Research Summary
This report discusses the current economic climate, focusing on the impact of oil prices, bond issuance, PMI numbers, and currency fluctuations. It also touches on the performance of various markets, including Asia, Australia, Europe, the Middle East, Africa, and the Americas. The report highlights the effects of these factors on different sectors, such as technology, airlines, and financial services.
Key Takeaways
Oil Prices and Market Reactions
- Oil Price Increase: The report mentions a rise in oil prices to $90/bbl, which has caused fear in the markets and pushed yields higher. This is due to extended production cuts from Saudi Arabia and Russia.
- Impact on Bond Issuance: The rise in oil prices has also led to an increase in Investment Grade bond issuance, pushing prices down and causing yields to rise.
- Market Response: The markets are giving up their gains as yields and the US Dollar Index remain strong. The yield curve has inverted more, and oil prices remain elevated.
PMI Numbers and Economic Indicators
- US S&P Global PMI: The August US S&P Global PMI posted 50.5, down from July’s final of 52.3, indicating a weaker rise in output primarily due to a contraction in new business.
- Asian Market Performance: Asian equities ended mixed, with the MSCI Asia ex-Japan index lower again. New orders and new export orders came in slightly higher for both the NBS and Caixin Manufacturing PMI numbers.
- European Market Performance: European equity markets ended lower, with banks and financial services underperforming. German industrial orders declined more than expected in July, dampening spirits in the Eurozone.
Technology and Financial Services
- Technology Sector: The new Huawei phone is getting a lot of attention, with the US National Security Adviser seeking more details on reports that Huawei has developed an advanced 7nm processor for its Mate 60 Pro device.
- Financial Services: The Bundesbank chief pushed back on speculation that rate cuts would come shortly after the ECB reaches peak rate. The Bank of England Governor stated that it is much nearer to the end of the tightening cycle.
- Airlines: Several airlines have warned about higher Q3 fuel costs. Jet fuel costs have jumped nearly 25% since the start of the earnings season.
Actionable Insights
- Monitor Oil Prices: The rise in oil prices is causing significant market reactions. It’s crucial to keep an eye on these fluctuations and their potential impact on various sectors.
- Watch PMI Numbers: PMI numbers are key indicators of economic health. Tracking these numbers can provide insights into market trends and potential investment opportunities.
- Focus on Technology and Financial Services: These sectors are experiencing significant changes and developments. Staying informed about these changes can help identify potential opportunities and risks.
