment was also weighed down ahead of an expected rate hike this week from major central banks, including the Federal Reserve. Toronto gold miners were the biggest losers, with B2Gold and Canterra Gold down 6% and 3%, respectively. The ruble-based MOEX index fell 11% before recovering slightly, hovering at 7% at 2,265 on news that Moscow intends to annex Ukrainian territory in addition to new aggressive measures to cover Russia's looming budget deficit. The separate republics of Donetsk and Luhansk, as well as parts of Kherson under Russian control, will hold referendums to become part of Russia. At the same time, the Kremlin wants to collect more than 3 trillion rubles in taxes to cover its expected budget deficit, with higher taxes and tariffs on energy exports, which will increase by 1.4 trillion rubles next year. As a result, heavier-weighted energy stocks fell 11% on average, with Gazprom down 7% on the prospect of hefty taxes on record profits this year. Budget figures for August showed an unusually broad deficit as lower energy prices and lower European exports hit the country's revenue. The FTSE 100 erased early gains, trading near the flat line in early trade on Tuesday, in line with European peers, as sentiment remained subdued ahead of this week's major central bank meetings. The Bank of England is expected to raise interest rates by 50 or 75 basis points on Thursday in response to a spike in inflation while achieving a soft landing. The Fed's policy decision will be in focus early Wednesday, with the central bank expected to announce a third straight 75 basis point rate hike to combat inflation. Ocado Group was the worst performer, down more than 7%, followed by Ashtead Group and Persimmon Group, each down more than 5%. Glencore, UK Realty, and Kingfisher each fell 2 percent. On the other hand, oil majors BP and Shell rose more than 1%. Europe's major stock indexes gave back their opening gains on Tuesday, with the DAX 40 and STOXX 600 down around 0.7% in early trade. The prospect of faster global rate hikes and a potential recession continued to worry investors. Sweden's central bank raised interest rates by a full percentage point, the largest increase since November 1992 and above market expectations. Meanwhile, the U.S. Federal Reserve is expected to announce a rate hike of 75 basis points at the end of its two-day meeting on Wednesday, while U.K. policymakers are expected to raise rates by as much as 75 basis points on Thursday. On the corporate front, Germany's Henkel raised its 2022 organic sales outlook based on strong sales growth in its adhesives division, while Volkswagen's €70bn-75bn Porsche IPO remains on track. Continue. On the economic data front, German producer price inflation hit a new high in August, mainly driven by rising energy costs. The CAC 40 offset early gains, falling 0.3% to close at around 6,041 on Tuesday, on track for a sixth straight session of losses, as investors weighed in on the prospect of further tightening of monetary conditions ahead of a slew of central bank monetary policy decisions. trade-off. Among individual stocks, Teleperformance, Eurofins Scientifique, Thales, Capgemini, Dassault Systemes, and ArcelorMittal led losses, each down more than 2%. Italy's FTSE MIB index fell 0.4% to close at 22,075, offsetting modest gains in the previous session, as investors continued to assess the outlook for global growth and inflation ahead of a series of interest rate hikes by major central banks this week. The Federal Reserve, Bank of England, and neighboring Swiss National Bank are expected to tighten policy after Sweden's Riksbank surprised markets and raised key interest rates by 100 basis points. Lenders in Milan have recorded losses to stem a steady rise since the European Central Bank raised borrowing costs this month amid pressure from losses on Italy's BTP. Banca Generali fell more than 3 percent, while Finecobank shares lingered down 2 percent. Credit risks in Italy are expected to be higher a week before Sunday's snap election, with the latest polls showing a broad victory for the right-wing coalition. On Tuesday, the Shanghai Composite rose 0.22% to close at 3,122, while the Shenzhen Composite rose 0.69% to 11,284, slightly recovering from a near four-month low and tracking a rebound in global equities. At the same time, investors focused on China's Market reaction after the central bank kept its benchmark lending rate unchanged. The People's Bank of China kept the prime rate for 1-year loans at 3.65% and the 5-year loan rate at 4.3% in its September fixed rate as authorities paused monetary easing measures to stem a rapid fall in the yuan and capital outflow. Growth-oriented new energy stocks led the market higher and rebounded from recent lows. Tianqi Lithium (8%), Contemporary Ampere (2%), Sungrow (4%), Ganfeng Lithium (3%) Helongji Green Energy (4%) rose strongly. Meanwhile, investors remained cautious about global central banks' expectations of a rate hike this week. New Zealand shares rose 38 points, or 0.33%, to settle at 11,570.43 on Tuesday after losses in the previous two sessions sent the index to its lowest level in three weeks while tracking Wall Street's positive lead before the Federal Reserve slashed interest rates to curb inflation. In China, Beijing renewed its commitment to spurring economic recovery by speeding up projects and stimulating consumption. Meanwhile, the People's Bank of China kept key lending rates unchanged amid a sharp fall in the yuan. The consumer, non-energy, and financial and business services sectors posted significant gains. Gentrack Group Limited rose 5.1%, followed by NZ King Salmon Investments (4.6%), Seeka Limited (3.9%), and Third Age Health Services (3.5%). A2 Milk Corp rose 2.8 percent, supported by rising exports to China. Traders are now expecting the release of New Zealand trade data for August and third-quarter consumer and business confidence in September. Australia S&P/ASX 200 rose 1.22% to close at 6802, up from a two-month low, tracking overnight gains on Wall Street as the market tried to recover from recent losses ahead of an expected rate hike from the Federal Reserve. Mining and energy stocks led the market, commodity prices rebounded, and BHP Billiton (3%), Rio Tinto (2%), South32 (3%), Woodside Energy (2%), and Santos Ltd (2%) were a strong rise. Financial stocks also added points to the index, with the "big four" banks all up more than 1 percent. Gold and clean energy-related stocks also rose, extending sharp gains in the previous session. Meanwhile, growth-oriented healthcare and technology stocks have lagged behind the market. The Nikkei 225 rose 1.2 percent to around 27,900 post-holiday trading on Tuesday, recouping some of last week's losses and taking some cues from overnight trading on Wall Street as markets tended to trend ahead of an expected rate hike from the Federal Reserve. Investors also assessed data showing Japan's headline inflation accelerated faster in August as rising raw material costs and inflationary pressures from a weaker yen expanded.

