In addition to uncertainties in US and European debt problems, disappointing corporate news has weighed on financial markets. Equities weakened in both Asian and European session. Credit Suisse announced it would cut more than 2000 jobs, or 4% of the company's full-time positions, across the globe as profits dropped in 2Q11. Investment banks UBS and Goldman Sachs also said earlier that they would trim headcounts. Volkswagen, the biggest European carmaker, reported worse-than-expected operating profit in 2Q11. The management said that while the company's revenue and operation this year will be' significantly higher than' a year ago, 'the continuing volatility in interest and exchange rates and commodities prices will weaken the volume effect'. Separately, Sony, the largest consumer electronics exporters in Japan, lowered its annual profit forecast to 60B yen from 80B yen previously projected. Oil prices, usually trading in line with stock markets, dipped with the front-month WTI crude contract hovering around the lowest level in a week while the equivalent Brent crude contract continued moving choppily within a range of 115/120. Gold moved sideways but stayed at elevated level of above 1600. As the stalemate of US debt ceiling has helped gold's rally this week, a retreat or a correction is likely should lawmakers reach a deal by the August 2 deadline. However, this would not be an end to US' deficit problems and US debts are still vulnerable to downgrades as the country still lacks a feasible plan to reduce deficits. We expect gold price will be well-supported as these issues persist.

As far as other macroeconomic events are concerned, the RBNZ left the OCR unchanged at 2.5% in July. While this had been widely anticipated, the central bank said in the accompanying statement that it would like to remove the post-earthquake 50 bps insurance cut as 'current global financial risks recede and the economy continues to recover'. We expect a rate hike of 50 bps, instead of 2 increases of 25 bps in 2 months, will be adopted in September. Yet, the emphasis on the 'insurance cut' put in place in March signals that the coming rate hike would be a special one and would not imply the beginning of the tightening cycle.

European data were weaker than expected. Germany's unemployment fell -11K in July after dropping -8K in the prior month. The market had anticipated a deeper decline of -15K. Unemployment rate stayed unchanged at 7%. In the Eurozone, consumer confidence slipped to -11.2 in July from an upwardly revised -10 a month ago. Other confidence indices missed expectations with economic, industrial and services confidence indices dipping to 103.2 (consensus: 104), 1.1 (consensus: 1.6) and 7.9 (consensus: 9.2 ) respectively during the month.

In the US, initial jobless claims probably fell -6K to 412 in the week ended July 23. Pending home sale might have contracted -2% m/m in June after rising +8.2% a month ago.