European and American markets displayed mixed signals as they brace for a crucial period of economic data and central bank decisions. The Stoxx Europe 600 index remained largely stable, while AstraZeneca Plc faced a setback with its lung cancer drug trial, causing its stock to drop over 5%. In the US, equity futures showed slight declines following a 1.2% rebound in the S&P 500 on Monday, which marked a recovery from its poorest start to the month since 1953. Treasury yields inched up, and the dollar maintained its gains from Monday.
Investor sentiment remains cautious, with a balancing act between fears of a US recession and hopes for a soft landing. Concerns are growing that the Federal Reserve may be lagging behind as the labor market cools. Additionally, political uncertainty is resurfacing with former President Donald Trump scheduled to debate US Vice President Kamala Harris later today.
Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management Co., noted, “It may take some time before we can tell for certain whether the Fed has successfully mitigated the slowdown or acted too late, risking an economic contraction. Given this uncertainty, we advise investors to avoid taking excessive risks.”
Global equities experienced net selling for the eighth consecutive week, led by North American markets, according to Goldman Sachs Group Inc.’s report for the week ending September 6. This trend, which began in May, reflects a strategic unwinding of positions to maintain liquidity in anticipation of potential market disruptions around the US presidential election.
Implied volatility for a key Bloomberg dollar gauge is nearing its highest level since the March 2023 banking crisis, with the equity market’s fear gauge also rising amid August’s market turmoil. Konstantinos Venetis of TS Lombard highlighted, “The combination of increasing macroeconomic and political uncertainties places greater pressure on market bulls in the near term.”
On Wednesday, a US government report is expected to reveal that the consumer price index (CPI) increased by 2.6% in August compared to the previous year, the smallest rise since 2021. The Federal Reserve is in a blackout period before its September 17-18 meeting, providing no new guidance.
Chris Low of FHN Financial remarked, “Inflation remains a key concern. Weaker inflation numbers might prompt the Fed to consider a 50 basis-point cut, while stronger figures could reinforce a 25 basis-point increase.”
In Asia, a major equity index remained steady, while shares in mainland China and South Korea fell. Tokyo and Sydney saw modest gains following a positive session in US equities driven by renewed buying interest.
Oil prices declined slightly after a one-day rise, driven by a risk-on sentiment in broader markets. Gold prices retreated following a brief advance as traders await the US inflation data. Bitcoin fell below $57,000, and aluminum prices continued to rebound due to lower Chinese inventories and an unexpected rise in exports.
Key Events This Week:
1.Germany CPI (Tuesday)
2.US Presidential Debate: Donald Trump vs. Kamala Harris (Tuesday)
3.US CPI (Wednesday)
4.Japan PPI (Thursday)
5.ECB Rate Decision (Thursday)
6.US Initial Jobless Claims and PPI (Thursday)
7.Eurozone Industrial Production (Friday)
8.Japan Industrial Production (Friday)
9.U. Michigan Consumer Sentiment (Friday)
Market Movements:
Stocks:
1. Stoxx Europe 600: Little changed
2.S&P 500 Futures: Little changed
3.Nasdaq 100 Futures: Down 0.2%
4.Dow Jones Industrial Average Futures: Little changed
5.MSCI Asia Pacific Index: Down 0.2%
6.MSCI Emerging Markets Index: Up 0.1%
Currencies:
1.Bloomberg Dollar Spot Index: Little changed
2.Euro: Little changed at $1.1043
3.Japanese Yen: Down 0.2% to 143.48 per dollar
4.Offshore Yuan: Little changed at 7.1268 per dollar
5.British Pound: Up 0.2% to $1.3100
Cryptocurrencies:
1.Bitcoin: Down 0.2% to $56,892.78
2.Ether: Up 0.2% to $2,346.25
Bonds:
1.10-Year Treasuries: Yield up two basis points to 3.72%
2.Germany’s 10-Year Yield: Up one basis point to 2.18%
3.Britain’s 10-Year Yield: Up three basis points to 3.88%
Commodities:
1.Brent Crude: Down 0.5% to $71.47 per barrel
2.Spot Gold: Little changed
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