Danske Daily: Tuesday's Market Movers‏

Again today we have a very light calendar with only a few minor releases. Early this morning Germany will release producer prices and at noon Ireland is scheduled to release property prices for July. In Ireland property prices have increased in the past three months and appear to have turned around.

In Germany the campaign ahead of the general election on 22 September moves up a gear today. Chancellor Merkel is scheduled to speak at two campaign rallies and Finance Minister Schäuble is scheduled to speak at no less than four events.

Norwegian Q2 GDP likely to confirm no more rate cuts from Norges Bank.

Market News
Focus is on emerging markets’ woes this morning as there is a very light calendar in Europe and US (see WSJ and FT). India takes centre stage after stock markets tumbled another 1.6% on Monday following a 4% decline on Friday and the rupee declined to a fresh low against the dollar. Other developing nations like Indonesia and Thailand have also seen their currencies weaken since the Fed first announced its plan to scale back asset purchases. Indonesia’s stock market declined 5.6% on Monday after reporting a sharp widening of the current account deficit in Q2 and Thailand posted a second quarter of negative growth. This morning the negative sentiment has continued in Asian trading and most equity indices are down.

That said, we do not expect a repeat of the Asian crisis. Although the mentioned countries run current account deficits, they are fundamentally sounder than back in 1997-98. Their external balances are much lower and nations have ample stocks of foreign currency reserves.

In Australia AUD dropped, as minutes from the RBA meeting on 6 August showed that members agreed not to shut the door for further rate cuts nor signal an imminent intention to reduce rates further but stressed that the course of the exchange rate would be important.

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