The ZEW Indicator of Economic Sentiment for Germany declined to 26.5 in September of 2021 from 40.4 in August, and below market forecasts of 30. The gauge fell for the 4th consecutive month to the lowest since March 2020 when the coronavirus crisis started. The assessment of the economic situation in Germany however, increased to 31.9 from 29.3 in August. Current readings imply that over the next six months economic growth in Germany will only be slightly higher than its current rate. “Expectations fell markedly once more in September 2021. Although financial market experts expect further improvements of the economic situation over the next six months, the expected magnitude and the dynamics of the improvements have decreased considerably. Global chip shortage in the automobile sector and shortage of building material in the construction sector have caused a significant reduction in profit expectations for these sectors”, comments ZEW President Professor Achim Wambach.

European equity markets fell on Tuesday, down from a 1% jump in the previous session on worries over slowing economic recovery amid coronavirus outbreaks and weak economic data. Germany’s ZEW survey of economic sentiment showed investors' morale tumbled to 26.5 in August, well below expectations of 30. Meanwhile, market participants await the European Central Bank policy meeting on Thursday at which policymakers will be debating the PEPP asset purchase program. On the corporate front, Meggitt shares declined over 12% after US defense firm TransDigm ruled itself out of a potential $8 billion takeover bid for the British rival.

The British pound depreciated towards $1.38 on Tuesday, after Prime Minister Boris Johnson set out plans to raise taxes on workers, employers and some investors to pay for social care costs and the NHS. Johnson announced the government would raise the rate of National Insurance payroll taxes paid by workers and employers by 1.25 percentage points. The same increase would be applied to the tax on shareholder dividends. The move angered some in his governing party as it breaks an election promise, while business groups warned that the plan will hit the economy and cost jobs. On the monetary policy front, BoE policymaker Michael Saunders said the central bank may need to raise interest rates next year if growth continues and inflation becomes stickier.

WTI crude futures fell more than 1% to $68.2 per barrel Tuesday, the lowest level since August 26th, amid concerns of slower fuel demand. Saudi Aramco on Sunday cut October official selling prices (OSPs) for all its crude grades sold to Asia by at least $1 a barrel. The deeper-than-expected price cuts suggested consumption in the region remains weak due to new lockdowns across Asia to combat the Delta variant of the coronavirus. Meanwhile, strong Chinese trade data and US output outages capped losses. More than 80% of oil production in the Gulf of Mexico remained shut due to damage caused by Hurricane Ida.

Exports from China surged 25.6 percent year-on-year to a record USD 294.32 billion in August 2021, far above market estimates of 17.1 percent and accelerating from a 19.3 percent rise in July. It this was the 14th straight month of growth in outbound shipments, as high commodity prices and solid foreign demand specially from the US and Europe offset local COVID-19 outbreak, and port congestion. Exports to the US grew 15.52 percent year-on-year to USD 51.72 billion, accelerating from July’s 13.4 percent growth. Meanwhile, exports to the ASEAN countries rose by 16.59 percent from a year earlier.The top three exports were electronics, high-tech products, and clothing and clothing accessories.

The Logistics Manager’s Index was little changed at 73.8 in August of 2021 but still pointed to the fifth-highest growth on record in the logistics sector driven by rapid price growth and significant tightening of capacity. The gauge for warehousing prices remained at an all-time high (88) mostly because of the lack of available capacity. Inventory levels continued to rise at an above-average rate (63.8 vs 66.4) as firms were abandoning JIT principles and ordering earlier and in larger quantities to avoid stockouts. Also, transportation prices increased (93.7 vs 91) as the strain of this excess inventory was being felt on transportation networks. It is expected that the logistics activity will remain strong going into the Autumn “peak season” as firms start preparations for Q4 and the holidays.

The South African GDP grew 1.2% on quarter in the three months to June of 2021, following a 1% expansion in the previous period and compared with market expectations of a 0.7% growth. Six out of ten industries reported positive growth rates in the second quarter, with transport (6.9% vs -1.1% in Q1), personal services (2.5% vs 0.6%) and trade (2.2% vs 2.6%) industries making the most significant contributions. Also, the agricultural sector rebounded sharply (6.2% vs -0.1%) due to increased production of field crops, horticulture and animal products. Conversely, declines were seen in manufacturing (-0.8% vs 0.5%), construction (-1.4% vs 0.5%), finance, real estate and business services (-0.4% vs 1.3%) and government services (-0.9% vs 0.3%). Year-on-year, the economy advanced at a record 19.3%, beating market forecasts of a 17.5% growth. Statistics South Africa no longer reports an annualized growth rate and now uses 2015 as the base year for the data.

Prices for iron ore cargoes with a 63.5% iron content for delivery into Tianjin fell below $140 a tonne in the second week of September, the lowest since early December, and falling further below a record high of $230 in May amid improving supply and curbs on steel production in China. The Chinese city of Handan became the latest region to implement restrictions on steel output after provinces of Anhui, Gansu, Fujian, Jiangsu, Jiangxi, Shandong, and Yunnan provinces were told to limit their production to 2020 volumes amid China’s efforts to curb carbon emissions. Meanwhile, the country imported iron ore worth a record $20 billion in August, as purchases from Brazil grew and from Australia hit a record high, pushing port inventories above 131 million tonnes.

The Eurozone quarterly economic growth was revised higher to 2.2 percent in the second quarter of 2021, a solid rebound following two consecutive periods of contraction, amid a recovery in activity and domestic demand due to the reopening of the bloc's economies, helped by the rapid pace of COVID-19 vaccination. Household consumption jumped 3.7 percent (vs -2.1 percent in Q1) and fixed investment rose 1.1 percent (vs -0.2 percent in Q1). In addition, public spending advanced 1.2 percent (vs -0.5 percent in Q1), while net trade made no contribution to the GDP growth as exports grew nearly at the same pace as imports. Changes in inventories, however, subtracted 0.2 percentage points from the GDP. On a yearly basis, the economy expanded 14.3 percent, the most on record, reflecting a low base year due to the pandemic.