As we enter the second week of September, markets are gearing up for a critical period of economic data and central bank decision-making. Monday’s trading session will likely set the tone for the week, as investors cautiously await key inflation data and Federal Reserve updates.
With concerns over inflation, interest rates, and global growth in focus, the market is expected to react to any fresh signals that emerge.
KEY INDICATORS
Japan’s GDP (Q2)
The Japan’s gross domestic product expanded a seasonally adjusted 0.7 percent on quarter in the second quarter of 2024.
That was shy of expectations for an increase of 0.8 percent, which would have been unchanged from the previous three months.
On an annualised basis, GDP rose 2.9 percent – again missing forecasts for 3.1 percent, which again would have been unchanged.
European markets advance in early trade
European markets saw a broad-based cyclicals-led move in early trade.
The main indexes of Germany, France and the UK each saw gains of around 0.5% to 0.6%.
Travel, techs, industrials and banks advanced while utilities and telecoms lagged behind.
Futures higher, potential Fed rate cut size in focus
US stock futures pointed into the green on Monday after equities ended the prior session lower following an August jobs report that left traders uncertain about the size of potential Federal Reserve interest rate cuts later this month.
For the week, the benchmark S&P 500 and 30-stock Dow Jones Industrial Average both posted their largest weekly drops since March 2023.
The tech-heavy Nasdaq Composite logged its biggest dip since January 2022.
MARKET MOVERS
USD/JPY
Potential long preference Long positions above 143.54 with targets at 143.92 & 144.30 in extension. Alternative scenario Below 142.90 look for further downside with 142.65 & 142.09 as targets. The break above 143.35 can be a positive signal that has opened a path to 144.30.
S&P 500
Potential short preference Short positions below 5436.74 with targets at 5422.25 & 5399.15 in extension. Alternative scenario Above 5470.26.00 look for further upside with 5489.73 & 5511.47 as targets. Even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
XAU/USD
Potential short preference Short positions below 2491.09 with targets at 2485.73 & 2477.77 in extension. Alternative scenario Above 2499.96 look for further upside with 2505.19 & 2515.37 as targets. As long as the resistance at 2505.19 is not surpassed, the risk of the break below 2485.73 remains high.
TODAY’S NEWS HEADLINES
China’s CPI climbs by a less-than-expected 0.6% as transport and home goods prices fall
China on Monday reported its consumer price index rose by 0.6% year on year in August, missing expectations as costs of transportation and home goods, and rents declined.
The consumer price index was forecast to have climbed 0.7% year on year in August, according to a Reuters poll.
The producer price index fell by 1.8% year on year in August, more than the estimated 1.4% decline as per the Reuters poll.
European shares bounce back after worst weekly performance in more than a year
European shares began the week on a positive note after the benchmark index saw its worst day in more than a year on Friday, while investors await a slew of economic data and expect the European Central Bank to cut interest rates later in the week.
European STOXX 600 index was up 0.6% by 0815 GMT on Monday, after it posting its worst weekly performance since October 2023.
All regional bourses advanced between 0.5% and 1%.
Investors will parse through consumer price inflation figures from Germany, Spain and France due later in the week.
Dollar tentative, yen dips on muddled Fed rate-cut outlook
The dollar held to tight ranges on Monday while the yen pared some of its safe-haven gains, as investors were undecided on the scale of a Federal Reserve rate cut expected later this month and looked to this week’s U.S. inflation reading for more clues.
Friday’s highly anticipated U.S. jobs data failed to offer clarity to traders on the question of whether the Fed would deliver a regular 25-basis-point rate cut or an outsized 50 bp one at its policy meeting next week.
The yen was last 0.26% lower at 142.65 per dollar, surrendering some of its gains after having risen 2.73% last week.
The euro rose 0.03% to USD 1.1089.
Sterling advanced 0.06% to USD 1.3138.
Against a basket of currencies, the dollar was little changed at 101.21.
