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The Market Last Week

Global equity markets ended mostly higher last week. UK markets ended in the green last week, amid upbeat corporate results. On the data front, UK’s gross domestic product (GDP) advanced in line with market estimates in 2Q17. Further, the nation’s public sector net borrowing, excluding nationalised banks, registered a surplus for the first time since July 2002, bolstered by self-assessed tax receipts. European markets ended the week on a positive footing, after oscillating between gains and losses. Further, markets gained support from the Eurozone’s preliminary Markit manufacturing PMI that unexpectedly rose in August, reaching its highest level in 2 months. Meanwhile, flash services PMI unexpectedly declined in the same month. Separately, Germany’s flash Markit manufacturing PMI surprisingly advanced in August. Further, preliminary services PMI rose more-than-expected in August. US markets ended the week on an upbeat note, amid gains in financial sector stocks. Meanwhile, the US President, Donald Trump, threatened to shut down the government if Congress does not agree to fund $1.6 billion for beginning construction along the US Mexico border. In economic news, US Markit preliminary services PMI advanced at a faster than anticipated pace in August, notching its strongest level in more than 2 years. Meanwhile, monthly existing home sales recorded an unexpected drop in July, marking its lowest level in 11 months. Initial jobless claims rose less-than-forecast for the week ended 18 August 2017. Asian markets closed mostly stronger during the week. On the macro front, Japan’s flash Nikkei manufacturing PMI expanded to its strongest level in 3 months in August.

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Currency Update

The EUR ended firmer against the USD, supported by robust Markit manufacturing PMI data across the Eurozone. Additionally, Eurozone’s consumer confidence index recorded a surprise rise in August. The British Pound ended the week on the positive footing against the greenback, after data revealed that UK’s BBA mortgage approvals recorded a rise in July, notching its highest level in 5 months. The US Dollar ended weaker against its key counterparts, as political turmoil continued in the US. Furthermore, US preliminary Markit manufacturing PMI unexpectedly fell in August. Additionally, monthly new home sales painted a negative picture for July. Moreover, preliminary durable goods orders declined more-than-expected to its weakest level since August 2014 in July.

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German economy likely to continue strong growth in 3Q17: Bundesbank

The Deutsche Bundesbank indicated in its monthly bulletin that the German economy is expected to grow at a stronger pace in the third quarter of 2017, higher than the forecast of 1.9% in the June projection, supported by strong industrial production, exports and consumption. The central bank further added that the outlook for consumers remains bright, amid a robust labour market and positive income growth. Separately, Germany’s economy advanced at par with the market forecast on a quarterly basis in the second quarter, driven by an increase in spending and investment.

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The Week Ahead

Going ahead this week, investors will keep a tab on US GDP, consumer confidence and employment report along with the ISM manufacturing PMI and advance goods trade balance data for further direction. Germany’s consumer price inflation, GfK consumer confidence, unemployment rate and China’s manufacturing PMI will be on investors’ radar.

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