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Markets Update: Asian markets rose, dollar and bond yields fell, setting stage for critical inflation data. Yen strengthened after Powell hinted at rate cuts. Nvidia's earnings report is highly anticipated. Investors expect mild inflation data supporting rate cuts. Treasury yields and dollar weakness boosted commodities.
Economic Calendar
Global Markets Roundup: 26 August 2024
Asian markets nudged higher on Monday, while the U.S. dollar and bond yields declined, setting the stage for a week of critical inflation data that could steer interest rate decisions in the United States and Europe. Market participants are cautiously optimistic, hoping the upcoming data will support the case for rate cuts, which Federal Reserve Chair Jerome Powell hinted at last week, noting the need to prevent further labor market deterioration. The yen strengthened significantly in response to Powell's comments, putting pressure on Japan's Nikkei, which fell 1.0%.
Investor focus is also firmly on Nvidia, the AI sector's frontrunner, whose stock has skyrocketed by 150% this year, contributing a substantial portion to the S&P 500's 17% year-to-date gain. Analysts are predicting another stellar performance when Nvidia reports its earnings on Wednesday, though there is concern that anything short of exceptional could trigger a "sell the news" event. According to Chris Weston, head of research at Pepperstone, Nvidia would need to surpass consensus by at least $2 billion, with sales expectations of $30 billion or more and third-quarter guidance above $33 billion to maintain its momentum. In early trading, futures for the S&P 500 and Nasdaq showed little movement, while European stocks appeared subdued with a 0.2% dip in EUROSTOXX 50 futures, and FTSE futures were inactive due to a holiday. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.8%, following last week’s 1.1% rise. Meanwhile, South Korea's KOSPI and Chinese blue chips remained flat.
The anticipation for rate cuts is palpable, with U.S. personal consumption and core inflation figures expected on Friday, alongside a preliminary reading of European Union inflation. Analysts expect the data to be mild enough to allow central banks to proceed with easing monetary policy in September.
Fed fund futures are currently pricing in a 100% chance of a quarter-point cut at the Fed’s Sept. 18 meeting, with a 38% chance of a more aggressive 50-basis-point reduction. The market also anticipates a cumulative 103 basis points of easing by the end of 2024 and an additional 122 basis points by 2025. Similarly, the European Central Bank is expected to implement a quarter-point cut next month, with further easing anticipated through 2025.
The decline in U.S. Treasury yields continues, with two-year yields at 3.91% after a nearly 10 basis-point drop on Friday, while 10-year yields held steady at 3.79%. The dollar's weakness persisted, falling 0.5% to 143.64 yen, following Friday’s 1.3% drop. The euro strengthened to $1.1191, hovering near a 13-month high, and the Swiss franc remained robust at 0.8461 per dollar.
Commodities responded to the softer dollar and lower bond yields, with gold holding steady at $2,514 an ounce, close to its all-time high of $2,531.60. Oil prices rose 0.8% amid escalating tensions in the Middle East, following an exchange of rocket fire and airstrikes between Israel and Hezbollah, raising concerns about potential supply disruptions. Brent crude climbed 55 cents to $79.57 a barrel, while U.S. crude increased by 56 cents to $75.39 per barrel. October copper contract on Shanghai Futures Exchange surged 1.3% to 74,520 yuan ($10,463.35) a ton, reaching a high not seen since Aug. 2. SHFE aluminium prices rose 0.3% to 19,875 yuan/ton, hitting a high of 19,990 yuan, the highest since July 16, driven by supply worries and U.S. rate cut speculations.
This week's market events include:
MON: UK Bank Holiday, German Ifo
TUE: CBRT Minutes, Chinese Industrial Profit, German GfK Consumer Sentiment
WED: Australian CPI, Nvidia Earnings
THU: Spanish & German CPI, US GDP & PCE
FRI: Japanese & French CPI, German Unemployment, US PCE, U.S. University of Michigan Final
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team