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Markets Update: Asian markets fell on Monday due to US slowdown concerns, while the yen weakened. Global bond yields rose, and gold prices remained steady. The upcoming week will see the release of various economic and market data, including central bank policy announcements and inflation data.
Economic Calendar
Global Markets Roundup: 2 September 2024
Asian stock markets experienced a decline on Monday due to concerns about a potential economic slowdown in the United States, which negatively impacted Wall Street. However, there was a recovery in U.S. stock futures after an initial dip, and bond yields also rose from their lows. Data on consumer prices (CPI) from China indicated that the country continued to play a significant role in global disinflation, with producer prices dropping by 1.8% annually in August, exceeding analysts' expectations of a 1.4% decrease. The CPI figure for the year also fell short of forecasts at 0.6%, primarily driven by an increase in food prices, while goods prices only rose by 0.2%, reflecting subdued domestic demand.
The selling pressure was particularly evident in Japan's Nikkei index, which declined by 2.4% as technology stocks faced a downturn, following a nearly 6% drop the previous week. The broader Asia-Pacific shares index outside Japan slipped by 1.2%, after a 2.25% decline in the previous week, while South Korea's KOSPI market fell by 1.3%. On a more positive note, S&P 500 futures and Nasdaq futures both saw a slight increase of 0.2% after Friday's decline. Additionally, EUROSTOXX 50 futures rose by 0.3%, and FTSE futures strengthened by 0.5%.
Investors showed uncertainty as Fed fund futures dipped, contemplating whether the mixed U.S. August payrolls report would prompt the Federal Reserve to implement a significant 50 basis points rate cut in the upcoming meeting. Market expectations currently suggest a 33% probability of such a large rate cut, influenced in part by statements from Fed officials Christopher Waller and John Williams. However, there is no clear indication from Fed communications supporting such a drastic move. Barclays economist Christian Keller emphasized the need for caution, advocating for a more moderate approach with a 25 basis points cut initially, followed by two additional 25 basis points cuts later this year, and a total of 75 basis points of cuts in the following year.
Investors are displaying a more dovish stance, factoring in 113 basis points of easing by the end of the year and an additional 132 basis points by 2025. The upcoming release of August U.S. consumer price data is expected to further justify the case for a rate cut, with a projected slowdown in headline inflation from 2.9% to 2.6%. Meanwhile, the first debate between Democrat Kamala Harris and Republican Donald Trump is scheduled for Tuesday ahead of the presidential election on Nov. 5.
In anticipation of the European Central Bank's decision, markets are fully prepared for a quarter-point cut on Thursday, although there is uncertainty regarding potential easing measures in October and December.
The expectation of global policy easing has bolstered bond markets, with 10-year Treasury yields hitting 15-month lows and two-year yields at their lowest since March 2023. Profit-taking activities led to a slight increase in yields on Monday, but the yield curve remained close to its steepest level since mid-2022. The yen weakened against the dollar, which strengthened to 142.7 yen, moving away from Friday's low of 141.75. The euro remained stable at $1.1086, having briefly touched $1.1155 on Friday.
In the commodities market, gold prices remained steady at $2,497 an ounce due to the downward trend in bond yields, falling short of the recent all-time high of $2,531. Oil prices received some support following a significant weekly decline, with Brent bouncing back by $1.01 to reach $72.07 a barrel, while U.S. crude prices increased by $1.02 to $68.69 per barrel. Copper prices dipped in the initial Asian trading session due to uncertainty surrounding the Federal Reserve's approach to interest rate cuts. There are concerns in the market that a gradual reduction in rates could pose challenges for the U.S. economy in achieving a smooth landing, which is putting pressure on copper prices. The standard three-month LME contract is currently showing a 0.3% decline at $8,973.00 per ton.
The most active corn contract on the Chicago Board of Trade (CBOT) ZC1! decreased by 0.4% to $4.04-3/4 per bushel, while soybeans ZS1! dipped by 0.2% to $10.03-1/2 per bushel. Similarly, wheat experienced a decline, dropping by 0.7% to $5.63-1/4 per bushel. Earlier in the session, wheat had reached its lowest levels since September 2 at $5.62 per bushel. On Friday, RC2! November robusta coffee prices decreased by $141, or 2.9%, to $4,770 per metric ton, moving away from the previous week's peak of $5,180, the highest level seen in over 16 years. This contract experienced a 4% decline for the week. KC2! December arabica coffee dropped by 3.4% to $2.36 per pound, resulting in a 3.3% loss for the week.
The upcoming week will see the release of various economic and market data, including:
- MON: Apple iPhone Event; Revised Japanese GDP (Q2), Chinese CPI (Aug), EZ Sentix Index (Sep), US Employment Trends (Aug)
- TUE: EIA STEO, OPEC MOMR; Australian Business Confidence (Aug), Final German CPI (Aug), UK Unemployment/Wages (Jul), Swedish GDP (Jul), Norwegian CPI (Aug), US NFIB (Aug), Chinese Trade Balance, M2 & New Yuan Loans (Aug)
- WED: UK GDP Estimate (Jul), US CPI (Aug)
- THU: ECB Policy Announcement, Norges Bank Regional Network (Q3), IEA OMR, Swedish CPIF (Aug), US IJC (w/e 7th Sep), PPI Final Demand (Aug), Canadian Building Permits (Jul), New Zealand PMIs (Aug)
- FRI: CBR Policy Announcement, ECB TLTRO III.10 repayment publication; EZ Industrial Production (Jul), US Export/Import Prices (Aug), University of Michigan (Sep)
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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