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Markets Update: Following a significant sell-off, Asian stock markets attempted to recover on Thursday. The dollar weakened and the yen strengthened due to a surge in Treasuries. Concerns about the U.S. economy prompted expectations of substantial rate cuts by the Federal Reserve.Â
Economic Calendar
Global Markets Roundup: 5 September 2024
NI225 | HSI | ES1! | FESX1! | USDJPY | EURUSD | DXY | USDCHF | WTI CL1! | GOLD | ZC1! | CC2! | NVDA
Following a significant sell-off, Asian stock markets attempted to recover on Thursday. The dollar weakened and the yen strengthened due to a surge in Treasuries, amid concerns about the U.S. economy prompting expectations of substantial rate cuts by the Federal Reserve. Oil prices stabilized after recent declines driven by weak demand and supply issues, while gold saw a slight increase. Investors are closely analyzing various reports to assess the state of the U.S. economy and job market. Recent data, including disappointing manufacturing figures and mixed labor data, have left markets unsettled.
Although Japan's Nikkei NI225 fell to a three-week low, tech-heavy Taiwan TWSE:TAIEX and South Korean KOSPI stocks rebounded by 1% following Wednesday's losses. The broader MSCI index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose by 0.6% after a three-day decline of nearly 3%.
Market expectations now suggest a 44% probability of a 50-basis-point rate cut by the Fed at its upcoming meeting, up from 38% previously. Traders are projecting a total of 110 basis points of easing by the end of the year across the remaining Fed meetings. The recent shift in market sentiment follows Wednesday's data showing a decline in U.S. job openings, indicating a slowdown in the labor market. This development aligns with the Fed's current emphasis on employment conditions.
San Francisco Fed President Mary Daly stressed the need for rate cuts to support the labor market, emphasizing that future actions will depend on economic indicators. According to Vasu Menon, OCBC's managing director of investment strategy, the Fed is prepared to implement deeper rate cuts if needed to safeguard against potential threats, supported by favorable financial conditions in the U.S. economy.
In the currency market, the dollar faced pressure as investors sought refuge in safe-haven assets. The Japanese yen USDJPY benefited significantly, while the Swiss franc USDCHF remained stable. Treasury yields were relatively steady in early Asian trading, following a decline in the previous session. Two-year note yields (US2YT=RR) hovered around 3.775%, while benchmark 10-year note yields US10Y stood at 3.767%.
In the commodities market, Brent crude futures BRN1! rose by 0.45% to $73.03, rebounding from a previous drop. U.S. West Texas Intermediate crude futures CL1! also recovered, climbing 0.52% to $69.56 after Wednesday's decline. On Thursday, gold remained close to $2,500 per ounce as investors anticipated the crucial US jobs report to gain further understanding of the potential Federal Reserve interest rate cut, which might lower the opportunity cost of holding gold, which does not yield interest. Aluminium futures for three months on the London Metal Exchange (LME) ALI1! decreased by 0.1% to $2,394.50 per metric ton, nickel NICKEL1! fell by 0.6% to $16,120, zinc ZNC1! dropped by 0.8% to $2,772, while copper remained almost unchanged at $8,957.50. LME lead LEAD1! slipped by 0.3% to $2,013.50 per metric ton and tin FTIN1! decreased by 0.6% to $30,320. LME copper, which experienced declines in July and August, has so far decreased by 0.4% this month, influenced by high copper cathode output and a bleak demand forecast.
In the agricultural commodities market, December London cocoa (C2) closed 187 pounds lower, while December New York cocoa (CC2) dropped by 5.3% to $6,882 per ton, marking its lowest point since early August at 6,819. November robusta coffee (RC2) ended the session $202 higher, up by 4.3% at $4,912 per ton. December arabica coffee (KC2) saw a 0.4% increase, reaching $2.437 per pound. October raw sugar (SB1) settled 0.25 cents lower, a decrease of 1.3%, at 19.24 cents per pound. October white sugar (SF1) declined by 0.5% to $539.10 per ton. The primary wheat contract on the Chicago Board of Trade (CBOT) ZW1! saw a decrease of 0.5% to $5.77-3/4 per bushel, yet it was approximately 10% higher than the previous week's beginning. CBOT corn ZC1! slipped 0.1% to $4.12-1/2 per bushel, despite being 7% above its recent lows from early last week. Soybeans ZS1! dropped by 0.5% to $10.16-1/2 per bushel, although they have recorded an increase of about 6% over the past two weeks.
Market focus on Thursday will be on U.S. service industry data and jobless claims, with anticipation building for Friday's highly awaited August non-farm payrolls report that is expected to provide crucial insights into the economy's direction and potential interest rate cuts by the Fed.
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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