 

REVIEWING ECONOMIC DATA: 

Looking at the last economic data:

- US: In August 2022, U.S. building permits, representing future construction, fell 10% to an annualized rate of 1.517 million, well below market expectations of 1.61 million. This was the largest drop since April 2020 and the lowest level since June 2020. Single-family authorizations fell 3.5% to 899,000 units, while approvals for construction units of five or more units fell 18.5% to 571,000 units. Permits decreased in the Northeast (down 15.2% to 139,000), Midwest (down 6.5% to 201,000), South (down 11.5% to 8.02 million) and West (down 1.1% to 375,000).

- US: In August 2022, U.S. housing starts unexpectedly increased by 12.2% month-on-month, with an annualized rate of 1.575 million units, exceeding market expectations of 1.455 million units. It was the largest increase since March last year, although data from previous months were revised to show a 10.9% drop in starts in July. Despite the economic recovery in August, the housing sector remains under pressure from soaring material prices and rising mortgage rates. Single-family housing rose 3.4% to 935,000 units, and starts for five or more homes rose 28.6% to 621,000 units. The Midwest (19.3% to 167,000), South (24.5% to 885,000) and West (1.1% to 361,000) had higher start rates, but declined in the Northeast (-17.3% to 162,000).

- TW: In August 2022, Taiwan's export orders rose 2% year-on-year to US$54.587 billion, rebounding from a 1.9% decline in July and exceeding market forecasts for a 2% decline. Minerals orders surged 134%, electronics orders surged 15.4%, textile orders surged 6%, and Infocomm orders surged 3.1%. By contrast, orders for base metals (-22.6%), machinery (-15.2%) and transportation equipment (-9.8%) fell. Orders from the United States rose 7.5%, while orders from China and Hong Kong fell 25.5%.

- IT: Italy's current account surplus was 1.636 billion euros in July 2022, shrinking sharply from 8.706 billion euros a year earlier. Still, it was the first surplus since March and the largest since October 2021. The commodity account surplus narrowed to 1.011 billion euros from 9.024 billion euros, mainly due to more expensive energy imports, and the secondary income deficit widened to 1.656 billion euros from 1.521 billion euros. On the other hand, the service gap narrowed from 337 million euros to 350 million euros, and the primary account surplus increased from 1.541 billion euros to 2.315 billion euros.

- SW: In September 2022, the Riksbank raised its benchmark interest rate by an unprecedented 100 basis points to 1.75%, beating expectations of 75 basis points, and said rates would continue to rise over the next six months. The decision comes after two successive lower interest rate hikes, aimed at tackling inflation, now at its highest level in 30 years, and supporting the krona, which is near a record low in 2001. Riksbank policymakers pointed out that higher price growth is hurting the purchasing power of consumers and households and hindering the ability to finance plans. The year-end benchmark rate forecast was revised to nearly 2.25%. Meanwhile, inflation is projected to average 8.6% this year and 8.5% in 2023, sharply revised upwards. Under current forecasts, inflation is expected to normalize to 2% by 2025.

