Global equity markets pulled back sharply last week as a wave of weak economic figures raised questions about the strength of the Chinese economy. Industrial production and retail sales growth slowed considerably in the country during July with both figures missing analyst expectations. Covid-19 outbreaks and flooding in several regions have caused significant disruptions alongside supply bottleneck problems which have been felt around the world. The ongoing regulatory crackdown on the technology sector by the Chinese authorities also added to the negative sentiment surrounding markets.
The Nikkei 225 in Japan was amongst the worst performers, slumping by -3.5% to close the week at its lowest level this year. Major carmaker Toyota flagged that it was cutting its September production by -40.0% which sparked a sell-off amongst the critical sector. In the US, the S&P500 declined by -0.6% despite recording yet another record high earlier in the week whilst the in the UK, the FTSE100 fell by -1.8%. European bourses also slumped with the French CAC40 falling sharply by -3.9% with the German DAX30 closing the week -1.1% lower.
Given the elevated uncertainty in equity markets, increased appetite for safe haven assets saw sovereign bond yields fall. The turmoil in Afghanistan also added to the negativity with the 10-year US treasury yield falling by 4 basis points (bps) to 1.24%. The UK gilt yield equivalent declined by 5bps to 0.52% whilst 10-year benchmark index retreated by 3bps to -0.53%. The US Dollar was another beneficiary of the change in attitude towards risk with the greenback rallying against its major peers.
In the commodity markets, oil prices slid once again as supply continued to tick higher. Brent crude fell by a further -7.6% to $65.26 a barrel on concerns surrounding the outlook for global growth. Copper also declined rapidly to $9,044 a tonne with the -5.2% weekly fall due to the weaker activity being seen in China. Gold concluded the week at $1,783 an ounce after a modest +0.5% rise.
Flash PMI figures covering the first three weeks of August have already been published in the UK with both the manufacturing and services sectors seeing further growth during the month so far. There are no other major figures due from the country on this occasion. PMI data has also already been published in the Eurozone whilst on Tuesday, the final calculation of German Q2’21 GDP is released. Meanwhile on Thursday, the ECB publishes the accounts from its most recent monetary policy meeting.
In the US, revised Q2’21 GDP data (released Thursday) is expected to be modestly upgraded on the previously calculated +6.5% figure. The housing sector also comes back into focus with both existing home and new home sales due over the coming days. Elsewhere, the Bank of Japan publishes its preferred measure of Core CPI whilst there are no major figures due from China on this occasion. Additionally, the annual Jackson Hole Symposium takes place this week (albeit virtually), bringing various central bankers and finance ministers from around the world together to discuss important policy matters. 
Read last week's market update
 Trading Economics - China Economic Indicators - 21.08.21
 T. Rowe Price - 20.08.21
 Forex Factory - 22.08.21
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