Financial Markets Daily Report
28 July 2021

Investors turned more cautious as the rout in Chinese equities dragged global stock markets in yesterday's session. Volatility jumped and stocks declined across advanced and emerging economies, with U.S. tech equities posting their biggest drop in more than two months.

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  • Investors turned more cautious as the rout in Chinese equities dragged global stock markets in yesterday's session. Volatility jumped and stocks declined across advanced and emerging economies, with U.S. tech equities posting their biggest drop in more than two months.
  • Safe-haven flows put downward pressure on U.S. and euro area core sovereign yields, while euro area peripheral spreads nudged up. In FX markets the EUR and the JPY strengthened moderately.
  • The IMF maintained its 2021 global growth forecast (6.0%) but warned of widening fault lines between AEs and EMs.
  • Today the focus will be on the Fed's monetary policy meeting, which will be focused on discussing the strategy for tapering net asset purchases. We do not expect FOMC members to announce this strategy yet, nor to hint at rate hikes, but the Fed's assessment of the inflation outlook will be key in determining the speed of its next steps.
     
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