Daily Market Overview by IFC Markets

US stocks retreated on Tuesday on concerns over the negative impact of China’s 1.9% yuan devaluation on US economy. The dollar strengthened, with the ICE US Dollar Index, a measure of the dollar’s strength against a basket of six currencies, rising 0.2%. The S&P 500 500 fell 1% closing at 2084.07, led by losses in the materials sector, which declined 1.9%. Shares of exporters and makers of luxury goods sold off. Apple plunged 5.2% as 27 % of its sales in the second quarter came from China. General Motors and Tiffany & Co. declined more than 2.1%. Miner Freeport-McMoRan plunged 12%. Today at 12:00 CET Mortgage Applications will be released in US. At 15:00 CET July job openings and labor turnover summary report will be released. The tentative outlook is positive. At 15:30 US crude oil inventory will be published by Energy Information Administration. And at 19:00 CET July monthly budget statement will be released.
European stocks tumbled on Tuesday on concerns the Chinese yuan devaluation will hurt euro-zone exports to world’s second largest economy. The euro strengthened against the dollar as Greece agreed on terms of third bailout with its international creditors. The deal must still be approved by the parliaments of the euro-zone countries. The Stoxx Europe 600 lost 1.6%. Euro-zone exporters including automakers and makers of luxury goods were hit hardest. BMW fell 4.3%, Daimler AG sank 5.2%, and Volkswagen lost 3.7%. Germany’s DAX 30 was down 2.7% as exporter shares fell, and stayed lower after ZEW indicator of German economic expectations fell in August to 25.0 from 29.7 in July. The Athex Composite rose 2.1% after the country moved closer to receiving 86 billion euros as an agreement was reached on third bailout with creditors. Today at 10:00 CET June industrial production will be released in euro-zone. The tentative outlook is positive. At 9:30 CET job market data will be released in UK. The tentative outlook is negative for the Pound. Tomorrow at 7:00 CET final consumer price index for July will be released in Germany. The tentative outlook is neutral.

Nikkei fell 1.2% to two-week lows today as yen rose on haven demand after Chinese yuan fell for the second day. Exporters fell with steelmakers leading decliners. Tomorrow at 00:50 CET June Machine orders will be published in Japan. The tentative outlook is negative. At the same time financial data on foreign and domestic purchases of bonds and stocks will be released.
Chinese yuan fell for the second day as the central bank set yuan’s midpoint rate lower than Tuesday’s closing market rate. The official data released today showed factory output growth slowed further to 6% in July from a year earlier, and fixed asset investment and retail sales were also weaker than expected.
Commodity futures are falling today following yuan’s declines.

Oil futures are extending losses today after falling to six-year lows on Tuesday on concerns yuan’s depreciation will lower China’s oil import demand at the time when OPEC reported the organization’s output rose to its highest level in more than three years. Global supply glut persists as major producers pump more crude oil in an effort to retain revenues as prices fall.

Nickel led decliners among industrial metals today as it fell 3.1%, with aluminum, lead, zinc and tin declining at least 1% and copper slipping 0.5% on London Metal Exchange.

Global equities mixed after Wall Street selloff

Equity index futures are mixed currently ahead of US ISM Services PMI report scheduled for 16:00 CET today after Wall Street selloff Monday. Facebook shares lost 4.9% after its Messenger app, Instagram, Whatsapp and other products were offline before a whistleblower testimony at a Senate hearing today how the company repeatedly chose “profit over safety” in its operations, Tesla shares rose 0.81% on Monday outperforming marrket despite news the electric vehicle maker must pay $137 million to black ex-worker over hostile work environment, racism.

The Dollar strengthening has resumed . The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, lost 0.3% on Monday despite US Census Bureau report US factory orders jumped in August.

Both EUR/USD and GBP/USD continued climbing Monday despite Sentix report the momentum of the economic recovery in the euro-zone continued to slow down. Both Pound and Euro are lower against the Dollar currently. AUD/USD continued advancing while USD/JPY continued retreating Monday with both the Australian dollar and yen lower against the Greenback currently.

Futures on three main US stock indexes are up while US 10-year Treasury yields inched up to 1.495% currently. Stocks ended solidly lower Monday while Treasury prices declined on concerns about expected raising of the government’s debt ceiling as the United States faces the risk of a historic default in two weeks. The three major Wall Street stock benchmarks recorded daily losses in the range of 0.94% to 2.14% led by tech shares.

European stock indexes are up currently after ending down Monday led by tech shares. Asian indexes are mixed today while Nikkei tumbled to one-month low leading losses with growth-oriented shares hit hard as rising oil prices stoked further worries about inflation. Investors are watching closely to see if Evergrande default develops into a default for China property sector after trading in the company shares were halted for trading on Monday.

Commodity Market news

Commodities Change
Brent Crude Oil +0.64%
WTI Crude +0.47%

Brent is extending gains currently ahead of data from the American Petroleum Institute later today. Prices closed solidly higher Monday as The Organization of the Petroleum Exporting Countries and its allies including Russia, collectively known as OPEC+, said on Monday it would maintain an agreement to increase oil production only gradually. United States and India had called to boost output. US West Texas Intermediate WTI rose 2.3% and is higher currently. Brent gained 2.5% to $81.86 a barrel on Monday.