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Markets Update: Investors were cautious ahead of a data-heavy week, with the U.S. jobs report potentially influencing the Federal Reserve's rate cut decision. The dollar strengthened, and markets reduced the likelihood of a larger cut.
Economic Calendar
Global Markets Roundup: 2 September 2024
Investors in Asia remained on guard on Monday as they prepared for a data-heavy week, culminating in the release of the U.S. jobs report. This report could determine whether an expected interest rate cut this month will be standard or more substantial. A holiday in the United States and Canada resulted in low trading volumes, while victories for far-right parties in German state elections introduced a new element of political uncertainty.
Following positive spending data on Friday, the dollar maintained most of its gains, prompting markets to reduce the likelihood of a 0.5% rate cut by the Federal Reserve. Market futures are fully pricing in a 25 basis point rate cut on September 18, with a 33% chance of a 50 basis point cut. Additionally, there are expectations of a total of 100 basis points in cuts by December, and 120 basis points by 2025. (FEDWATCH)
The Bank of Canada is anticipated to cut rates again on Wednesday, with markets indicating a 22% probability of a 50 basis point cut. The upcoming payrolls report on Friday will be crucial for the Federal Reserve, with analysts forecasting a job increase of 165,000 and a decrease in the unemployment rate to 4.2%. Fed Governor Christopher Waller and NY Fed President John Williams are scheduled to speak after the job data, providing the market with an immediate reaction.
Other significant events this week will include the ISM surveys, JOLTS job openings, ADP employment data, trade updates, and the Fed's Beige Book. Given these uncertainties, investors remained cautious, with S&P 500 futures ES1! down 0.1% and Nasdaq futures NQ1! down 0.2%. EUROSTOXX 50 futures FESX1! remained stable, while FTSE futures Z1! increased by 0.3%.
Asian markets struggled to replicate Friday's gains on Wall Street, with Japan's Nikkei NI225Â erasing early gains to trade nearly unchanged, following an 8.7% surge last week.
MSCI's broadest index of Asia-Pacific shares excluding Japan (.MIAPJ0000PUS) declined by 0.4%, while South Korean stocks KOSPIÂ inched up by 0.3%. Chinese blue-chip stocks 3399300Â fell by 1.2%, primarily due to declines in the real estate sector after a report indicated a slowdown in home price growth. Shares of New World Development 17, a major Hong Kong property developer, plummeted by 14% after forecasting a net loss. The Caixin manufacturing survey reported an increase to 50.4 in August, surpassing the expected 50.0. Surveys on Japanese and South Korean factories also indicated improved activity levels. Cash Treasuries were not actively traded due to the holidays, while Treasury futures (TYc1) remained relatively stable. The ten-year yields US10YÂ stood at 3.914% after rising following Friday's inflation and spending data.
This increase supported the U.S. dollar against the yen at 146.08 USDJPY, following a 1.2% rally last week, with potential resistance around 148.54. The euro remained at $1.1045 EURUSD, after a 1.3% decline last week, with political uncertainty in Germany contributing to the currency's stagnation. The European Central Bank (ECB) is expected to reduce rates by a quarter point next week following benign EU inflation figures.
The stronger dollar, coupled with higher bond yields, exerted pressure on gold prices at $2,497 per ounce GOLD, falling short of its recent record high of $2,531.60. Oil prices experienced further declines as the market considered the possibility of increased supply from OPEC+ in October. Brent BRN1! dropped by 59 cents to $76.34 per barrel, while U.S. crude CL1! declined by 51 cents to $73.04 per barrel.
Looking at the week ahead, expected are the following events:
MON: Labor Day in the US & Canada, Final Manufacturing PMIs for EZ & UK (Aug), Chinese Caixin Manufacturing PMI Final (Aug)
TUE: Swiss CPI (Aug), Swiss GDP (Q2), Turkish CPI (Aug), US ISM Manufacturing PMI (Aug), Final Manufacturing PMI (Aug)
WED: Policy Announcements from BoC & NBP; Australian GDP (Q2), Chinese Caixin Services PMI (Aug), Final Composite/Services PMIs for EZ & UK (Aug), EZ Producer Prices (Jul), Canadian Trade Balance (Jul), US Durables Revised & Factory Orders (Jul), JOLTS (Jul)
THU: Swiss Unemployment (Aug), German Industrial Orders (Jul), Construction PMIs for EZ/UK (Aug), EZ Retail Sales (Jul), US Challenger Layoffs (Aug), ADP (Aug), Initial Jobless Claims (w/e 31st Aug), ISM Services PMI (Aug), Final Composite/Services PMIs (Aug)
FRI: Japanese Household Spending (Jul), German Industrial Output (Jul), Trade Balance (Jul), UK Halifax House Prices (Aug), EZ Revised GDP (Q2), US NFP (Aug), Canadian Unemployment/Wages (Aug)
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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