- JP: In August 2022, Japan's food inflation rate climbed to 4.7%, the highest level in nearly eight years, from 4.4% the previous month. The latest results mark the 12th consecutive month of increases in food prices, driven by fresh food (8.1% vs 8.3%, July), fresh vegetables (3.8% vs 5.6%), fresh fruit (9.4% vs 7.7%), fish and seafood (10.9%vs 10.4%), meat (4.1%vs 3.3%), dairy products (1.0%vs 1.2%), cakes and sweets (5.0%vs 4.8%), oils, fats (7.1%vs 7.3%) ), dining out (3.5% vs 3.2%), cereals (6.5% vs 5.7%), cooked food (5.3% vs 4.7%) and beverages (1.4% vs 1.2%). Meanwhile, alcoholic beverage prices continued to fall (-0.2% vs. -0.2%).

- JP: Japan's core consumer price index (excluding fresh food but including fuel costs) rose 2.8% in August 2022 from a year earlier, beating expectations of 2.7% and accelerating from a 2.4% rise in July as raw material costs The gains and a weaker yen pushed prices higher. Core inflation also topped the central bank's 2 percent target for a fifth month, challenging the Bank of Japan, which sees such cost-push inflation as transitory and a consumption risk. Analysts said Japan's inflation is expected to stay above the central bank's target for most of this year as global economic turmoil and a weaker yen lead to higher import costs and fuel and food prices. Meanwhile, the Bank of Japan is widely expected to keep interest rates ultra-low at its September meeting to support a fragile economic recovery despite inflation and monetary pressures.

- JP: Japan's annual inflation rate rose from 2.6% in July to 3.0% in August 2022. It was the 12th straight month of increases in consumer prices and the fastest growth since September 2014. The yen fell as food and fuel costs soared after Russia invaded Ukraine. The main upward pressure comes from food costs (4.7% vs 4.4% in July), transportation (0.6% vs -0.2%), fuel, lighting and water (15.6% vs 14.7%), clothing (1.5% vs 1.4%) ), housing (0.6% vs. 0.6%), furniture (4.4% vs. 3.9%), education (0.7% vs. 0.7%), culture and entertainment (1.6% vs. 0.7%), and miscellaneous (1.2% vs. 1.2%). On the other hand, medical expenses continued to decline (-0.7% vs. -0.6%). Core consumer prices rose 2.8% year-on-year, the highest level since October 2014, and rose 2.4% in July, beating forecasts of 2.7% and above the Bank of Japan's 2% target for the fifth straight month. On a month-on-month basis, consumer prices rose 0.4%, after rising 0.5% in July, the highest since January 2021.

 

LOOKING AHEAD:   

Today, investors will receive:

- USD: Crude Oil Inventories, FOMC Economic Projections, FOMC Statement, Federal Funds Rate, and FOMC Press Conference.

- AUD: MI Leading Index m/m, CB Leading Index m/m, and RBA Deputy Gov Bullock Speak.

- GBP: Public Sector Net Borrowing, and CBI Industrial Order Expectations.

- NZD: Credit Card Spending y/y.

- EUR: German 10-y Bond Auction.

 

KEY EQUITY & BOND MARKET DRIVERS:

- FR: French 10-year OAT yields topped 2.4 percent, the highest since September 2011, as investors braced for a slew of expected rate hikes from major central banks. The Federal Reserve is set to raise its funding rate by 75 basis points for the third time, with policymakers saying borrowing costs will remain restrained until price growth stabilizes at a healthy level. The ECB will continue to raise interest rates next year, as Chief Economist Ryan said consumer demand is also an inflation factor. At its last meeting, the ECB raised its three main interest rates by 75 basis points and its inflation forecasts for 2022 and 2023 to an average of 8.1% and 5.5%, respectively.

- GE: German 10-year bond yields topped 1.9 percent, their highest level since December 2011, and tracked a surge in global bond yields as central banks extend their aggressive rate hike paths to rein in soaring inflation. Big banks such as the Federal Reserve, Bank of England, and Swiss National Bank are set to tighten after Sweden's Riksbank surprised markets by raising its benchmark interest rate by a full percentage point policy. Meanwhile, European Central Bank Chief Economist Ryan said high demand in the eurozone economy is causing inflation, adding that interest rates will continue rising until 2023. In addition, ECB Deputy President Deguinido said that slowing growth is not enough to bring inflation down to healthy levels, and recently emphasized that it will raise interest rates significantly.

- US: U.S. futures reversed earlier gains and pointed to a lower opening on Tuesday as investors grew more anxious as the two-day Federal Open Market Committee (FOMC) meeting began. The Fed is expected to raise interest rates for the third time tomorrow by 75 basis points, but some analysts believe it could raise the Fed funds rate by a full percentage point. Meanwhile, Treasury yields continued to rise, hitting multi-year highs. Dow futures fell nearly 100 points, while S&P 500 and Nasdaq futures lost 0.3%. In regular trading Monday, the Dow rose 198 points, the S&P 500 gained 0.7%, and the tech-heavy Nasdaq gained 0.8%.

