China reported a falling trade balance. EU insists on the introduction of taxes on the income of energy companies

September 7, 2022

The US service sector PMI Index rose to a four-month high on higher demand. The index of business activity and new orders rose to the highest levels in a year, reflecting both continued changes in purchasing habits and solid wage growth. The dollar index and Treasury yields increased sharply amid the data, with the 10-year Treasury yields rising to a new three-month high. At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 0.54%, and the S&P 500 Index (US500) fell by 0.40%. The NASDAQ Technology Index (US100) lost 0.74% on Tuesday.

According to the latest PMI survey, global manufacturing declined in August for the first time since June 2020. The decline, while very modest, reflects an increasingly widespread deterioration in manufacturing and demand conditions across both sectors and regions. Companies are also taking a more cautious approach to controlling costs and employment as the economic climate worsens. CentralBbanks are raising interest rates amid an economic slowdown that, while bearing fruit in terms of lower inflation, increases the risk of a deepening global downturn and possible recession.

The White House confirmed that the United States will not list Russia as a sponsor of terrorism. This is the final decision.

Equity markets in Europe traded without a single dynamic yesterday. German DAX (DE30) gained 0.87%, French CAC 40 (FR40) added 0.19%, Spanish IBEX 35 (ES35) was 0.26% lower, British FTSE 100 (UK100) closed on Tuesday with a 0.18% gain.

The new British Prime Minister Liz Truss outlined her top three priorities: growing the economy by cutting taxes, taking action on energy bills, and strengthening the NHS (National Health Service).

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German energy giant Uniper warned Tuesday that the worst is yet to come for Europe, as worries about Russian gas supplies to Europe in the fall and winter continue to drive up prices.

The EU is pushing for national taxes on energy companies’ inflated profits to counter what European Commission President Ursula von der Leyen called “astronomical” energy bills. The planned taxes, to be discussed by EU energy ministers on Friday, would target both fossil fuel producers and low-carbon energy companies that have made super profits thanks to artificially inflated electricity prices.

The European Commission approved a proposal to suspend the visa facilitation agreement with Russia completely as of September 12.

According to the IEA, global coal consumption will rise to a record high in the near future, even though coal remains the dirtiest fuel of all the major fossil fuels. Already, global coal prices are trading at unusually high levels.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.03% yesterday, Hong Kong’s Hang Seng (HK50) ended yesterday down 0.12%, and Australia’s S&P/ASX 200 (AU200) fell by 0.38% yesterday.

Australia’s annual GDP at the end of July was 3.6% instead of the expected 3.4%. Quarterly GDP grew by 0.9% from the previous value of +0.8%. Australian stock index ASX 200 gained slightly on this news.

China’s trade balance for August was 535.91 billion yuan, compared to the expected 504.85 billion yuan, and 682.69 billion yuan last year. Exports jumped by 11.8% last month against an expected 15.7%. The country’s imports grew by 4.6% against the expected 8.7%. Markets treated the data as negative as exports and imports missed the expectations.

S&P 500 (F) (US500) 3,908.55 −15.71 (−0.40%)

Dow Jones (US30) 31,148.07 −170.37 (−0.54%)

DAX (DE40) 12,871.44 +110.66 (+0.87%)

FTSE 100 (UK100) 7,300.443 +13.01 (+0.18%)

USD Index 110.243 +0.71 (+0.64%)

Important events for today:

– Australia GDP (q/q) at 04:30 (GMT+3);
– German Industrial Production (m/m) at 09:00 (GMT+3);
– UK BoE Monetary Policy Report (m/m) at 12:00 (GMT+3);
– UK BoE Gov Bailey Speaks (m/m) at 12:00 (GMT+3);
– Eurozone GDP (q/q) at 12:00 (GMT+3);
– Canada BoC Interest Rate Decision (m/m) at 17:00 (GMT+3);
– Canada BoC Rate Statement (m/m) at 17:00 (GMT+3);
– Canada Ivey PMI (m/m) at 17:00 (GMT+3);
– US FOMC Member Mester Speaks (m/m) at 17:00 (GMT+3);
– US FOMC Member Brainard Speaks (m/m) at 19:35 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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China reported a falling trade balance. EU insists on the introduction of taxes on the income of energy companies