Growing signs of a sharp economic slowdown are weighing on sentiment and stocks in Asia, as well as commodity prices, offering support to sovereign bonds. S&P 500 and Nasdaq 100 futures are down, European contracts made modest gains, and the dollar is strengthening. Shares in Asia-Pacific are retreating, dragged down by Chinese technology stocks after a report that social media giant Tencent Holdings Ltd. is planning to sell all or most of its $24 billion stake in food-delivery company Meituan, a strategy understood to appease regulators. U.S. data at the start of the week point to a rapid cooling in manufacturing and collapsing sentiment among homebuilders, adding to the economic risks after the weak Chinese figures. Demand for safe-haven assets is helping Treasury bonds sustain a rally and spurring purchases of Australian and New Zealand debt.
Oil fell below $89 a barrel due to concerns about demand and the possible return of Iranian supplies. Bets on cooling inflation and less punitive monetary tightening as the global economy slows have contributed to a nearly 13% rally in global stocks since June's lows. The danger to the rebound lies in the possibility of persistent price pressures that keep borrowing costs high for longer, leading to a recession. Those reports followed an unexpected interest rate cut by China on Monday ahead of figures showing the economic slowdown deepened in July. The offshore yuan stabilized after falling in the wake of the disappointing data and monetary measures.
In Colombia: 10am: June trade balance; est. -US$200m, prev -US$1,733m 10am: June CIF imports; est. US$6,218m, prev US$6,805m * 11am: Q2 GDP; q/q est. 1.8%, prev 1%; y/y est. 12%, prev 8.5% * 11am: June ISE economic activity; est. 9.2%, prev 16,5% * 10am: Ministry of Finance Ocampo will speak before the Senate about the economic and fiscal accounts cut of the Ivan Duque administration * This week: Asobancaria event in Cartagena with the participation of: August 17: BanRep Manager Leonardo Villar; Andrés Velasco, director of the Autonomous Committee of the Fiscal Rule * August 18: BanRep Co-director Roberto Steiner; Technical Deputy Minister of Finance Gonzalo Hernández; Minister of Agriculture Cecilia López * August 18: Minister of Finance José Antonio Ocampo; President Gustavo Petro.
International: 7:30am: US construction starts July; est. 1.53m, prev 1.56m * 8:15am: US industrial production July; m/m est. 0.3%, prev -0.2% * Fed Agenda: No public events scheduled until August 17 * This week: August 17: Fed minutes.
Economic data from China, the world's top crude oil buyer, renewed concerns about a global recession, and the market is closely monitoring talks about reviving a deal that could allow more Iranian exports.
US: Treasury bonds post small losses, continuing the curve's flattening movement. Yesterday, Treasuries gained on the back of negative data from China and increased "flight to quality" flows. Today, they reversed those losses but remain around the average levels of the last month. The curve's inversion deepens, driven by recession fears, reaching -40 bp.
Developed Markets: European bonds are anchored to the performance of Treasury bonds, posting losses in tight ranges of 5-10 bp. Gilts are weakening following June's higher-than-expected wage figures, indicating that aggregate demand remains high. Also driving bond performance are the results of the ZEW Current Situation Survey, which suggest a less pessimistic market than expected.
Emerging Markets: In Brazil, economic activity expanded more than expected in June, demonstrating the strong resilience to the monetary tightening campaign, which has so far failed to contain inflation expectations. This led to an increase in demand for bonds, particularly bonds.
Colombia: TES continued to appreciate on both the short and long ends of the curve, while belly bonds posted losses. The curve continues to steepen as offshore demand remains stable. Globally, market optimism is waning, so we expect the pace of appreciation in the Colombian fixed-income market to slow and resume its long-term upward trend during the week. We expect losses to be led by the longer end of the curve. For today, we expect a trading range of 10.50%-10.80% for TES 24, 11.30%-11.70% for TES 27, 11.60%-12.00% for TES 31, 11.90%-12.40% for TES 42, and 11.80%-12.20% for TES 50.
The US dollar (DXY) is trading at 106.7 points this morning. The index is advancing for the third consecutive session and further extending its rebound from last week's 5-week lows near 104.60 points. The dollar is experiencing additional volatility as investors are pricing in the Federal Reserve's next move, anticipating a 50 bp or 75 bp hike in September. Given the increased risk perception,
The Colombian peso (COP) closed at $4.151 pesos, appreciating 1.63% from the previous close. The currency had daily volatility of $40. On Friday, the Colombian peso extended its weekly gains, reaching monthly lows. The peso's appreciation due to the weakness of the dollar is justified by the US inflation data for July, which was quite positive, increasing optimism in the markets, and by the country's downward risk premium. The supply of dollars came from foreign agents and the derivatives market, and demand came from the real sector. For today, considering a
The euro (EUR) is trading at US$1.0164, with an associated strengthening of 0.03%. The EUR/USD is strengthening despite data from the German ZEW Economic Sentiment Index, which plummeted to -55.3 points in August compared to the previous -53.8 points expected by the market. This is its worst result since October 2008. Furthermore, the German ZEW Current Situation Index also fell, reaching -47.6 points from -45.8 points previously. Although this is the worst result recorded since April 2021, it has improved market expectations, which had expected a decline to -48 points. In this context, we expect a narrow daily trading range between 1.019 and 1.007.
Futures were virtually flat. Dow Jones Industrial Average futures fell just 18 points, or 0.05%. S&P 500 futures fell 0.12%, along with Nasdaq 100 futures. Walmart reported earnings per share that beat expectations, and the company also maintained its outlook for the second half of the year, sending shares up 3%. Similarly, Home Depot reported earnings that beat expectations and maintained its guidance for 2022. Target and Lowe's will report quarterly results on Wednesday. Separately, Ziprecruiter shares fell more than 5% after the company lowered its revenue outlook.
Asia-Pacific stocks had a mixed session. Mainland China closed higher, with the Shanghai Composite gaining 0.05% and the Shenzhen Component up 0.08% to 12,470.11. Hong Kong's Hang Seng ended the day down 1.05%. Japan's Nikkei 225 ended unchanged at 28,868.92, while the Topix index fell 0.15%. The Kospi closed higher by 0.22% at 2,533.52.
The Stoxx 600 rose 0.2%, with basic resources companies gaining 2.3% to lead gains, while household goods fell 0.5%. Delivery Hero, the German online food delivery company, rose 12% after offering an upbeat third-quarter outlook. Shares in Sonova, the world's largest hearing aid maker, fell 14% after it cut its full-year 2022 and 2023 forecasts, citing a subdued market environment and continued input cost pressures.
- Conconcretos will report its 2Q22 results. Positive expectations are expected following the July 27 report on its participation in projects related to the Bogotá metro.
- Grupo Argos presented positive results for 2Q22, with favorable performance in each of its market segments.
- Grupo Sura reported strong results for Q2 22, mainly due to growth in written premiums and investment income.
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Héctor Wilson Tovar García, Research Manager wtovar@accivalores.com
Geiber David Gamba Leguizamón Equity Analyst geiber.gamba@accivalores.com
Paola Andrea Lama Velasquez Fixed Income Analyst paola.lama@accivalores.com
Estiven Hurtado Cortés Utilities estiven.hurtado@accivalores.com
Sarah Garces Anzola Retail Sector Analyst Sarah Garces@accivalores.com
Juan Camilo Buendia Sector Holding juan.buendia@accivalores.com
Valentina Orozco Energy Sector valentina.orozco@accivalores.com
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