- US: As the two-day Federal Open Market Committee meeting began, the 10-year U.S. Treasury note yield hit 3.54%, its highest level since April 2011. The Fed is widely expected to raise rates by another 75 basis points, and bets on a full one-point hike have been pared back. Investors will also be closely monitoring so-called dot plots to forecast interest rate movements later this year. At the same time, the 2-year Treasury bond yield exceeded 3.98%, the highest since November 2007, and the 30-year Treasury bond exceeded 3.5%, the highest since April 2014. On Monday, the yield curve for 2-year and 10-year Treasuries inverted by -48 basis points. An inversion of this yield curve part is often seen as a sign of a recession in a year or two.

- US: The Fed is expected to increase by 75 basis points during its September 2022 meeting, which would be the third straight hike of three-quarters of a basis point, pushing borrowing costs to a range of 3%-3.25%, the highest since 2008 Level. Some analysts still believe the central bank could raise interest rates more steeply. Meanwhile, the so-called dot plot is expected to show rates could hit 4% by December, up from 3.4% projected in June, before rising to around 4.5% next year, up from 3.8% three months ago. Fed policymakers have been reaffirming their commitment to lower inflation, which is near its highest level in 40 years. Investors will also closely monitor new forecasts for inflation, unemployment, and GDP.

- UK: UK 10-year gilt yields widened to 3.3%, the highest since July 2011, as the Bank of England is likely to raise interest rates by 75 basis points this week in a bid to curb stubbornly high inflation. Recent data showed that Britain's core inflation accelerated to its highest level since 1992 in August, while headline inflation remained well above policymakers' 2 percent target. Elsewhere, UK finance minister Kwasi Kwarteng will provide more details on Friday on the size of the government's energy support package.

- UK: Britain's FTSE 100 futures rose on Tuesday, boosted by a rebound in global stocks as trading resumed after Queen Elizabeth II's funeral, as markets found some footing ahead of expectations for several central bank rate hikes this week. The Federal Reserve's policy decision will focus this week, announcing a third straight 75 basis point rate hike expected to fight inflation. A hawkish surprise could further fuel market volatility. Meanwhile, investors remain divided on whether the Bank of England will raise interest rates by 50 or 75 basis points this week as it looks for a soft landing and grapples with soaring inflation.

 

STOCK MARKET SECTORS:

- High: None.

- Low: Materials, Real Estate, Health Care, Consumer Discretionary.

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

- CAD: The Canadian dollar fell below 1.33 to its lowest level since October 2020, as weaker-than-expected domestic inflation data slightly eased expectations about how aggressively the Bank of Canada will extend its path to rate hikes. Consumer prices in Canada rose 7% on a yearly basis in August, below expectations for a 7.3% increase and well below the 39-year peak of 8.1% two months ago. Disappointing employment data for August, with Canadians' unemployment rate rising to 5.4 percent from a projected 5 percent, added incentive to slow rate hikes. Meanwhile, investors awaited a policy decision from the Federal Reserve on Wednesday.

- USD: The U.S. dollar index rose more than 110 against a basket of currencies on Tuesday, near its highest level in 20 years, as investors digested a week of strong U.S. housing data and the Federal Reserve is set to raise interest rates for the third time in a row. U.S. policymakers are expected to raise rates by 75 basis points on Wednesday to ease mounting inflationary pressures, with some analysts betting on a larger rate hike across the board. In addition, the U.S. economy has been showing relatively strong momentum in the face of slowing global growth, making the dollar more attractive to safety-seeking investors. Meanwhile, markets are eyeing meetings of other major central banks, with the Swiss National Bank and the Bank of England also expected to raise interest rates this week.

 

CHART OF THE DAY:

Sweden's krona continued to weaken to 10.8 against the dollar on Tuesday, a record low, surpassed only in 2001, amid concerns over Sweden's economic outlook after the Riksbank raised interest rates by 100 basis points more than expected. It was the largest rate hike in nearly three decades as policymakers tried to rein in inflation, which is currently at 9%. The bank said it will continue to raise interest rates over the next six months. The latest data points to a slowdown in the economy as households put off consumption amid rising energy costs. Retail sales fell in July, the third straight monthly decline. In addition, the August PMI showed factory activity rose at the least since April 2019 and business confidence fell to a 17-month low. The krona is the second-worst performer of major currencies this year, down nearly 20% against the dollar and 5% against the euro.

