At Wednesday’s close, the Dow Jones (US30) Index was up 0.09%, while the S&P 500 (US500) Index fell 0.16% and hit a 2-week low. The NASDAQ Technology Index (US100) closed negative 0.30% and hit a 3-week low. Stocks on Wednesday initially recovered from early losses and headed higher after the 10-year T-note yield fell to a 2-week low after the July JOLTS report on US job openings fell more than expected to a 3-year low. The weak JOLTS report boosted hopes that the Fed would cut interest rates by 50 bps at the September 17–18 FOMC meeting. However, stocks gave up their gains after the release of the Fed’s Beige Book on Wednesday afternoon, which raised fears of a recessionary economy. The Fed’s Beige Book said the number of Fed districts reporting low or declining activity rose to nine from five in the previous period. Employers were more selective in hiring and less inclined to expand, citing concerns about demand and an uncertain economic outlook.
The Bank of Canada (BoC) decided on a 25 bps rate cut, which was widely expected, citing growing economic concerns amid inflation approaching the Central Bank’s 2% target. Preliminary data points to downside risks to third-quarter growth in the Bank’s July estimates, while the labor market remains stagnant, with unemployment holding at 6.4%, hinting at further rate cuts in upcoming meetings. However, amid the lack of surprises, Macklem noted that sustained price pressures in the housing and services sectors continue to support high inflation, which is seen as hawkish for the Bank of Canada going forward.
Equity markets in Europe were down yesterday. Germany’s DAX (DE40) fell by 0.83%, France’s CAC 40 (FR40) closed down 0.98%, Spain’s IBEX 35 (ES35) lost 0.58% and the UK’s FTSE 100 (UK100) closed down 0.35%.
Factory orders in Germany rose 2.9% in July 2024 from the previous month, beating market prognoses, which had expected a 1.5% fall, following an upwardly revised 4.6% rise in the previous month. It was the second consecutive month of growth, driven by strong orders for airplanes, ships, and trains (86.5%). Orders for electrical equipment also grew strongly (18.6%).
Switzerland’s unemployment rate rose to a seasonally unadjusted 2.4% in August 2024, up from 2.3% in the previous four months. The number of unemployed rose by 3,638 from a month earlier to a six-month high of 111,354.
WTI crude oil prices were trading near $69.6 a barrel on Thursday, remaining near the lowest level in eight months after a recent strong sell-off. Recent pressure on oil prices has been driven by oversupply concerns, with OPEC planning to increase production and a potential deal between Libya’s rival governments to restart oil production. Meanwhile, API data showed a significant drop of 7.4 million barrels in US crude inventories last week, much larger than the expected 0.9 million barrel decline.
Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) was down 4.24%, China’s FTSE China A50 (CHA50) decreased by 0.70%, Hong Kong’s Hang Seng (HK50) was down 1.10%, and Australia’s ASX 200 (AU200) was positive 1.88%.
Thailand’s annual inflation rate for August 2024 fell to a fourth-month low of 0.35% from 0.83% in the previous month and came in below market expectations of 0.4%, remaining outside the Central Bank’s target range of 1–3%. Meanwhile, core inflation, which excludes volatile items such as food and energy prices, rose to 0.62% in August from the previous reading of 0.52%, exceeding market expectations of 0.55%.
Governor Michele Bullock said in a statement that the Reserve Bank of Australia (RBA) aims to balance lowering inflation in a reasonable time frame and preserve as much of the gains in the labor market as possible. She added that the country’s inflation rate has fallen significantly since its peak but remains above the midpoint of the 2–3% target, with core inflation, measured by a trimmed average, at 3.9% in June. It is expected to return to the target range by the end of next year and approach the median in 2026.
The Reserve Bank of New Zealand (RBNZ) cut the official money rate last month, the first move since tightening policy in the post-pandemic period in an attempt to curb inflation. Investors are confident the Central Bank will continue easing policy at its next meeting in October, with a 37% chance of a 50 basis point rate cut.
