After weeks of discord, Germany's coalition government has agreed to a 32 billion euro corporate tax cut plan aimed at boosting its stagnant economy. The "Growth Opportunities Law" aims to stimulate growth by incentivizing climate-friendly investments, spurring research through tax incentives, and allowing greater loss offsetting. The Greens agreed to a reduced 2 billion euro child benefit programme after initially seeking more funding. The business tax cuts are urgently needed to jumpstart the economy amid the recession, but public dissatisfaction persists over the coalition's leadership and delays. If passed, the tax cuts could provide a timely stimulus to reignite growth and recovery in Germany's struggling economy. However, some experts question if the modest package will be enough to boost Germany's $4 trillion economy.

EQUITY

Major U.S. stock indexes rallied on Tuesday, with the S&P 500 and Nasdaq posting their biggest daily percentage gains since early June, as weaker-than-expected economic data knocked down bond yields and raised hopes the Fed may pause rate hikes soon. Tesla gained 7% after increasing around 10% last week, while Apple, Meta, Amazon, and Microsoft followed suit, albeit only by around 2%. 

GOLD

Gold prices rose to a 3-week high on Tuesday as the dollar and Treasury yields fell after downbeat US jobs data reduced expectations for Fed interest rate hikes. Weakening consumer confidence and declining job openings in July signalled a slowing labour market, boosting gold's appeal as a hedge against inflation. Looking ahead, traders will watch inflation and jobs data this week, especially the PCE Price Index, for further clues about the Fed's monetary policy path.

OIL

Crude oil prices rose as industry data showed a large draw in US crude inventories and Hurricane Idalia threatened Gulf production, though the demand outlook remains uncertain with China's economy slowing and additional rate hikes potentially reducing growth. The US Treasury Department has proposed new guidelines for clean energy projects to qualify for increased tax credits under the Inflation Reduction Act, further changing the energy landscape.

CURRENCY

The US dollar index dropped sharply on Tuesday as weak US labour data reduced expectations for further Federal Reserve interest rate hikes. The dollar index nursed its biggest decline in over a month, while the Japanese yen rebounded from a 10-month low. Analysts said the data supported bets for an earlier end to the Fed's tightening cycle, weakening the dollar against major currencies like the yen and euro.