Deputy Prime Minister Salvini proposed an additional €20 billion in deficit spending for the 2027 budget.
This proposal highlights differing fiscal stances within the government, as Prime Minister Meloni recently emphasized caution.
Salvini stated EU approval is unnecessary and a formal proposal would be made soon.
Euro Recovers Against Swiss FrancCritical Juncture
The Euro is at a critical juncture against the Swiss Franc, recovering from multi-year lows.
The European Central Bank's (ECB) hawkish stance on inflation contrasts with the Swiss National Bank's (SNB) zero-rate policy.
This divergence makes Euro-denominated assets relatively more attractive.
European Stocks Rise on Softer Iran Sanctions+0.3%
European shares saw a modest increase, with the STOXX 600 gaining 0.3% (656.57 points).
Defense stocks led the gains, while automotive and luxury sectors showed weakness.
The market reacted positively to Iran sanctions being less severe than initially feared.
German Government to Reveal Drone Attack PerpetratorsInvestigation
Chancellor Merz announced that the government and security authorities would soon reveal the perpetrators of the Leipzig airport drone attack.
Security agencies suspect Russian intelligence involvement, though the government has not officially named Russia.
The government is working with security authorities to clarify the situation and make a statement.
UK Government's Affordable Housing Investment£10B Plan
The UK government initiated the first phase of a £10 billion investment in affordable housing.
Over £7 billion is allocated to London, supporting the construction of more than 70,000 homes.
Social rent homes, which are subsidized, will account for 60% of the new builds, falling short of the Prime Minister's election pledge.
German Business SentimentRises
German business sentiment improved more than expected in August, according to the Ifo survey.
The government is expected to comment shortly on the attribution for an attempted drone attack on Leipzig Airport.
Italy's Budget Deficit€20B Extra Deficit
Italy's Deputy Prime Minister Salvini called for an additional €20 billion in deficit spending for the 2027 budget.
Swedish Central BankRates Held 1.75%
The Swedish central bank (Riksbank) maintained its policy rate at 1.75%, expressing caution on inflation, as per released minutes.
Emerging Markets
Australia Central Bank Debated Rate HikeHold at 4.35%
The Reserve Bank of Australia (RBA) kept its cash rate at 4.35% in August, despite some board members arguing for a hike.
Minutes revealed several members judged upside risks to inflation could materialize, requiring an increase.
The RBA stated it is prepared to raise rates if upside risks materialize, but judged current rates as 'sufficiently restrictive'.
RBA Introduces New Liquidity SystemReserves Down 50%
The RBA introduced a new system for supplying ample liquidity, as funds in the financial system have fallen over 50% since 2022.
This decline is due to the maturity of pandemic-era relief assets, though reserves remain above fundamental demand.
The new system aims to flexibly supply liquidity while keeping the cash rate near the target.
Australian Banks See Mortgage Applications Plummet-20%
Westpac reported a 20% drop in mortgage applications in the June quarter, with other 'Big Four' banks seeing double-digit declines.
The four major banks collectively dominate over 70% of Australia's A$2.5 trillion mortgage market.
Factors include recent tax changes and high interest rates, with industry profit growth expected to slow to 2.9% by 2027.
Australian Developer Bathla Group RestructuresRestructuring
Sydney-based developer Bathla Group initiated restructuring, hiring Teneo as an external restructuring firm.
The company faces a 'perfect storm' of slumping sales, rising costs, and tax changes aimed at improving housing affordability.
This highlights broader challenges in the Australian residential development sector.
Woodside Energy Scraps Clean Energy GoalsQ1 Net +7%
Woodside Energy (WDS) reported a 7% increase in Q1 net profit but abandoned its $5 billion clean energy spending plan by 2030.
The company also withdrew its Scope 3 emissions reduction targets, refocusing on its core oil and gas business.
Woodside announced an interim dividend of A$0.57 and initiated a strategic review for its new ammonia asset in Beaumont, Texas.
Taiwan Industrial Production Surges+25.6% YoY
Taiwan's industrial production rose 25.6% year-on-year in July, driven by strong demand for semiconductors and AI.
This supports the view of robust earnings momentum in the tech sector, though concerns about a narrow market base persist.
Japanese Yen Weakens Post-InterventionWeakness Returns
The Japanese Yen fell to a record low on a trade-weighted basis in July, then rebounded after joint US-Japan intervention.
