Weekly market recap

Your weekly global financial market newsletter

Even though US stocks have had a good month (and maybe because of that), and have started a new uptrend after the July sell-off (and the DJIA is even at new highs), investors should start paying attention. Because September is starting, the worst month ever for US markets.
Since 1928, the S&P 500 index has declined 55 percent of the time in September. This may be due to renewed volume growth activity in the markets as Wall Street traders return from holidays. This leads to increased volatility and more pronounced moves in both directions, but losing months prevail. Since 1950, the S&P 500 index has written off an average of 0.7% in September and has risen in only 43% of years.
This September will be interesting from the start. First, market events will be influenced by labour market data, which may suggest a lot about the next important milestone this month, which will be the expected rate cut by the US Federal Reserve. Weaker-than-expected data could lead to a rate cut of up to 50 basis points and renew fears of a slowing US economy. Caution is therefore definitely appropriate.

Indices

US stocks ended last week mixed, with large caps and value titles in particular doing well, outperforming growth titles by the largest margin since July this year, and the DJIA index hitting a new all-time high. The Nasdaq technology index ended in negative numbers, which was significantly affected by the loss of technology company Nvidia, which lost almost 10% during the week. All three major averages ended a volatile month in the green, with the S&P 500 rising 3.9%, the Nasdaq up 4.1% and the Dow adding 2%.

European equities benefited from continued optimism during the week, mainly due to slowing inflation in the Eurozone, but also in countries such as Germany, fuelling speculation of further rate cuts by the ECB. The pan-European STOXX Europe 600 Index gained 1.34%, rising to a record high, Germany’s DAX reached a fresh peak, adding 1.47%, France’s CAC 40 Index rose 0.71% and the UK’s FTSE 100 Index ended 0.59% higher. The FTSE 100 added 0.10% over the month, the DAX rose 2.15% and the CAC 40 firmed 1.32%.

US30

+0.94%

US100

-0.74%

US500

+0.24%

GER30

+1.47%

Commodities

The price of Brent Crude Oil continued to fall, and by the end of the week it had fallen below the $77 level again, recording its second monthly decline. In addition to the expected reduced demand in China, one of the main reasons is the expected increase in production by OPEC+ countries from October. Although the Libyan government recently closed all oil fields in the east of the country and halted production and exports, which led to a short-term price increase, this is unlikely to limit the negative impact of the OPEC+ production increase.

The gold price continues its roller coaster ride and after a profitable week, it has once again fallen to the $2,500 per troy ounce level. It has thus been in the range between USD 2,470 and $2,530 since mid-August, and it will be interesting to see if the price breaks the support level and continues to fall or rises after breaking the resistance level. Following the motto of good news is bad news, investors have been processing the relatively good macro data from the US, which has somewhat cooled the optimism regarding a significant interest rate cut by the US central bank.

Gold

-0.26%

Silver

-3.25%

BRENT

-2.64%

NATGAS

-2.43%

Forex

After falling as low as 100 points at the beginning of the week in anticipation of more interest rate cuts by the US Fed, The Dollar Index reached 101.7 in the last three sessions of August. Investor sentiment regarding aggressive rate cuts was somewhat spoiled by data regarding the core PCE price index, which rose 0.2% in July. In the coming week, investor sentiment will be heavily influenced by expectations regarding the labour market, which will be very important for the Fed in its rate decision.

EUR/USD

-1.27%

USD/JPY

+1.28%

GBP/USD

-0.63%

USD/CAD

-0.11%

Macro

Even as the major stock indices hover within sight of all-time highs, American consumers are optimistic about further gains in stock prices. Sentiment is the best it has been since 2017, according to a survey by the Conference Board. Na

Market sentiment was also boosted by US GDP data. The pace of economic growth picked up markedly in the second quarter, with GDP growing by three per cent on an annualised basis (the first estimate was 2.8%), compared with 1.4% in the first three months of the year.

Most awaited was Friday’s Labour Department’s release of its core personal consumption expenditures (PCE) price index. According to the Federal Reserve’s preferred inflation gauge, prices rose as expected by 0.2% in July, but the year-over-year increase was weaker than expected.

The annual inflation rate in the euro area fell to 2.2% in August from 2.6% in July, according to preliminary data. This is the lowest inflation rate since July 2021, which is already close to the ECB’s 2% target. It could therefore also ease monetary policy for the second time this September. Meanwhile, business and consumer sentiment has deteriorated in Germany. Inflation figures in Germany also came in below expectations and fell more sharply than expected.

What to watch out for this week

Monday's holiday in the US and Canada promises a quieter start to the week, but the end of the week will bring very important numbers. The first half of the week will be taken up by the final numbers of the Purchasing Managers' Indexes for both industry and services, both in Europe and the US.
On Wednesday, we will first learn how the Bank of Canada will handle its interest rates, we will hear the first report from the US labour market, namely the job openings (JOLTS) numbers, and investors will also be interested in the Beige Book, in which the Fed assesses the state of the US economy.
On Thursday, in addition to the US services sector purchasing managers' indices, other labour market numbers will also be available, i.e. corporate job creation data (ADP) and unemployment claims.
On Friday, we will first see the third estimate of GDP for the Eurozone and then the most watched statistics from the US labour market (job creation, unemployment rate, hourly earnings).

Disclaimer

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