Daily Summary - Another Day of Steep Indices Declines

FOMC Minutes: The Federal Open Market Committee (FOMC) meeting minutes did not trigger significant market shifts, but they were largely perceived as hawkish. The minutes revealed that Fed members are more concerned with inflation than the labor market, although it is important to note the meeting occurred before the disappointing July non-farm payrolls data. While some members favored waiting for the situation to become clearer, the majority expressed greater concern about inflation.

US Dollar: The dollar saw a minor strengthening after the FOMC minutes, but the Fed's true stance will likely be revealed during Fed Chair Powell's speech at the Jackson Hole symposium on Friday.

US Equities: The situation on Wall Street remains weak, with a second consecutive day of sharp pullbacks. The US100 futures contract is down 1.1%, while the US500 is down 0.65%.

European Equities: Germany's DE40 continues its decline, falling 0.45% amid worsening sentiment. The defense sector is losing value due to concerns over potential peace negotiations, which could lead to a reduction in military orders.

Asian Markets: The Asian session concluded with significant gains for the Shanghai Composite, while the Nikkei 225 dropped 1.5%. The People's Bank of China (PBOC) kept its one-year and five-year loan prime rates unchanged at 3.0% and 3.5%, respectively, as expected.

RBNZ Decision: The Reserve Bank of New Zealand (RBNZ) cut interest rates to 3.0% as expected and delivered a dovish message, hinting at further potential cuts. This resulted in a 1% decline in the New Zealand dollar against the US dollar. RBNZ Deputy Governor Hawkesby stated he was comfortable with a weaker NZ dollar. However, today's decision was not unanimous, with four members voting for the cut and two voting against.

UK Inflation: UK CPI inflation came in stronger than expected at 3.8% year-on-year, against expectations of 3.7% and the previous reading of 3.6%. Services inflation rose by a notable 5%. This higher inflation reduces the likelihood of further interest rate cuts. Despite this, the pound is weaker against the US dollar today.

Eurozone Inflation: Final eurozone inflation was confirmed at 2.0%, in line with expectations and the preliminary reading. On a month-over-month basis, inflation was unchanged.

US Politics: Donald Trump has called for Fed Governor Cook to resign from her position following alleged real estate fraud charges. If Cook were to resign, Trump would have the opportunity to select another person for the Fed Board of Governors who would be more favorable to him.

Oil Markets: Crude oil is attempting to rebound today. According to the Department of Energy (DOE), crude oil inventories fell by a substantial 6 million barrels, compared to an expected drop of 0.8 million barrels. Gasoline inventories also decreased by 2.7 million barrels against an expected decline of 0.3 million. However, distillate inventories rose by 2.3 million barrels, exceeding the expected increase of 1.5 million.

Retail Earnings: Results from Target and Lowe's were mixed. Target's earnings, while better than expected, showed continued challenges with sales growth. The company's stock is down over 7% today. Lowe's gained 0.5% after its results, though this marked a significant pullback from its earlier session highs.

Estée Lauder: Shares of Estée Lauder fell after the company published a pessimistic profit outlook for 2025, citing ongoing challenges with weak demand in key markets.

Riksbank: The Riksbank kept its policy rate unchanged at 2%, in line with market expectations. The central bank hinted at the possibility of further rate cuts later this year, depending on economic conditions and inflation.