However, the yen has since weakened against cross-currencies, being sold as a funding currency for carry trades.
This suggests the post-intervention strength is entering an early phase of reversal.
Japan's National Debt Interest Costs Soar¥36.64T
Japan's national debt interest costs are projected to increase by 17% to a record ¥36.64 trillion next year.
This forecast intensifies discussions about the country's growing fiscal burden.
The rising costs highlight the challenges of managing public finances amid high debt levels.
Philippines Central Bank Likely to Hike Rates25bp Hike
A Reuters poll indicates the Philippine central bank is likely to raise its benchmark interest rate by 25 basis points to 5.00% on August 27.
This would mark the third consecutive rate hike by the Bangko Sentral ng Pilipinas.
The move aligns with the central bank's sustained hawkish stance on monetary policy.
Bank of Korea Rate Decision Anticipated25bp Hike?
Economists are split on the Bank of Korea's upcoming rate decision on August 27, with 18 out of 35 expecting a 25bp hike to 3.0%.
This reflects a tight consensus and aligns with the central bank's previous commitment to maintain its tightening stance.
The decision will be closely watched for signals on future monetary policy direction.
Philippines Rate HikeRates to 5.0%
The Philippine central bank is expected to raise its benchmark interest rate to 5.0% on August 27, marking the third consecutive hike.
Inflation at 6.2% in July (from 6.4% in June) remains well above the 2-4% target, prioritizing inflation control over growth concerns.
Russian Refinery AttackAfipsky Fire
Russia's Afipsky oil refinery in the Krasnodar region caught fire after a Ukrainian drone attack, resulting in two fatalities and two injuries.
This major facility processes 7.2 million tons (144,000 barrels per day) and is part of ongoing Ukrainian attacks on Russian energy infrastructure.
Iran Vows RetaliationSanctions Widened
Iran vowed retaliation after the US widened sanctions, with its Economy Minister stating 'the enemy must await attack'.
China questioned the effectiveness of sanctions and affirmed its intent to protect its interests, suggesting major trading partners will continue dealings with Iran.
Czech Koruna StrongNear 3-Year High
The Czech Koruna strengthened to near a three-year high, driven by a weaker dollar and expectations of continued rate hikes.
The Hungarian Forint traded slightly weaker at 363.10/euro, with a 25 basis point rate cut expected from the Hungarian central bank in August.
Ukraine Mediation WindowUS Mediation
Ukrainian President Zelenskiy sees a window for US-mediated peace talks until summer 2027, with proposals being drafted for Moscow.
These proposals include a ceasefire and a free economic zone in eastern Donbas, managed by a third country, before US election campaigns complicate mediation efforts.
Pakistan-Iran TalksDispute Progress
Pakistan's Army Chief Asim Munir held talks with Iranian leadership in Tehran, making significant progress on dispute resolution.
Discussions focused on de-escalation, reopening the Strait of Hormuz, and a swift end to conflicts, with the US-Israel war and regional peace central to the agenda.
Kyrgyzstan Rates HeldRates 12%
The Central Bank of Kyrgyzstan maintained its key interest rate at 12%, continuing its tight monetary policy to curb inflation.
Japan
Yen Reaches Record LowTrade-Weighted Low
The trade-weighted yen index fell to a record low of 50.49 in July (from 50.78 in June), despite joint US-Japan intervention.
Weakness persists even after the US dollar softened following intervention, with options markets signaling continued depreciation pressure.
Record Debt-Servicing Costs+17.1% Increase
Japan's government debt-servicing costs are projected to reach a record 36.6 trillion yen (approx. $230 billion) in fiscal year 2027, a 17.1% increase.
This projection is based on a 3.8% interest rate, the highest in 29 years, and comes as budget requests are expected to exceed 130 trillion yen for the first time.
Corporate Hedging StrategiesSupply Chain Shift
Japanese companies are restructuring supply chains and hedging strategies amid prolonged yen weakness, despite repeated government interventions.
Importers are diversifying sourcing to reduce costs, while options markets suggest a long-term trend of yen depreciation.
July Inflation EasesCore CPI +2.3%
Japan's core consumer price index (excluding special factors) rose 2.3% in July, a moderation from 2.6% in June.
