Before the open - 15/08

The Nikkei dropped sharply last night after finance minister Taro Aso denied prime minister Shinzo Abe was not considering a corporate tax cut - as the Nikkei newspaper had previously reported on Tuesday.

Many have said such a tax cut would be a huge shot in the arm for Japan, which is languishing under huge state debts and the need for major fiscal consolidation. The yen jumped after an earlier decline.

Asian markets generally were somewhat subdued after the Dow Jones finished down 0.7 per cent, on track to end a six-week surge of gains, while the S&P finished down 0.5 per cent. The Shanghai Composite was more or less flat, up 0.1 per cent.

The Hang Seng reopened after the passing of Typhoon Utor, rising nearly 0.7 per cent at one point to an 11-week highs as exporter Li & Fung jumped 12.5 per cent after reporting its first half results. However, most of the Hang Seng's gains were later erased.

Li & Fung is the world’s largest supplier of goods to retailers, and despite reporting a 70 per cent drop in profits, said it was on track for recovery.

The FTSE is expected to open down this morning.

Banks will be closed in a number of European countries today due to Assumption Day (France, Greece, Italy, Portugal, Spain). After UK retail sales this morning, important macroeconomic data will be very US-focused.

Key events today:

UK retail sales for July at 09:30. Expected to increase from 2.2 per cent to 2.5 per cent year and from 0.2 per cent to 0.6 per cent month-on-month.

US consumer price index for July at 13:30. Expected to rise from 1.8 per cent to 2.0 per cent year-on-year and to fall from 0.5 per cent to 0.2 per cent month-on-month.

US initial jobless claims for July at 13:30. Expected to increase from 333,000 to 335,000.

US net long-term Treasury international capital flows for June at 14:00. Expected to rise from a $27.2bn deficit to a $31.3bn surplus.

US industrial production for July at 14:15. Expected to remain at 0.3 per cent month-on-month.

US National Association of Housebuilder’s housing market index for August at 15:00. Expected to fall from 57 to 56.