First Battle of El Alamein, Egypt. 8th Army infantry units capture their objectives overnight, but British 2nd Armoured Brigade and 4th Light Armoured Brigade fail to support. Rommel immediately counterattacks at daybreak, overrunning British 69th Brigade at Deir el Dhib (600 casualties) and Australian 2/28th AIF battalion on Ruin Ridge (400 casualties). 50th Royal Tank Regiment gets stuck in a minefield and loses 13 tanks. With this, the piecemeal British offensives run out of steam and both sides go on the defensive for the time being. Since July 1, Allies have lost 13,250 killed, missing and wounded. German and Italian losses are about the same, with 7000 taken POW by the Allies.
In the morning, a single Luftwaffe bomber flies at rooftop level and bombs Palmerston Street, Hillkirk Street and Russell Street in Manchester, England (3 civilians killed, 7 seriously injured).
Kokoda track. Australian and Papuan survivors from the battle at Oivi (now commanded by Major William Watson) retreat 10 miles back to Deniki, along a creek bed to avoid Japanese troops on the Kokoda track, bypassing the Kokoda airfield. At Deniki, they meet up with Lieutenant Colonel William Owen and 39th Battalion 'B' Company. Owen decides to move forward to hold onto the Kokoda airfield, despite knowing he is greatly outnumbered.
South Atlantic. At 8.47 AM 820 miles West of Freetown, Sierra Leone, U-582 sinks American SS Stella Lykes (1 killed, Captain and Chief Engineer taken prisoner, 49 survivors in a lifeboat reach Cacheu, Portuguese Guinea, 750 miles East on August 8). At 2.14 PM 450 miles Southwest of Freetown, U-752 torpedoes Norwegian SS Leikanger which sinks quickly on the cargo of 1000 tons of chrome ore (17 crew and 1 British gunner killed, 12 crew and 1 gunner float on rafts and debris for 4 days until picked up by American SS Harry Luckenbach). At 5.40 PM 670 miles West of Freetown, U-130 sinks British SS Elmwood (all 44 crew, 6 gunners and 1 RAF passenger survive).
Overnight, Luftwaffe bombers raid Birmingham, England.