The core-core CPI (excluding special factors and fresh food) increased by 2.2% in July, up from 2.0% in June, indicating persistent but slowing inflation.
JGB Tax IncentivesRetail JGBs
The Japanese government is considering tax incentives to enhance the attractiveness of Japan Government Bonds (JGBs) for retail investors.
Finance Minister Katayama announced a careful review of preferential tax measures, expected as part of the 2027 tax reform, to secure stable long-term financing.
Middle East GeopoliticsHormuz Strait
Japan continues to advocate for stability in the Strait of Hormuz and is monitoring developments in the Middle East, including Iran-US negotiations.
The government aims to respond appropriately to regional events that impact the international community.
Asia
Taiwan Industrial Output+25.61% Y/Y
Taiwan's industrial production surged by 25.61% year-on-year in July.
India
Stocks Open LowerNifty Down 72.5 pts
Indian equities are expected to open lower due to geopolitical risks from Middle East tensions and Iran sanctions.
GIFT Nifty futures dropped 72.5 points to 24,146.5, with Nifty 50 monthly expiry adding to volatility from position unwinding.
Oil Prices StabilizeBrent $92.6
Stable oil prices, with Brent crude around $92.6 per barrel despite sanctions, are easing sentiment for Indian bonds and currency.
This limits inflation concerns for India, the world's third-largest oil importer, potentially allowing bond yields to decline.
RBI Hawkishness DoubtedOIS Stuck
Despite hawkish warnings from RBI officials about rate hikes, market expectations for future increases remain modest at 75 basis points over 12 months.
The one-year overnight index swap (OIS) rate is stuck between key technical levels, lacking upward momentum.
RBI Blocks Dollar DebtYes Bank Withdraws
The RBI's aggressive management of the rupee has effectively blocked Indian banks from raising dollar debt, leading several, including Yes Bank, to withdraw issuance plans.
The rupee is tightly managed near 95.73/$, with minimal volatility, as the RBI reportedly intervenes to limit weakness.
Q1 Growth SlowsGDP +7.1%
India's economic growth is projected to have slightly slowed to 7.1% in the April-June quarter, primarily due to weaker private investment.
Axis Bank (AXISBANK) aims to outperform industry credit growth by 3 percentage points, focusing on data centers, renewable energy, manufacturing, and gold-backed retail loans.
China
PBOC Weakens Yuan MidpointWeakest in 6 Mos
The People's Bank of China (PBOC) set its official yuan midpoint at the weakest level in six months, signaling concerns over rapid appreciation.
The yuan has appreciated about 4% this year, nearing a three-and-a-half-year high, which could hurt export competitiveness.
Hong Kong Exports Surge+50.7% Y/Y
Hong Kong's exports soared by 50.7% year-on-year in July, with imports also increasing by 41.0%.
However, the three-month cumulative growth rate slowed to +8.4% (May-July) from +13.8% (April-June), indicating a moderation after the initial post-reopening surge.
Outbound Investment Falls-9.1% Y/Y
China's non-financial outbound direct investment declined by 9.1% year-on-year to $76.8 billion from January to July.
This reflects weakening investment profitability and increased global uncertainty.
South China Sea Build-upNew Military Base
New military installations, including a suspected early warning radar, have been observed on an islet 14km northeast of Antelope Reef in the Paracel Islands.
This is part of China's efforts to strengthen control over the northern South China Sea and build its largest military base there.
China-India Border Talks25th Round
China and India held their 25th round of border negotiations, co-chaired by Foreign Minister Wang Yi and National Security Advisor Doval.
No new progress was reported from the regular consultations between the nuclear-armed neighbors managing a disputed 3,800km border.
Unitree IPO Plunges-45% Post-IPO
Chinese humanoid robot company Unitree's stock plunged 45% after its IPO, exposing issues in China's IPO system.
The stock initially surged over five-fold on its debut, reaching a market cap of $66 billion before dropping by $30 billion, leading to significant retail investor losses.
Shein IPO FundingUp to $1.8B
Online fast-fashion retailer Shein completed funding for its Hong Kong IPO, raising up to $1.8 billion.
The company was valued at up to $27 billion, with demand primarily from existing shareholders and China-related funds.
