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Markets Update: Holidays in Asia kick off a busy week with calm. Futures suggest a 59% probability of a significant Fed rate cut. Disappointing data from China supports the argument for stimulus. Trump unharmed as FBI foils second assassination plot.
Economic Calendar
Global Markets Roundup: 16 September 2024
Asian stocks were hesitant and the dollar weakened on Monday, signaling the likely beginning of a easing cycle in the United States. Investors are considering the possibility of a significant move. This week, central banks in Japan and the UK are expected to maintain their current policies, while important data releases, such as U.S. retail sales and industrial production, are on the agenda. Geopolitical tensions were highlighted by an assassination attempt on Republican presidential candidate Donald Trump, as reported by the FBI. With holidays in China, Japan, South Korea, and Indonesia leading to low trading activity, early market movements were modest. The Asia-Pacific shares index outside Japan rose by 0.3%, following a 0.8% increase last week. The Nikkei in Japan was closed, but futures indicated a slight decline compared to the previous cash close due to yen appreciation pressuring exporters. S&P 500 futures remained stable, while Nasdaq futures dipped slightly by 0.1%. EUROSTOXX 50 futures rose by 0.2%, FTSE futures by 0.1%, and DAX futures by 0.1%. NI225 ES1! NQ1! FESX1! DAX1! Z1!
Over the weekend, economic data from China showed a slowdown in industrial output growth to a five-month low in August, accompanied by weakening retail sales and new home prices. This data suggests the need for additional economic stimulus by the end of the year to reach China's target of approximately 5% growth in 2024. Meanwhile, expectations for a half-point cut by the Federal Reserve have increased to 59%, up from 30% a week ago, following reports of a potential more aggressive easing approach. Market indicators show an anticipated 114 basis points of easing by Christmas and 142 basis points for next year. ANZ analysts highlighted that in the past three decades, easing cycles that began with cuts of more than 25 basis points raised concerns about market instability leading to a recession, a scenario not currently applicable. The anticipation of a forceful move led to a widespread rally in bonds, with two-year Treasury yields dropping to 3.593%, marking the lowest level since September 2022. The Bank of England is expected to maintain its interest rates at 5.00% during its upcoming meeting on Thursday, although there is a 31% chance of a rate cut priced into the markets. The Bank of Japan is likely to keep rates unchanged at its upcoming meeting on Friday, with a possibility of setting the stage for a tightening in October. This week, South Africa's central bank is expected to ease its policy, while Norway is anticipated to maintain its current stance.
In currencies, the yen strengthened against the dollar as Treasury yields dropped, with the dollar falling to a nearly nine-month low at 140.25 yen USDJPYÂ after a 0.9% decline last week. The euro remained stable at $1.1096 EURUSD, as the possibility of additional rate reductions by the European Central Bank restrained the currency at $1.1200. The Canadian dollar stayed at 1.3580 per U.S. dollar USDCADÂ following Bank of Canada Governor Tiff Macklem's hint at potential faster rate cuts in an interview with the Financial Times. USDJPY EURUSD USDCAD
In commodities, Gold was supported by lower bond yields, with the price standing at $2,582 per ounce GOLD and close to its all-time high of $2,588.81. Oil prices showed mixed results due to around 20% of crude oil production in the Gulf of Mexico still being offline. Brent BRN1! dipped by 4 cents to $71.57 per barrel, while U.S. crude CL1! rose by 7 cents to $68.72 per barrel. GOLD BRN1! CL1!
In agricultural commodities, the main wheat contract on the Chicago Board of Trade (CBOT) ZW1! was trading 0.6% lower at $5.91-1/2 per bushel, after reaching $5.99 on Friday, marking its highest level since June 19. Wheat prices have increased by approximately 13% in the past three weeks, partly due to a weakened U.S. dollar DXY that has made American agricultural products more affordable for international buyers. Meanwhile, the CBOT corn ZC1! declined by 0.7% to $4.10-1/2 per bushel on Monday, and soybeans ZS1! dipped 0.5% to $10.01-1/4 per bushel. ZW1! ZC1! ZS1! DXY
Notable events to watch out for today are Euro Zone Labour Costs/Wages, NY-Fed Manufacturing, Canadian Manufacturing Sales, ECB Survey of Monetary Analysts.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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