European stocks slipped from record highs as investors braced for a week filled with crucial economic data that could influence central bank policies. The Stoxx Europe 600 index fell 0.5% on the first trading day of September, a historically volatile month. In Asia, markets also retreated following persistent contractions in Chinese factory activity and worsening property market conditions.
US equity futures declined after the S&P 500 nearly reached an all-time high on Friday. The dollar held steady, and US Treasury markets remained closed for the Labor Day holiday. September has historically been challenging for stocks, with the dollar often outperforming. The Cboe Volatility Index (VIX), Wall Street’s fear gauge, has increased each September over the past three years.
This week’s US jobs report is anticipated to be pivotal in determining the pace of Federal Reserve rate cuts. Current expectations suggest a one-in-four chance of a 50 basis point reduction. Paul Mackel from HSBC noted that the jobs data will likely influence the Federal Open Market Committee’s decision on whether to initiate a 25 or 50 basis point cut.
Ahead of the jobs report, July job vacancy figures will be released, expected to show a decline to a three-month low of 8.1 million positions. Additionally, European Central Bank member Francois Villeroy de Galhau has advocated for a rate cut following a slowdown in inflation.
In German politics, Chancellor Olaf Scholz’s coalition faced setbacks in regional elections as the far right gained significant ground, though forming a government remains unlikely due to a lack of parliamentary support.
In China, despite multiple stimulus efforts, economic recovery remains elusive. The Caixin China manufacturing data showed an unexpected increase, yet overall sentiment was dampened by a continued contraction in factory activity and worsening residential market conditions. Chinese home sales and property sector performance have deteriorated, with China Vanke Co. reporting its first half-year loss in over two decades.
Oil prices dropped as OPEC+ plans to increase output, while economic challenges in China persist. Gold and iron ore also saw declines.
Upcoming Key Events:
1.Eurozone HCOB Manufacturing PMI, Monday
2.UK S&P Global Manufacturing PMI, Monday
3.US Markets Closed for Labor Day Holiday, Monday
4.South Korea CPI, Tuesday
5.Switzerland GDP, CPI, Tuesday
6.South Africa GDP, Tuesday
7.US Construction Spending, ISM Manufacturing Index, Tuesday
8.Mexico Unemployment, Tuesday
9.Brazil GDP, Tuesday
10.Chile Rate Decision, Tuesday
11.Australia GDP, Wednesday
12.China Caixin Services PMI, Wednesday
13.Bloomberg CEO Forum in Jakarta, Wednesday
14.Eurozone HCOB Services PMI, PPI, Wednesday
15.Poland Rate Decision, Wednesday
16.Fed’s Beige Book, Wednesday
17.Canada Rate Decision, Wednesday
18.South Korea GDP, Thursday
19.Malaysia Rate Decision, Thursday
20.Philippines CPI, Thursday
21.Taiwan CPI, Thursday
22.Thailand CPI, Thursday
23.Eurozone Retail Sales, Thursday
24.Germany Factory Orders, Thursday
25.US Initial Jobless Claims, ADP Employment, ISM Services Index, Thursday
26.Eurozone GDP, Friday
27.US Nonfarm Payrolls, Friday
28.Canada Unemployment, Friday
29.Chile CPI, Friday
30.Colombia CPI, Friday
Market Movements:
1.Stoxx Europe 600: -0.5%
2.S&P 500 Futures: -0.3%
3.Nasdaq 100 Futures: -0.4%
4.Dow Jones Futures: -0.2%
5.MSCI Asia Pacific Index: -0.4%
6.MSCI Emerging Markets Index: -0.4%
Currencies:
1.Bloomberg Dollar Spot Index: Little Changed
2.Euro: +0.1% to $1.1062
3.Japanese Yen: Little Changed at 146.28 per Dollar
4.Offshore Yuan: -0.2% to 7.1071 per Dollar
5.British Pound: +0.1% to $1.3141
Cryptocurrencies:
1.Bitcoin: -1.4% to $57,598.28
2.Ether: -2.4% to $2,442.94
Bonds:
1.10-Year Treasuries Yield: Little Changed at 3.90%
2.Germany’s 10-Year Yield: +3 Basis Points to 2.33%
3.Britain’s 10-Year Yield: +3 Basis Points to 4.05%
Commodities:
1.Brent Crude: -0.6% to $76.50 per Barrel
2.Spot Gold: -0.2% to $2,498 per Ounce
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