Stock Market Update

The S&P 500 futures currently trade four points below fair value. 

Equity indices in the Asia-Pacific ended the week on a mostly higher note with Japan's Nikkei (+0.9%) and South Korea's Kospi (+1.5%) hitting fresh records. The U.S. and Japan reaffirmed their commitment to allowing the market to determine exchange rates. The Chinese government will assist local governments with more than $1 trillion in bills. Securities Times expects the People's Bank of China to resume buying bonds in Q4.

• In economic data:
  • China's August New Loans CNY590.0 bln (expected CNY700.0 bln; last -CNY50.0 bln), August Outstanding Loan Growth 6.8% yr/yr (expected 6.9%; last 6.9%), and August total social financing CNY2.57 trln (expected CNY2.46 trln; last CNY1.13 trln)
  • Japan's July Industrial Production -1.2% m/m (expected -1.6%; last 2.1%) and Capacity Utilization -1.1% m/m (last -1.8%)
  • India's August CPI 2.07% yr/yr (expected 2.10%; last 1.61%)
  • New Zealand's August Business PMI 49.9 (last 52.8). August Electronic Card Retail Sales 0.7% m/m (last 0.2%); 0.9% yr/yr (last 1.7%)

---Equity Markets---

• Japan's Nikkei: +0.9% (+4.1% for the week)
• Hong Kong's Hang Seng: +1.2% (+3.8% for the week)
• China's Shanghai Composite: -0.1% (+1.5% for the week)
• India's Sensex: +0.4% (+1.5% for the week)
• South Korea's Kospi: +1.5% (+5.9% for the week)
• Australia's ASX All Ordinaries: +0.6% (-0.1% for the week)

Major European indices are on course for a mostly lower finish to the week. The U.K. reported no growth for July and a sharp drop in Industrial Production (-0.9% m/m), fueling concerns about stagflation taking hold. European Central Bank policymaker Patsalides cautioned that the next policy change could be a rate hike, and that there is no current need for action unless there is a shock. However, other ECB policymakers hinted at the potential for another cut by the end of the year.

• In economic data:
  • Germany's August CPI 0.1% m/m, as expected (last 0.3%); 2.2% yr/yr, as expected (last 2.0%)
  • U.K.'s July GDP 0.0% m/m, as expected (last 0.4%); 1.4% yr/yr (expected 1.5%; last 1.4%). July Construction Output 0.2% m/m (expected -0.2%; last 0.3%); 2.4% yr/yr (expected 1.9%; last 1.5%). July Industrial Production -0.9% m/m (expected 0.0%; last 0.7%); 0.1% yr/yr (expected 1.1%; last 0.2%). July Manufacturing Production -1.3% m/m (expected 0.1%; last 0.5%); 0.2% yr/yr (expected 1.6%; last 0.0%). July trade deficit GBP22.24 bln (expected deficit of GBP21.60 bln; last deficit of GBP22.16 bln) o France's August CPI 0.4% m/m, as expected (last 0.2%); 0.9% yr/yr, as expected (last 1.0%)
  • Italy's Q2 Unemployment Rate 6.3% (expected 6.1%; last 6.1%)
  • Spain's August CPI 0.0% m/m, as expected (last -0.1%); 2.7% yr/yr, as expected (last 2.7%). August Core CPI 2.4% yr/yr, as expected (last 2.3%)

---Equity Markets---

• STOXX Europe 600: -0.1% (+1.1% week-to-date)
• Germany's DAX: -0.1% (+0.3% week-to-date)
• U.K.'s FTSE 100: +0.3% (+1.3% week-to-date)
• France's CAC 40: -0.3% (+1.7% week-to-date)
• Italy's FTSE MIB: flat (+1.9% week-to-date)
• Spain's IBEX 35: -0.6% (+2.6% week-to-date)