Weekly market recap

Your weekly global financial market newsletter

The past week was packed with high-impact news, including earnings reports from tech giants Microsoft, Meta, Apple, and Amazon. Job growth in the U.S. slowed to its lowest rate since October 2021, suggesting potential economic headwinds. Market expectations are high for a probable 0.5 percentage point interest rate hike on September 18, 2024, as inflation concerns persist.
As markets digest recent economic indicators, the focus is on whether the Federal Reserve can achieve a soft landing for the U.S. economy. With contrasting signals, such as robust technology sector earnings versus rising unemployment rates, the path remains uncertain. This week's sentiment shifted to the downside, with major U.S. stock indices experiencing significant declines.
European markets saw significant declines due to weak U.S. economic data sparking growth concerns. Major indices, including Germany's DAX and France's CAC 40, posted notable losses. The Bank of England cut rates for the first time in four years, with cautious remarks about future cuts.
Chinese markets were mixed, with the Shanghai Composite gaining slightly, while the CSI 300 and Hang Seng Index declined. Manufacturing data showed continued contraction, affecting sentiment. Industrial profits, however, saw some improvement.
Japanese stocks suffered heavy losses, with the Nikkei and TOPIX indices both down significantly. The yen strengthened as the Bank of Japan raised rates and outlined plans to taper bond purchases.

Indices

The US technology sector faced pressure, particularly from weaker quarterly results from Intel and Amazon, despite Apple’s solid performance. Nvidia’s earnings are yet to be published. The shift in rhetoric around AI from enthusiasm to concerns of a bubble burst also weighed on market sentiment.

US30

-2.39%

US100

-3.21%

US500

-2.19%

GER30

-4.74%

Commodities

Gold prices spiked to a two-week high but then retreated as traders took profits amid broader market volatility. Brent crude oil futures fell significantly, hitting a two-month low due to concerns over global demand outweighing supply risks from geopolitical tensions in the Middle East. Natural gas prices continued their free fall due to lower demand and increased production, coupled with concerns about a storm near Florida.

Gold

3.47%

Silver

1.18%

BRENT

-4.70%

NATGAS

-4.19%

Forex

Dollar Index fell significantly while VIX showed the biggest moves this year.

The Japanese yen had a standout week, strengthening significantly following an unexpected rate hike by the Bank of Japan. This move, combined with a dovish stance from the Federal Reserve, has put downward pressure on the US dollar, causing the USD/JPY pair to drop notably. The BoJ’s shift towards a more hawkish policy contrasts with the Fed’s current approach, supporting the yen’s upward momentum.

EUR/USD

0.49%

USD/JPY

4.89%

GBP/USD

-0.44%

USD/CAD

-0.23%

Macro

U.S. macro data and Federal Reserve speakers remain in focus, along with crucial economic indicators and earnings reports. In China, the week begins with a private-sector survey on services activity, followed by trade data on Wednesday and a consumer prices reading at the end of the week. Investor sentiment remains fragile in light of economic, political, and geopolitical events.

Analysts are debating whether the U.S. can achieve a “soft landing” by taming inflation with higher interest rates without slipping into a recession. Historically, when the Fed began cutting rates to stave off a recession, stocks plummeted and bonds rallied. This sentiment affects all markets, and U.S. data has triggered sharp reactions globally, causing the steepest one-day decline since last March.

What to watch out for this week

After last Friday's weak July jobs report raised recession fears, this week's economic calendar will be lighter.
On Monday, the Institute of Supply Management will release its service sector index, which is expected to show modest growth. Thursday's update on the labor market includes the weekly initial jobless claims report. Investors will also pay attention to speeches from San Francisco Fed President Mary Daly and Richmond Fed President Thomas Barkin.
Investors will closely monitor economic releases from China to gauge its recovery. The week begins with a private-sector survey on services activity, followed by trade data on Wednesday and a consumer prices reading at the end of the week. Recent data suggests a gloomy outlook, prompting Beijing's urgency to bolster growth. Officials will focus on Friday's inflation numbers for insights into further measures needed to stimulate domestic demand.

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