Stock Market Update

The S&P 500 futures currently trade 69 points below fair value. 

Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. South Korea's CPI unexpectedly deflated in August (-0.1%), causing the yr/yr growth rate to slow to 1.7% from 2.1%. South Korea is expected to gradually increase defense spending and President Lee called for bold steps to boost the potential growth rate. Japan's top trade negotiator said that there is no disagreement with the U.S. after last week's visit to Washington was canceled.

• In economic data:
  • Japan's August Monetary Base -4.1% yr/yr (expected -3.5%; last -3.9%)
  • South Korea's August CPI -0.1% m/m (expected 0.2%; last 0.2%); 1.7% yr/yr (expected 2.0%; last 2.1%) 
  • Australia's Q2 Current Account deficit AUD13.7 bln (expected deficit of AUD15.9 bln; last deficit of AUD14.1 bln). Q2 Net Exports Contribution 0.1% (expected 0.3%; last -0.1%)
  • New Zealand's Q2 Terms of Trade Index 4.1% qtr/qtr (expected 2.1%; last 1.9%)

---Equity Markets---

• Japan's Nikkei: +0.3%
• Hong Kong's Hang Seng: -0.5%
• China's Shanghai Composite: -0.5%
• India's Sensex: -0.3%
• South Korea's Kospi: +0.9%
• Australia's ASX All Ordinaries: -0.3%

Major European indices trade in the red while regional sovereign debt also trades lower. The British government is facing growing pressure to allay the market's concerns about the nation's fiscal standing. This has driven yields on longer-dated gilts to levels not seen in nearly 30 years. There was also some uncertainty linked to next week's confidence vote in the French government. European Central Bank policymakers Schnabel and Simkus said that there is no current need for a rate cut.

• In economic data:
  • Eurozone's flash August CPI 0.2% m/m (last 0.0%); 2.1% yr/yr, as expected (last 2.0%). Flash August Core CPI 0.3% m/m (last -0.2%); 2.3% yr/yr (expected 2.2%; last 2.3%)
  • France's July budget balance -EUR142.0 bln (expected -EUR107.2 bln; last -EUR100.4 bln)
  • Italy's July PPI 0.5% m/m (last 1.4%); 1.6% yr/yr (last 2.4%)
  • Spain's August Unemployment Change 21,900 (expected 14,200; last -1,400)

---Equity Markets---

• STOXX Europe 600: -1.4%
• Germany's DAX: -1.9%
• U.K.'s FTSE 100: -0.8% 
• France's CAC 40: -0.7%
• Italy's FTSE MIB: -1.4%
• Spain's IBEX 35: -1.7%