The 15th BRICS summit kicked off in Johannesburg on Tuesday. Issues to be addressed during the 3-day meeting include the possible expansion of the bloc, with South African sources stating that up to 23 other countries have formally asked to join. Officials have highlighted that discussions around a common BRICS currency are not on the cards but that there will be talks on the settlement of trade in local currencies between member nations. The New Development Bank (NDB), the development bank set up by the bloc in 2015, is also due to start lending in South African Rand and Brazilian Real.
Dubai airport reported a 49% rise in airport passenger traffic in H1 2023 relative to H1 2022, with activity surging in Q2. This rise takes the total number of passengers passing through DXB to 41.6m in the first 6 months of the year, fractionally higher than the 41.3m pre-Covid in H1 2019. Officials have raised the full-year 2023 forecast from 83.6m to 85m passengers, slightly below the total for 2019.
Sales of existing US homes fell 2.2% m/m in July, to reach 4.07m on a seasonally adjusted annualised basis, down from 4.16m in June. A combination of a low stock of properties for sale and high borrowing costs are currently dampening sales of existing properties.
The au Jibun Bank Japan provisional composite PMI reading rose to 52.6 in August, up from 52.2 in July. The improvement in the composite measure was driven by the services sub-component which rose robustly to 54.3 from 53.8 in July. In contrast the manufacturing reading continued to point to a contraction in activity falling to 49.4 in August from 49.6 the month prior.
Today’s Economic Data and Events
- 11:15 FR composite PMI Aug: forecast 47.1
- 11:30 GE composite PMI Aug: forecast 48.3
- 12:00 EC composite PMI Aug: forecast 48.5
- 12:30 UK composite PMI Aug: forecast 50.4
- 17:45 US composite PMI Aug: forecast 51.5
- 18:00 EC consumer confidence Aug: forecast -14.5
Fixed Income
- US Treasuries extended their losses overnight with the 2yr UST yield trading near its highest levels in more than a decade. The 2yr UST yield added about 5bps over to 5.0459% while the 10yr UST pulled slightly stronger with the yield down about 1bps at 4.3241%. The markets will remain fixated on the Jackson Hole event at the end of the week and any clues on the next direction for Fed policy.
- European bonds pulled higher overnight with yields on bunds down 6bps at 2.64% while gilt yields fell more than 8bps to 4.637%. In emerging markets, Turkish 10yr local currency yields added 15bps to 20.19% while South African 10yr yields fell about 7bps to 11.911%.
FX
- The US dollar pulled higher against most peers overnight with EURUSD dropping nearly 0.5% to 1.0846 and GBPUSD down 0.2% at 1.2732. The relentless push upward in UST yields, particularly on the front end compared with more muted moves in European and British bond yields may be behind the pull higher in the dollar. USDJPY fell 0.2% to 145.89 in favour of the Japanese yen.
- Commodity currencies closed mixed with USDCAD near flat at 1.355 while AUDUSD added 0.1% to 0.6423 and NZDUSD added 0.3% to 0.5946.
Equities
- The day started strongly in East Asia yesterday where the Nikkei and the Hang Seng added 0.9% and 1.0% respectively, before equally robust gains in Europe where the composite STOXX 600 ended the day 0.7% higher.
- Sentiment changed at the end of the trading day in the US, however, with the NASDAQ adding just 0.1% and the S&P 500 and the Dow Jones losing 0.3% and 0.5% respectively. Banks in particular fared poorly after ratings agency warnings over conditions.
- Locally, the DFM closed 0.4% higher, but the ADX ended down 0.1%.
Commodities
- Oil prices fell for a second day running with both Brent and WTI futures down about 0.5% to USD 84.03/b and USD 80.35/b respectively. The API reported a draw in US crude inventories of 2.4m bbl last week with official data from the EIA to be released later today.