Stock Market Update

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

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note while Japan's Nikkei (-1.5%) widened its pullback from a record high. Japan's trade balance report for July showed a decrease in exports to all major trading partners. The People's Bank of China made no changes to its one-year and five-year loan prime rates, which was expected. The Reserve Bank of New Zealand lowered its official cash rate by 25 basis points to 3.00%, but a couple policymakers were in favor of a larger cut. Acting Governor Hawkesby said that the Kiwi economy stalled in Q2. Bank Indonesia unexpectedly lowered its policy rate by 25 basis points to 5.00%.

• In economic data:
  • Japan's July trade deficit JPY300 bln (expected deficit of JPY70 bln; last deficit of JPY250 bln). July Imports -7.5% yr/yr (expected -10.4%; last 0.3%) and Exports -2.6% yr/yr (expected -2.1%; last -0.5%). June Core Machinery Orders 3.0% m/m (expected -0.4%; last -0.6%); 7.6% yr/yr (expected 5.0%; last 4.4%)

---Equity Markets---

• Japan's Nikkei: -1.5%
• Hong Kong's Hang Seng: +0.2%
• China's Shanghai Composite: +1.0%
• India's Sensex: +0.3%
• South Korea's Kospi: -0.7%
• Australia's ASX All Ordinaries: UNCH

Major European indices trade mostly lower. The U.K.'s inflation accelerated unexpectedly in July, putting some pressure on expectations for the next rate cut from the Bank of England. Separately, there was more speculation about the British government taxing sales of high-value properties to help plug a GBP40 bln budget gap. Central banks in Sweden and Iceland left their policy rates unchanged at 2.00% and 7.50%, respectively.

• In economic data:
  • Eurozone's July CPI 0.0% m/m, as expected (last 0.3%); 2.0% yr/yr, as expected (last 2.0%). July Core CPI -0.2% m/m, as expected (last 0.4%); 2.3% yr/yr, as expected (last 2.3%)
  • Germany's July PPI -0.1% m/m (expected 0.1%; last 0.1%); -1.5% yr/yr (expected -1.3%; last -1.3%)
  • U.K.'s July CPI 0.1% m/m (expected -0.1%; last 0.3%); 3.8% yr/yr (expected 3.7%; last 3.6%). July Core CPI 0.2% m/m (expected 0.1%; last 0.4%); 3.8% yr/yr (expected 3.7%; last 3.7%). July RPI 0.4% m/m (expected 0.1%; last 0.4%) and Core RPI 0.4% m/m (last 0.4%). July House Price Index 3.7% yr/yr (expected 4.0%; last 3.9%)

---Equity Markets---

• STOXX Europe 600: +0.2%
• Germany's DAX: -0.4%
• U.K.'s FTSE 100: +0.6%
• France's CAC 40: +0.1%
• Italy's FTSE MIB: -0.2%
• Spain's IBEX 35: -0.2%