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The latest trading session saw European and US futures rise, spurred by a positive atmosphere in Asian markets and a robust session on Wall Street. Investors are increasingly optimistic that the Federal Reserve may soon indicate its readiness to reduce interest rates.
According to recent data, MSCI’s all-country stock index is on track for a ninth consecutive day of gains, marking the longest streak since December. Stocks in Japan, South Korea, and Australia saw upward movement, while Chinese shares experienced a decline. Euro Stoxx 50 and US futures also recorded gains, while 10-year Treasury yields remained stable.
This optimistic trend was primarily driven by a strong performance in the US, where the S&P 500 index has now increased for eight days straight. Additionally, a measure of Asian currencies reached its highest point since January. Meanwhile, oil prices fell significantly, attributable to the news that Israel has accepted a cease-fire proposal regarding the situation in Gaza.
The expectations for forthcoming easing from the Federal Reserve are bolstering equity markets. Investor sentiment remains strong even amidst recent volatility and uncertainty surrounding the economic landscape. The MSCI Asia Pacific Index has generally performed well, only falling short in two sessions since August 6, reinforcing the anticipation that US policymakers might lower interest rates in September.
Market analysts have pointed out that recent economic data has mitigated concerns about a slowdown in US growth while not igniting fears of renewed inflation. Kyle Rodda, a senior analyst at Capital.Com Inc., remarked that this scenario is particularly favorable for equity markets in Asia excluding Japan, aided by the weaker dollar which enhances financial conditions and investor appetite.
On the European front, rising concerns regarding economic growth have prompted discussions of potential policy adjustments by the European Central Bank (ECB) in their upcoming meeting. Olli Rehn, a member of the ECB Governing Council, indicated that the current economic climate may necessitate such changes. Market participants are particularly keen on the upcoming euro-zone Consumer Price Index (CPI) data to be released shortly.
In the commodities market, copper prices have retracted from their recent recoveries, while gold has reached remarkable levels, surpassing $2,500 per ounce amidst growing expectations of impending interest rate cuts from the Federal Reserve. Concurrently, the yen has lowered against the dollar, settling around 147 per dollar.
Australia’s central bank has signaled that it is likely to maintain interest rates at the current 12-year high for a prolonged period to achieve its inflation targets next year. In China, banks have opted to keep their benchmark lending rates steady as profit margins face pressure, indicating a focus on the stability of the financial sector.
Market activity has shown declining trading volumes since the surge observed during the early-August selloff, as traders exercise caution leading up to the Federal Reserve’s Jackson Hole economic symposium later this week. This year’s meeting is expected to display a significant divide among central bankers, marking one of the most varied stances since the early pandemic period.
Jessica Amir, a market strategist at Moomoo, noted that markets are observing a growing dovish tone among Federal Reserve officials, with recent economic data supporting the case for rate cuts. This setting creates a conducive atmosphere ahead of the Jackson Hole symposium, where Fed officials, particularly Chair Jerome Powell, may hint at forthcoming rate reductions.
On the corporate side, there are notable developments as Alimentation Couche-Tard Inc. has made a preliminary proposal to acquire 7-Eleven’s parent company, Seven & i Holdings Co., with the potential valuation exceeding ¥5.63 trillion ($38.4 billion) based on the company’s market performance following the announcement.
Key upcoming events include:
Eurozone CPI, Tuesday
US Fed minutes, BLS preliminary annual payrolls revision, Wednesday
Eurozone HCOB PMI and consumer confidence, Thursday
ECB account of July rate decision, Thursday
US initial jobless claims, existing home sales, S&P Global PMI, Thursday
Japan CPI, Friday
Bank of Japan Governor Kazuo Ueda participates in a special parliamentary session to discuss the July 31 rate hike, Friday
US new home sales, Friday
Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, Friday
Market movements included:
S&P 500 futures showed minimal change as of early morning London time
Nasdaq 100 futures saw a 0.1% increase
The MSCI Asia Pacific Index rose 0.3%
The MSCI Emerging Markets Index also gained 0.2%
Japan’s Topix recorded a rise of 1.3%
Australia’s S&P/ASX 200 improved by 0.2%
Hong Kong’s Hang Seng experienced a decline of 0.5%
The Shanghai Composite fell 1.1%
Euro Stoxx 50 futures increased by 0.2%
In currency markets:
The Bloomberg Dollar Spot Index saw slight variation
The euro remained stable at $1.1074
The Japanese yen declined by 0.4% to 147.21 per dollar
The offshore yuan dropped by 0.1% to 7.1439 per dollar
The British pound decreased by 0.1% to $1.2976
In the realm of cryptocurrencies:
Bitcoin rose by 3.4% to $61,094.19
Ether increased by 2.5% to $2,681.23
In the bond market:
The yield on 10-year Treasuries climbed one basis point to 3.88%
Germany’s 10-year yield remained relatively stable at 2.25%
Britain’s 10-year yield also exhibited little change at 3.92%
Australia’s 10-year yield rose by four basis points to 3.96%
In commodity trading:
Spot gold fell slightly by 0.1% to $2,501.10 per ounce
West Texas Intermediate crude oil fell by 0.8% to $73.75 a barrel
This report is based on the information from trading markets and recent economic analyses.
Source
finance.yahoo.com