Korea
Bank of Korea Rate DecisionBOK Hike Expected
A poll of 35 economists shows 18 expect the Bank of Korea to raise its benchmark interest rate by 25 basis points to 3.0% on August 27.
The remaining 17 economists anticipate the central bank will keep rates steady at the current 2.75%.
Expectations for a further hike, following July's first increase in 3.5 years, have strengthened the Korean Won to 1,376.50 per USD, an 11-month high.
Top Gainers
Detail
Robinhood Markets (HOOD)
Financials sector, with a market capitalization of $97 billion.
+13.70%
Moderna (MRNA)
Healthcare sector, with a market capitalization of $58 billion.
+8.86%
Coinbase Global (COIN)
Financials sector, with a market capitalization of $49 billion.
+8.20%
Freeport-McMoRan (FCX)
Materials sector, with a market capitalization of $110 billion.
+7.64%
Albemarle (ALB)
Materials sector, with a market capitalization of $17 billion.
+6.75%
Estee Lauder Companies (EL)
Consumer Staples sector, with a market capitalization of $37 billion.
+6.02%
HCA Healthcare (HCA)
Healthcare sector, with a market capitalization of $93 billion.
+5.64%
Tesla (TSLA)
Consumer Discretionary sector, with a market capitalization of $1,433 billion.
+5.14%
Lululemon Athletica (LULU)
Consumer Discretionary sector, with a market capitalization of $14 billion.
+4.65%
Chipotle Mexican Grill (CMG)
Consumer Discretionary sector, with a market capitalization of $47 billion.
+4.56%
Companies
NVIDIA (NVDA)-0.98%
NVIDIA informed customers of a price increase of over 15% for its flagship AI server chips, Vera Rubin and Grace Blackwell.
The price hike will apply to shipments starting early next year, potentially improving profit margins through higher average selling prices.
The company is also reportedly discussing an investment and technology licensing deal with AI search startup Perplexity, valuing it over $30 billion.
Marvell Technology (MRVL)-5.57%
Wells Fargo raised its target price for Marvell Technology by 29%, from $240 to $310.
Palo Alto Networks (PANW)+2.38%
Benchmark and Piper Sandler both increased their target prices for Palo Alto Networks from $340 to $400.
Circle Internet Group (CRCL)+5.16%
Needham raised its target price from $127 to $130, and Susquehanna increased its target from $69 to $92.
Tesla (TSLA)+5.14%
Tesla initiated a recall of 2.98 million vehicles in China due to a design flaw in its door handles, making emergency opening difficult.
This is the largest recall in China's automotive market history, expected to incur significant costs and impact brand image.
China plans to ban designs that hinder emergency door opening from 2027, with Tesla's recall involving software updates and warning labels.
ExxonMobil (XOM)-0.63%
A minor fire at ExxonMobil's Liza Unity production facility in Guyana temporarily halted operations, affecting crude oil offloading.
The Liza Unity facility is a key growth asset for Exxon, and a prolonged shutdown could impact short-term production and cash flow.
Separately, Exxon plans to automate half of its drilling rigs in the Permian Basin by 2028, aiming for improved safety and efficiency.
ConocoPhillips (COP)-0.01%
Raymond James raised its target price for ConocoPhillips by 18%, from $142 to $168.
Eli Lilly (LLY)+0.88%
Eli Lilly launched its oral GLP-1 obesity drug Foundayo in the UK, marking its first European market entry.
Initially available via private prescription, Foundayo is priced at £100-£120 per month, lower than existing injectable Mounjaro.
The company is also collaborating with NICE for potential inclusion in the UK's National Health Service, and the FDA approved its Alzheimer's blood test, Elecsys pTau217, co-developed with Roche.
Walmart (WMT)-0.13%
Jefferies lowered its target price for Walmart by 20%, from $150 to $120.
Procter & Gamble (PG)+1.20%
Bernstein slightly raised its target price for Procter & Gamble from $148 to $149.
GE Vernova (GEV)-0.95%
GE Vernova unveiled a new medium voltage uninterruptible power supply (MV-UPS) product targeting power-intensive facilities like AI data centers.
Shipments are expected to begin in mid-2027, with the first project commissioning slated for late 2027.
JPMorgan (JPM)+0.01%
JPMorgan's Indian subsidiary is reportedly preparing to argue that alleged regulatory violations are merely 'technical errors'.