 

- USDSEK - W1, Resistance (target zone) around ~ 11.20226, Support around  ~ 10.4500

GLOBAL CAPITAL MARKETS OVERVIEW:   On Tuesday, the Dow fell more than 200 points, while the S&P 500 and Nasdaq each lost nearly 0.9%, as investors held back positions ahead of the results of the Federal Reserve's two-day policy meeting, which begins today. The U.S. central bank is almost certain to raise its key rate by 75 basis points, with money markets currently estimating an 18% chance of a sharp 100 basis point hike. On the corporate front, Ford shares fell more than 5% after warning that supply chain issues would cost the company an additional $1 billion in the third quarter. Meanwhile, Treasury yields continued to rise, hitting new multi-year highs, putting further pressure on tech and other growth-related stocks. Canada's S&P/TSX Composite index fell more than 1% to 19,350 on Tuesday, erasing gains from the previous session as investors digested a better-than-expected CPI report and continued Pressure on low growth concerns as major central banks are set to tighten policy further. In August, annual inflation in Canada was 7%, beating expectations of 7.3% and continuing to slide from a 39-year high of 8.1% hit two months ago. Hopes that inflation may have passed its peak and a sudden rise in unemployment last week made it possible for the Bank of China to curtail the aggressiveness of its rate hike path, pushing the Canadian dollar to near two-year lows. Market sentiment was also weighed down ahead of an expected rate hike this week from major central banks, including the Federal Reserve. Toronto gold miners were the biggest losers, with B2Gold and Canterra Gold down 6% and 3%, respectively. The ruble-based MOEX index fell 11% before recovering slightly, hovering at 7% at 2,265 on news that Moscow intends to annex Ukrainian territory in addition to new aggressive measures to cover Russia's looming budget deficit. The separate republics of Donetsk and Luhansk, as well as parts of Kherson under Russian control, will hold referendums to become part of Russia. At the same time, the Kremlin wants to collect more than 3 trillion rubles in taxes to cover its expected budget deficit, with higher taxes and tariffs on energy exports, which will increase by 1.4 trillion rubles next year. As a result, heavier-weighted energy stocks fell 11% on average, with Gazprom down 7% on the prospect of hefty taxes on record profits this year. Budget figures for August showed an unusually broad deficit as lower energy prices and lower European exports hit the country's revenue. The FTSE 100 erased early gains, trading near the flat line in early trade on Tuesday, in line with European peers, as sentiment remained subdued ahead of this week's major central bank meetings. The Bank of England is expected to raise interest rates by 50 or 75 basis points on Thursday in response to a spike in inflation while achieving a soft landing. The Fed's policy decision will be in focus early Wednesday, with the central bank expected to announce a third straight 75 basis point rate hike to combat inflation. Ocado Group was the worst performer, down more than 7%, followed by Ashtead Group and Persimmon Group, each down more than 5%. Glencore, UK Realty, and Kingfisher each fell 2 percent. On the other hand, oil majors BP and Shell rose more than 1%. Europe's major stock indexes gave back their opening gains on Tuesday, with the DAX 40 and STOXX 600 down around 0.7% in early trade. The prospect of faster global rate hikes and a potential recession continued to worry investors. Sweden's central bank raised interest rates by a full percentage point, the largest increase since November 1992 and above market expectations. Meanwhile, the U.S. Federal Reserve is expected to announce a rate hike of 75 basis points at the end of its two-day meeting on Wednesday, while U.K. policymakers are expected to raise rates by as much as 75 basis points on Thursday. On the corporate front, Germany's Henkel raised its 2022 organic sales outlook based on strong sales growth in its adhesives division, while Volkswagen's €70bn-75bn Porsche IPO remains on track. Continue. On the economic data front, German producer price inflation hit a new high in August, mainly driven by rising energy costs. The CAC 40 offset early gains, falling 0.3% to close at around 6,041 on Tuesday, on track for a sixth straight session of losses, as investors weighed in on the prospect of further tightening of monetary conditions ahead of a slew of central bank monetary policy decisions. trade-off. Among individual stocks, Teleperformance, Eurofins Scientifique, Thales, Capgemini, Dassault Systemes, and ArcelorMittal led losses, each down more than 2%. Italy's FTSE MIB index fell 0.4% to close at 22,075, offsetting modest gains in the previous session, as investors continued to assess the outlook for global growth and inflation ahead of a series of interest rate hikes by major central banks this week. The Federal Reserve, Bank of England, and neighboring Swiss National Bank are expected to tighten policy after Sweden's Riksbank surprised markets and raised key interest rates by 100 basis points. Lenders in Milan have recorded losses to stem a steady rise since the European Central Bank raised borrowing costs this month amid pressure from losses on Italy's BTP. Banca Generali fell more than 3 percent, while Finecobank shares lingered down 2 percent. Credit risks in Italy are expected to be higher a week before Sunday's snap election, with