Fitch downgrades US credit rating. Credit rating agency Fitch downgraded the US credit rating due to fiscal worries, a deterioration in US governance, and political polarisation reflected partly by the attack on the US Capitol Building on 6 January 2021. Fitch announced on Tuesday that it cut the US debt by one notch, from the coveted AAA to AA+, partly due to how the federal government handled the debt crisis two months ago. That move mirrored a similar downgrade by credit rating agency S&P in 2011, also in response to the debt ceiling standoff in Congress. Credit ratings are a metric that investors use to assess the risk of lending money to a government. Investors consider the US as a highly secure investment because of the size and relative stability of the economy.

Eurozone manufacturing activity weakness reignites recession fears. On Tuesday, the final survey results showed that activity in the eurozone’s manufacturing sector worsened in July amid steeper declines in output, new orders and purchases, reigniting fears that the region’s economy is heading into a recession. S&P Global's manufacturing purchasing managers’ index (PMI) for the currency bloc fell for the sixth consecutive month in July, reaching 42.7, down from 43.4 in June. This marks the thirteenth consecutive month that the closely-watch PMI reading fell below the 50 mark that separates contraction from expansion in the sector. Growth in the region has been negatively impacted by the aggressive monetary policy tightening that the European Central Bank has implemented to bring inflation under control.

UK house prices drop by most since 2009 after interest rate hikes. The pain from rising interest rates continued to dampen demand for real estate in Britain as house prices in the UK fell by the most since 2009 in the 12 months to July, mortgage lender Nationwide said on Tuesday. Nationwide announced that prices fell by 3.8 percent in July compared to the same month last year. That is the sharpest drop since July 2009 when the global economy had almost seized up as a result of the global financial crisis.  The year-on-year fall in June had come in at 3.5 percent. The price of a typical home now stands at 260,828 British pounds, that is 4.5 percent below the peak reached last August. Compared to June of this year, house prices inched down 0.2 percent in July. The Bank of England’s interest rate increases are impacting mortgage costs, with buyers now facing rates in excess of six percent in some cases, which translate into hundreds of pounds in additional costs for the borrower.

China services sector strengthened in July. A measure of China’s services activity compiled by a non-government data provider edged up in July, indicating continued recovery in the services sector of the world’s second largest economy. The Caixin/S&P Global services PMI notched up to reach 54.1 in July from 53.9 in June, showing business activity across the services sector expanded for the seventh month in a row. The improvement was largely underpinned by strong growth in new orders. Companies mentioned stronger market conditions and higher client numbers as reasons for the increase in new orders. At the same time, foreign demand rose at the slowest rate in six months.

Australia central bank adopts wait and see approach for future rate hikes. The Reserve Bank of Australia maintained interest rates at 4.1 percent for a second month on Tuesday as the central bank paused to assess the impact of previous rate increases, while warning of further hikes in the future. Inflation fell from seven percent in the year's first quarter to six percent in the second quarter. Philip Lowe, the bank governor, said inflation was “still too high at six percent” and interest rates could be lifted further.

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