foreign market highlights this week丨us august non-farm data is here! european and american pmis test the recovery process
2024-09-01
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the international market was volatile last week. nvidia's performance guidance slightly disappointed investors, and expectations for a september rate cut by the european central bank strengthened.
in the market, us stocks rose and fell, with the dow jones industrial average up 0.94%, the nasdaq down 0.92%, and the s&p 500 up 0.24%. the three major european stock indices rose across the board, with the uk ftse 100 up 0.59%, the german dax 30 up 1.47%, and the french cac 40 up 0.71%.
there are many things to watch this week. after causing market panic in early august, the latest us non-farm report attracted much attention. it is also believed that it will determine the extent of the fed's first interest rate cut. in addition, the fed will release the beige book on economic conditions. european and american economies will release august service and manufacturing purchasing managers' (pmi) data, and pay attention to whether the recovery process is differentiated. the bank of canada will hold an interest rate meeting and is expected to cut interest rates for the third consecutive time. the earnings season is coming to an end, and the performance of broadcom, nio and other companies is the focus of the market.
august non-farm payrolls may determine the extent of the fed's rate cut
data released last week showed that driven by strong consumer spending, the second quarter us gdp growth rate was revised up by 0.2 percentage points to 3%, while core personal consumption expenditures (pce) prices fell. federal funds rate futures show that investors expect interest rates to be about 100 basis points lower than the current level at the end of the year, with a probability of a 50 basis point rate cut in the september meeting of about 30%.
fed chairman powell recently commented at the jackson hole global central bank annual meeting that it is time to adjust the policy. powell stressed that the fed does not want to see the labor market cool further, which means that the august non-farm payrolls data may be crucial in determining the fed's interest rate expectations. very weak data may make a 50 basis point rate cut more likely, while strong data will rule out more drastic actions.
the market will also get some information about the state of the labor market before the non-farm payrolls. on tuesday (september 3), the jolts job openings for july will be released, while on thursday (september 5), the adp employment data will show the employment situation in the private sector, as well as data on non-farm productivity and unit labor costs for the second quarter.
in addition, the indicators worth paying attention to in the coming week include the august ism manufacturing and service index. after the index unexpectedly fell to 46.8 last month, which triggered concerns about economic recession, the market will pay special attention to the recovery of the manufacturing industry. at the same time, july construction spending and factory orders monthly rate will also become important references for the outside world to assess the current situation of the us economy.
in terms of financial reports, companies worth paying attention to this week include hp, broadcom, discount giant dollar tree, internet service and infrastructure company zscaler, and the performance of chinese listed company nio is also worthy of investors' attention.
crude oil and gold
crude oil futures fell for the second consecutive month, as concerns about weak demand offset support from disruptions in libya's crude oil production. the nearest month contract for wti crude oil was $73.55 per barrel, down 5.60% this month, and the nearest month contract for brent crude oil was $78.80 per barrel, down 2.38% this month.
analysts at rbc capital markets said five export terminals in eastern libya have been closed, affecting a total capacity of 800,000 barrels per day.
gary cunningham, director of market research at energy research firm tradition energy, said in a report: "we still have questions about global demand and how much impact the shutdown of libyan supply will have. with air travel seemingly becoming less frequent and asia's demand for diesel transportation also decreasing, global demand will weaken later this year."
considering that the federal reserve has released more stable signals of interest rate cuts, the international gold price has strengthened. comex gold futures for august delivery on the new york mercantile exchange were quoted at $2,493.80 per ounce, up 2.77% this month.
data from the u.s. commerce department showed that the pce price index rose 0.2% last month, in line with expectations. alex ebkarian, chief operating officer of precious metals trader allegiance gold, said the latest pce data confirmed that inflation is no longer the fed's main concern as they have shifted their focus to unemployment, further confirming a possible rate cut in september.
investors are now looking forward to the u.s. nonfarm payrolls report next week. "next week will determine whether the fed will cut rates by 25 or 50 basis points at its september meeting," said phillip streible, chief market strategist at blue line futures.
what are the prospects for the ecb to cut interest rates?
amid signs that the eurozone economic recovery is faltering, falling inflation opens the way for the european central bank to cut its key interest rate for the second time this year next month. data released by the european union's statistical office showed that eurozone consumer prices rose 2.2% in august from a year earlier, down from 2.6% in july. this is the lowest level since july 2021.
the ecb must balance two major risks in cutting rates. while energy prices have dragged down overall inflation, service inflation remains high, rising to 4.2% from 4.0% in july. policymakers worry that if they cut rates too quickly, service prices will continue to rise rapidly and prompt workers to demand higher wage agreements in 2025. the unemployment rate unexpectedly fell in july as 190,000 people found jobs. that lowered the unemployment rate to a record low of 6.4% from 6.5% in june, suggesting that wages may not cool as quickly as policymakers expect.
the ecb's chief economist ryan said that the ecb's battle to reduce inflation to 2% has not yet been won. to achieve this goal, interest rates must remain at a necessary high level without causing excessive damage to the economy. ryan said: "the return of inflation to the target must be sustainable. maintaining an interest rate path at an excessively high level for too long will lead to inflation rates being below target for a long time in the medium term, and it will be difficult to effectively minimize the side effects on output and employment."
the focus will turn back to economic data, with the eurozone's july producer price index (ppi) to be released on wednesday (september 4), and the final purchasing managers' index (pmi) for manufacturing and services in france, germany and the eurozone to be released. germany, the european locomotive, will release july manufacturing orders and industrial production data on thursday and friday, respectively, while france's july industrial production data is scheduled to be released on friday.
the uk economy has recently looked slightly more optimistic than the eurozone or the us. investors will be watching the august pmi index, halifax house price data and the british retail consortium's august retail sales monitor, which will help provide some insight into the current health of the uk economy.
what to watch this week
(this article comes from china business network)