the latest polls showing a broad victory for the right-wing coalition. On Tuesday, the Shanghai Composite rose 0.22% to close at 3,122, while the Shenzhen Composite rose 0.69% to 11,284, slightly recovering from a near four-month low and tracking a rebound in global equities. At the same time, investors focused on China's Market reaction after the central bank kept its benchmark lending rate unchanged. The People's Bank of China kept the prime rate for 1-year loans at 3.65% and the 5-year loan rate at 4.3% in its September fixed rate as authorities paused monetary easing measures to stem a rapid fall in the yuan and capital outflow. Growth-oriented new energy stocks led the market higher and rebounded from recent lows. Tianqi Lithium (8%), Contemporary Ampere (2%), Sungrow (4%), Ganfeng Lithium (3%) Helongji Green Energy (4%) rose strongly. Meanwhile, investors remained cautious about global central banks' expectations of a rate hike this week. New Zealand shares rose 38 points, or 0.33%, to settle at 11,570.43 on Tuesday after losses in the previous two sessions sent the index to its lowest level in three weeks while tracking Wall Street's positive lead before the Federal Reserve slashed interest rates to curb inflation. In China, Beijing renewed its commitment to spurring economic recovery by speeding up projects and stimulating consumption. Meanwhile, the People's Bank of China kept key lending rates unchanged amid a sharp fall in the yuan. The consumer, non-energy, and financial and business services sectors posted significant gains. Gentrack Group Limited rose 5.1%, followed by NZ King Salmon Investments (4.6%), Seeka Limited (3.9%), and Third Age Health Services (3.5%). A2 Milk Corp rose 2.8 percent, supported by rising exports to China. Traders are now expecting the release of New Zealand trade data for August and third-quarter consumer and business confidence in September. Australia S&P/ASX 200 rose 1.22% to close at 6802, up from a two-month low, tracking overnight gains on Wall Street as the market tried to recover from recent losses ahead of an expected rate hike from the Federal Reserve. Mining and energy stocks led the market, commodity prices rebounded, and BHP Billiton (3%), Rio Tinto (2%), South32 (3%), Woodside Energy (2%), and Santos Ltd (2%) were a strong rise. Financial stocks also added points to the index, with the "big four" banks all up more than 1 percent. Gold and clean energy-related stocks also rose, extending sharp gains in the previous session. Meanwhile, growth-oriented healthcare and technology stocks have lagged behind the market. The Nikkei 225 rose 1.2 percent to around 27,900 post-holiday trading on Tuesday, recouping some of last week's losses and taking some cues from overnight trading on Wall Street as markets tended to trend ahead of an expected rate hike from the Federal Reserve. Investors also assessed data showing Japan's headline inflation accelerated faster in August as rising raw material costs and inflationary pressures from a weaker yen expanded.   REVIEWING ECONOMIC DATA:  Looking at the last economic data: - US: In August 2022, U.S. building permits, representing future construction, fell 10% to an annualized rate of 1.517 million, well below market expectations of 1.61 million. This was the largest drop since April 2020 and the lowest level since June 2020. Single-family authorizations fell 3.5% to 899,000 units, while approvals for construction units of five or more units fell 18.5% to 571,000 units. Permits decreased in the Northeast (down 15.2% to 139,000), Midwest (down 6.5% to 201,000), South (down 11.5% to 8.02 million) and West (down 1.1% to 375,000). - US: In August 2022, U.S. housing starts unexpectedly increased by 12.2% month-on-month, with an annualized rate of 1.575 million units, exceeding market expectations of 1.455 million units. It was the largest increase since March last year, although data from previous months were revised to show a 10.9% drop in starts in July. Despite the economic recovery in August, the housing sector remains under pressure from soaring material prices and rising mortgage rates. Single-family housing rose 3.4% to 935,000 units, and starts for five or more homes rose 28.6% to 621,000 units. The Midwest (19.3% to 167,000), South (24.5% to 885,000) and West (1.1% to 361,000) had higher start rates, but declined in the Northeast (-17.3% to 162,000). - TW: In August 2022, Taiwan's export orders rose 2% year-on-year to US$54.587 billion, rebounding from a 1.9% decline in July and exceeding market forecasts for a 2% decline. Minerals orders surged 134%, electronics orders surged 15.4%, textile orders surged 6%, and Infocomm orders surged 3.1%. By contrast, orders for base metals (-22.6%), machinery (-15.2%) and transportation equipment (-9.8%) fell. Orders from the United States rose 7.5%, while orders from China and Hong Kong fell 25.5%. - IT: Italy's current account surplus was 1.636 billion euros in July 2022, shrinking sharply from 8.706 billion euros a year earlier. Still, it was the first surplus since March and the largest since October 2021. The commodity account surplus narrowed to 1.011 billion euros from 9.024 billion euros, mainly due to more expensive energy imports, and the secondary income deficit widened to 1.656 billion euros from 1.521 billion euros. On the other hand, the service gap narrowed from 337 million euros to 350 million euros, and the primary account surplus increased from 1.541 billion euros to 2.315 billion euros. - SW: In September 