Futures were up today, emboldened by a Chinese property stimulus and anticipations that global interest rates are nearing their peak. American markets took the day off for Labor Day, but elsewhere the action continues. Trading may be slim, but U.S. index futures for the S&P 500 and Nasdaq 100 ticked higher by about 0.2%, mirroring robust performances across Asian and European stock markets. The bond market joins the holiday pause, with Treasury futures marking a modest retreat. Even the dollar index took a breather, dipping to accommodate a rise in the Chinese yuan. Oil remains buoyant at its 2023 high, priced at a brisk $85.50 per barrel.
Last Friday’s jobs report revealed a cooling American labor market, supplying the Federal Reserve with a rationale to delay (or halt) further interest rate hikes. Bolstering market optimism further was a surge in home sales over the weekend in two of China’s major cities, Beijing and Shanghai. Evidently, the Chinese government’s strategy to mitigate an unprecedented housing slump is gaining traction. On Monday, the Hang Seng index leaped over 3% before trimming its gains. Simultaneously, a Bloomberg gauge that tracks Chinese developers sky-rocketed by a staggering 8.7%. It’s worth noting that Chinese authorities are fortifying the private economy by creating a new oversight bureau via the National Development and Reform Commission.
Market pundits are keenly watching the unfolding dynamics. Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, noted, “The incoming data supports our view of a ‘softish’ landing for the U.S. economy.” The subtle balance of inflation gravitating toward the Federal Reserve’s targets without instigating a recession seems plausible for this year. However, Haefele highlighted that the persistent uncertainty will keep traders on their toes as they attempt to gauge the Fed’s upcoming moves.
In Europe, stocks enjoyed the tailwind from a positive Asian session. Among the noteworthy market movers: CD Projekt shares catapulted as much as 7.2%; Novo Nordisk ascended to another record high, buoyed by its successful weight-loss drugs; Almirall climbed 4.8% on the back of Alzheimer’s disease product acquisition in Spain. Even the beleaguered Monte dei Paschi saw action, declining 3% as Italy’s governing coalition squabbles over plans to offload state-owned assets, including a stake in the bank.
In the Far East, the MSCI Asia Pacific Index rose by as much as 1.1%, propelled by gains in market giants Tencent and Alibaba. The property sector continued its optimism-driven ascent, with shares in Country Garden Holdings soaring after paying off a ringgit-denominated bond and receiving a nod to extend its private bond maturity. In Australia, the ASX 200 was buoyed by the resources sector after Albemarle upped its bid for Liontown Resources.
But the feverish activity didn’t stop with equities. In the forex markets, the Bloomberg Dollar Spot Index took a 0.18% dip, ending a seven-week winning streak. In rates, Treasury futures edged lower due to today’s Labor Day holiday, but a central debate brews in Europe—should policy tighten further given above-forecast inflation and sluggish growth? This week promises speeches from Federal Reserve officials, including Raphael Bostic and Susan Collins, who might shed light on the U.S. central bank’s strategy going forward.
Oil prices remained higher today, too, with WTI crude hovering around $85.6 per barrel. The OPEC+ leaders’ recent supply cuts continue to bolster the market.
Overall, while the week’s most important events are still around the corner, the market has already provided enough substance for traders to chew on as US equity markets reopen tomorrow.
Among key events to watch are European Central Bank President Christine Lagarde’s forthcoming speeches, central bank decisions in Australia and Canada, and a myriad of economic data that could tilt sentiment as bulls attempt to keep the recent rally alive.