Global stock markets are poised to close out their fourth consecutive month of gains, buoyed by optimism about a smooth transition for the US economy and the potential for reduced interest rates. Asian markets, led by China, have seen significant advances, supported by positive earnings reports and a strengthening yuan, which has reached its highest levels in over a year. In the US, futures have also risen, while European futures have seen slight declines ahead of the release of the Federal Reserve’s preferred inflation measure later today.
Market sentiment remains dominated by expectations of a Federal Reserve rate cut. Recent data indicates that the Fed has successfully managed inflation without precipitating a recession. The US economy grew more robustly in the second quarter than initially reported, with an upward revision in consumer spending offsetting weaker activity in other sectors.
Thomas Taw, BlackRock’s head of APAC investment strategy, told Bloomberg TV, “The US economy looks like it’s moving from very strong to strong. The data will continue to weaken, but you kind of have to marry that off with how much is inflation going to weaken in the US.”
These expectations for monetary easing have contributed to Treasuries being on track for their longest monthly winning streak in three years. However, this optimism has put pressure on the dollar, with a Bloomberg gauge of the currency set for its worst monthly performance this year. The dollar remained steady on Friday.
In Japan, the 10-year bond yield inched higher following data showing accelerated price pressures in Tokyo for August, supporting the case for further normalization of the country’s monetary policy.
Chinese authorities are contemplating a plan to allow homeowners to refinance up to $5.4 trillion in mortgages. This move aims to reduce borrowing costs for millions of families and stimulate consumption.
Looking ahead, the key focus for financial markets will be the upcoming US employment figures. Nonfarm payrolls data, due on September 6, will be closely watched for indications of whether the Fed will implement a rate cut in September. Fed Chair Jerome Powell had previously signaled the possibility of easing at his Jackson Hole speech earlier this month.
Potential US interest rate cuts could influence central banks globally, with analysts in Asia predicting that authorities in Indonesia and India may also lower borrowing costs.
Barclays Plc analysts, including Gabriel Casillas, noted, “The soothing Jackson Hole dovish messages continue to resonate, while focus turns to the US employment report to assess if a soft landing remains on track.”
In corporate news, shares of WuXi AppTec and WuXi Biologics are in the spotlight as US House Republican leaders plan votes next month on several measures targeting Chinese companies. On the earnings front, the Bank of China reported declines in first-half net income and commissions.
In commodities, gold saw a slight decline while oil prices extended their gains, driven by positive US economic data and worsening supply disruptions in Libya. Iron ore prices increased after a 10-day rally pushed them above $100 per ton.
Key Upcoming Economic Events:
1.Eurozone CPI and unemployment data, Friday
2.US personal income, spending, PCE, and consumer sentiment data, Friday
Market Movements:
1.S&P 500 futures rose 0.2%
2.Nasdaq 100 futures rose 0.3%
3.Dow Jones Industrial Average futures were little changed
4.MSCI Asia Pacific Index rose 0.7%
5.MSCI Emerging Markets Index rose 0.6%
6.Nikkei 225 futures rose 0.3%
7.Topix Index rose 0.3%
8.S&P/ASX 200 rose 0.3%
9.Hang Seng Index rose 1.9%
10.Shanghai Composite Index rose 1.3%
11.Euro Stoxx 50 futures fell 0.2%
Currency Movements:
1.Bloomberg Dollar Spot Index remained little changed
2.Euro steady at $1.1076
3.Japanese yen rose 0.1% to 144.81 per dollar
4.Offshore yuan rose 0.2% to 7.0795 per dollar
5.British pound steady at $1.3167
Cryptocurrencies:
1.Bitcoin fell 1.2% to $58,811
2.Ether fell 1% to $2,514.68
Bond Yields:
1.10-year Treasuries yield remained at 3.86%
2.Germany’s 10-year yield increased one basis point to 2.27%
3.Britain’s 10-year yield rose two basis points to 4.02%
4.Australia’s 10-year yield increased two basis points to 3.97%
Commodity Prices:
1.Spot gold fell 0.3% to $2,514.79 per ounce
2.West Texas Intermediate crude rose 0.3% to $76.14 per barrel
Related topic:
What Is Stock Futures Trading?