2022, the Riksbank raised its benchmark interest rate by an unprecedented 100 basis points to 1.75%, beating expectations of 75 basis points, and said rates would continue to rise over the next six months. The decision comes after two successive lower interest rate hikes, aimed at tackling inflation, now at its highest level in 30 years, and supporting the krona, which is near a record low in 2001. Riksbank policymakers pointed out that higher price growth is hurting the purchasing power of consumers and households and hindering the ability to finance plans. The year-end benchmark rate forecast was revised to nearly 2.25%. Meanwhile, inflation is projected to average 8.6% this year and 8.5% in 2023, sharply revised upwards. Under current forecasts, inflation is expected to normalize to 2% by 2025. - JP: In August 2022, Japan's food inflation rate climbed to 4.7%, the highest level in nearly eight years, from 4.4% the previous month. The latest results mark the 12th consecutive month of increases in food prices, driven by fresh food (8.1% vs 8.3%, July), fresh vegetables (3.8% vs 5.6%), fresh fruit (9.4% vs 7.7%), fish and seafood (10.9%vs 10.4%), meat (4.1%vs 3.3%), dairy products (1.0%vs 1.2%), cakes and sweets (5.0%vs 4.8%), oils, fats (7.1%vs 7.3%) ), dining out (3.5% vs 3.2%), cereals (6.5% vs 5.7%), cooked food (5.3% vs 4.7%) and beverages (1.4% vs 1.2%). Meanwhile, alcoholic beverage prices continued to fall (-0.2% vs. -0.2%). - JP: Japan's core consumer price index (excluding fresh food but including fuel costs) rose 2.8% in August 2022 from a year earlier, beating expectations of 2.7% and accelerating from a 2.4% rise in July as raw material costs The gains and a weaker yen pushed prices higher. Core inflation also topped the central bank's 2 percent target for a fifth month, challenging the Bank of Japan, which sees such cost-push inflation as transitory and a consumption risk. Analysts said Japan's inflation is expected to stay above the central bank's target for most of this year as global economic turmoil and a weaker yen lead to higher import costs and fuel and food prices. Meanwhile, the Bank of Japan is widely expected to keep interest rates ultra-low at its September meeting to support a fragile economic recovery despite inflation and monetary pressures. - JP: Japan's annual inflation rate rose from 2.6% in July to 3.0% in August 2022. It was the 12th straight month of increases in consumer prices and the fastest growth since September 2014. The yen fell as food and fuel costs soared after Russia invaded Ukraine. The main upward pressure comes from food costs (4.7% vs 4.4% in July), transportation (0.6% vs -0.2%), fuel, lighting and water (15.6% vs 14.7%), clothing (1.5% vs 1.4%) ), housing (0.6% vs. 0.6%), furniture (4.4% vs. 3.9%), education (0.7% vs. 0.7%), culture and entertainment (1.6% vs. 0.7%), and miscellaneous (1.2% vs. 1.2%). On the other hand, medical expenses continued to decline (-0.7% vs. -0.6%). Core consumer prices rose 2.8% year-on-year, the highest level since October 2014, and rose 2.4% in July, beating forecasts of 2.7% and above the Bank of Japan's 2% target for the fifth straight month. On a month-on-month basis, consumer prices rose 0.4%, after rising 0.5% in July, the highest since January 2021.   LOOKING AHEAD:    Today, investors will receive: - USD: Crude Oil Inventories, FOMC Economic Projections, FOMC Statement, Federal Funds Rate, and FOMC Press Conference. - AUD: MI Leading Index m/m, CB Leading Index m/m, and RBA Deputy Gov Bullock Speak. - GBP: Public Sector Net Borrowing, and CBI Industrial Order Expectations. - NZD: Credit Card Spending y/y. - EUR: German 10-y Bond Auction.   KEY EQUITY & BOND MARKET DRIVERS: - FR: French 10-year OAT yields topped 2.4 percent, the highest since September 2011, as investors braced for a slew of expected rate hikes from major central banks. The Federal Reserve is set to raise its funding rate by 75 basis points for the third time, with policymakers saying borrowing costs will remain restrained until price growth stabilizes at a healthy level. The ECB will continue to raise interest rates next year, as Chief Economist Ryan said consumer demand is also an inflation factor. At its last meeting, the ECB raised its three main interest rates by 75 basis points and its inflation forecasts for 2022 and 2023 to an average of 8.1% and 5.5%, respectively. - GE: German 10-year bond yields topped 1.9 percent, their highest level since December 2011, and tracked a surge in global bond yields as central banks extend their aggressive rate hike paths to rein in soaring inflation. Big banks such as the Federal Reserve, Bank of England, and Swiss National Bank are set to tighten after Sweden's Riksbank surprised markets by raising its benchmark interest rate by a full percentage point policy. Meanwhile, European Central Bank Chief Economist Ryan said high demand in the eurozone economy is causing inflation, adding that interest rates will continue rising until 2023. In addition, ECB Deputy President Deguinido said that slowing growth is not enough to bring inflation down to healthy levels, and recently emphasized that it will raise interest rates significantly. - US: U.S. futures reversed earlier gains and pointed to a lower opening on Tuesday as investors grew more anxious as the two-day Federal Open Market Committee (FOMC) meeting began. The Fed is expected to raise interest rates for the third time tomorrow by 75 basis points, but some analysts believe it could raise the