• US stocks closed lower with the S&P 500 closing below its 50DMA for the first time since March
• APAC stocks were pressured following the declines on Wall St amid the broad risk-off mood
• European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.3% after the cash market closed down by 1.0% yesterday
• RBNZ kept rates unchanged as expected and reiterated the OCR will need to remain at a restrictive level for the foreseeable future
• DXY is a touch softer above 103, EUR/USD is supported by 1.09, USD/JPY maintains 145 status, NZD leads post-RBNZ
• Looking ahead, highlights include UK CPI, EZ GDP & Unemployment Rate, US Building Permits & Industrial Production, FOMC Minutes, Supply from Germany

US TRADE

EQUITIES

• US stocks traded lower with the S&P 500 closing below its 50DMA for the first time since March as markets digested the slew of data releases from across the globe including the disappointing Chinese activity data and hawkish inflation numbers from Canada, while stronger-than-expected US Retail Sales did little to spur risk appetite and coincided with the release of a weak Empire State manufacturing survey. The losses were led by the energy sector as oil prices declined amid the macro-related headwinds and financials were also hit following a warning by Fitch of potential downgrades for dozens of banks.
• SPX -1.16% at 4,437, NDX -1.10% at 15,037, DJIA -1.02% at 34,946, RUT -1.29% at 1,895.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Kashkari (voter) said they can take a little more time to observe the data to see if they need to raise rates more, while he is not ready to say that they are done raising rates and noted that cutting rates would be a "long time away" but added that they may need to lower nominal rates sometime next year.
• White House said it does not see any reason to have a government shutdown next month.

APAC TRADE

EQUITIES

• APAC stocks were pressured following the declines on Wall St amid the broad risk-off mood, which was triggered by global macro headwinds, in particular, the recent slew of weak data from China.
• ASX 200 was led lower by the large industries, while participants also digested earnings and a softer leading index.
• Nikkei 225 dipped beneath the 32,000 level as all major bourses suffered from the falling tide across stocks.
• Hang Seng and Shanghai Comp remained pressured amid China growth concerns as recent poor data releases have prompted several banks to cut their growth forecasts for the world’s second-largest economy including JPMorgan which now anticipates 4.8% GDP growth for China this year, while the latest House Price data also showed a contraction Y/Y to add to the ongoing developer woes.
• US equity futures were uneventful and languished around the prior day's trough.
• European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.3% after the cash market closed down by 1.0% yesterday.

FX

• DXY was rangebound after mixed US data and comments from Fed’s Kashkari, while the attention turns to FOMC Minutes.
• EUR/USD traded uneventfully with price action stuck around support at the 1.0900 level.
• GBP/USD flatlined at the 1.2700 level as participants await incoming UK inflation data.
• USD/JPY was little changed but sustained a firm footing above 145.00 despite the downbeat sentiment and recent renewal of verbal intervention by Japanese government officials.
• Antipodeans were initially pressured although NZD/USD then recovered after the RBNZ kept rates unchanged at 5.50% and reiterated the OCR will need to remain at a restrictive level for the foreseeable future, while its OCR projections were slightly lifted to suggest a small chance of a hike next year and that it no longer sees chances of a rate cut by December next year. However, Governor Orr pushed back against this during the press conference in which he stated that the rise in the OCR track is not forward guidance and is not a strong signal of their next move
• PBoC set USD/CNY mid-point at 7.1986 vs exp. 7.2878 (prev. 7.1768)

FIXED INCOME

• 10yr UST futures traded mildly higher amid slightly softer yields and the broad risk-off conditions.
• Bund futures took a breather after rebounding from yesterday’s lows but remained sub-131.00.
• 10yr JGB futures were uneventful after the prior day’s whipsawing and despite the BoJ’s presence in the market.

COMMODITIES

• Crude futures were lacklustre as the risk-off mood offset the bullish private sector crude inventory data.
• US Energy Inventory Data (bbls): Crude -6.2mln (exp. -2.3mln), Gasoline +0.7mln (exp. -1.3mln), Distillate -0.8mln (exp. -0.5mln), Cushing -1.0mln.
• Woodside Energy (WDS AT) reiterated that parties reached an in-principle agreement on a number of issues key to workforce related to its Australian LNG operation and that positive progress is being made, although the Alliance union said Woodside Energy is well off the pace on key bargaining issues.
• Spot gold traded rangebound with a floor at the USD 1900/oz level.
• Copper futures were stuck near the prior day's worst levels amid the ongoing China slowdown concerns.

CRYPTO

• Bitcoin was choppy and largely ignored the China-related pressure seen across risk assets.
• Binance is to shut down crypto payments service amid a refocus on core products, according to CoinDesk.

NOTABLE ASIA-PAC HEADLINES

• RBNZ kept the OCR unchanged at 5.50% as expected, while it noted that the Committee agreed that the OCR will need to remain at a restrictive level for the foreseeable future and the current level of interest rates is constraining spending and hence inflation pressure, as anticipated and required. RBNZ also stated that headline inflation and inflation expectations have declined but measures of core inflation remain too high, as well as noted there is a risk in the near-term that activity and inflation measures do not slow as much as expected. Furthermore, it slightly raised OCR projections which is seen at 5.57% in September 2024 (prev. 5.43%) and at 5.50% in December 2024 (prev. 5.30%).
• RBNZ Governor Orr said during the press conference that the rise in the OCR track is not forward guidance and is not a strong signal of their next move, while they are wary about doing too much on rates. Orr noted that risks in the next few months are that activity could be stronger than projected, while he responded that there will always be the risk of another rate hike as there is always the risk of a rate cut when asked if there are risks of another hike, and stated that they are very comfortable where the OCR is.

DATA RECAP

• Chinese House Prices YY (Jul) -0.1% (Prev. 0.0%)
• Australian Leading Index MM (Jul) -0.03% (Prev. 0.12%)

GEOPOLITICS

• Ukraine said Russian drones were over the Danube and headed towards river port Izmail. It was also reported that Russia's Defence Ministry said it destroyed three Ukrainian drones over Russia's Kaluga region, according to Reuters.
• Russia is testing a digital Rouble in efforts to bypass sanctions, according to Bloomberg.
• US is in talks with Turkey, Ukraine, and Kyiv’s neighbours to increase the use of alternative export routes for Ukrainian grain, according to WSJ citing officials.
• US Secretary of State Blinken said he cannot confirm a report of Iran slowing its nuclear programme.
• Chinese Defence Minister Li Shangfu said during a visit to Russia that playing with fire on the Taiwan issue and vainly trying to control China with Taiwan is bound to end in failure, according to Reuters.
• North Korea said US soldier Travis King confessed he decided to come over to North Korea as he harboured ill feelings against the US Army and expressed a willingness to seek refuge in North Korea or a third country, according to KCNA.

EU/UK

• Italy's Deputy PM has called for a watered-down version of the government's bank windfall tax, whereby the levy will only apply on the incomes of larger lenders that are overseen by the ECB, according to FT citing Italian press.