Fed funds rate by a full percentage point. Meanwhile, Treasury yields continued to rise, hitting multi-year highs. Dow futures fell nearly 100 points, while S&P 500 and Nasdaq futures lost 0.3%. In regular trading Monday, the Dow rose 198 points, the S&P 500 gained 0.7%, and the tech-heavy Nasdaq gained 0.8%. - US: As the two-day Federal Open Market Committee meeting began, the 10-year U.S. Treasury note yield hit 3.54%, its highest level since April 2011. The Fed is widely expected to raise rates by another 75 basis points, and bets on a full one-point hike have been pared back. Investors will also be closely monitoring so-called dot plots to forecast interest rate movements later this year. At the same time, the 2-year Treasury bond yield exceeded 3.98%, the highest since November 2007, and the 30-year Treasury bond exceeded 3.5%, the highest since April 2014. On Monday, the yield curve for 2-year and 10-year Treasuries inverted by -48 basis points. An inversion of this yield curve part is often seen as a sign of a recession in a year or two. - US: The Fed is expected to increase by 75 basis points during its September 2022 meeting, which would be the third straight hike of three-quarters of a basis point, pushing borrowing costs to a range of 3%-3.25%, the highest since 2008 Level. Some analysts still believe the central bank could raise interest rates more steeply. Meanwhile, the so-called dot plot is expected to show rates could hit 4% by December, up from 3.4% projected in June, before rising to around 4.5% next year, up from 3.8% three months ago. Fed policymakers have been reaffirming their commitment to lower inflation, which is near its highest level in 40 years. Investors will also closely monitor new forecasts for inflation, unemployment, and GDP. - UK: UK 10-year gilt yields widened to 3.3%, the highest since July 2011, as the Bank of England is likely to raise interest rates by 75 basis points this week in a bid to curb stubbornly high inflation. Recent data showed that Britain's core inflation accelerated to its highest level since 1992 in August, while headline inflation remained well above policymakers' 2 percent target. Elsewhere, UK finance minister Kwasi Kwarteng will provide more details on Friday on the size of the government's energy support package. - UK: Britain's FTSE 100 futures rose on Tuesday, boosted by a rebound in global stocks as trading resumed after Queen Elizabeth II's funeral, as markets found some footing ahead of expectations for several central bank rate hikes this week. The Federal Reserve's policy decision will focus this week, announcing a third straight 75 basis point rate hike expected to fight inflation. A hawkish surprise could further fuel market volatility. Meanwhile, investors remain divided on whether the Bank of England will raise interest rates by 50 or 75 basis points this week as it looks for a soft landing and grapples with soaring inflation.   STOCK MARKET SECTORS: - High: None. - Low: Materials, Real Estate, Health Care, Consumer Discretionary.   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  - CAD: The Canadian dollar fell below 1.33 to its lowest level since October 2020, as weaker-than-expected domestic inflation data slightly eased expectations about how aggressively the Bank of Canada will extend its path to rate hikes. Consumer prices in Canada rose 7% on a yearly basis in August, below expectations for a 7.3% increase and well below the 39-year peak of 8.1% two months ago. Disappointing employment data for August, with Canadians' unemployment rate rising to 5.4 percent from a projected 5 percent, added incentive to slow rate hikes. Meanwhile, investors awaited a policy decision from the Federal Reserve on Wednesday. - USD: The U.S. dollar index rose more than 110 against a basket of currencies on Tuesday, near its highest level in 20 years, as investors digested a week of strong U.S. housing data and the Federal Reserve is set to raise interest rates for the third time in a row. U.S. policymakers are expected to raise rates by 75 basis points on Wednesday to ease mounting inflationary pressures, with some analysts betting on a larger rate hike across the board. In addition, the U.S. economy has been showing relatively strong momentum in the face of slowing global growth, making the dollar more attractive to safety-seeking investors. Meanwhile, markets are eyeing meetings of other major central banks, with the Swiss National Bank and the Bank of England also expected to raise interest rates this week.   CHART OF THE DAY: Sweden's krona continued to weaken to 10.8 against the dollar on Tuesday, a record low, surpassed only in 2001, amid concerns over Sweden's economic outlook after the Riksbank raised interest rates by 100 basis points more than expected. It was the largest rate hike in nearly three decades as policymakers tried to rein in inflation, which is currently at 9%. The bank said it will continue to raise interest rates over the next six months. The latest data points to a slowdown in the economy as households put off consumption amid rising energy costs. Retail sales fell in July, the third straight monthly decline. In addition, the August PMI showed factory activity rose at the least since April 2019 and business confidence fell to a 17-month low. The krona is the second-worst performer of major currencies this year, down nearly 20% against the dollar and 5% against the euro.   - USDSEK - W1, Resistance (target zone) around ~ 11.20226, Support around  ~ 10.4500