Analyst
The week starts well: Asian stocks, especially Chinese stocks ended the day with solid gains (Hang Seng +2.5% / Shanghai Comp. +1.4%), paving the way for a busy economic agenda this week full of important interest rate decisions, CPI reports, GDP releases and other important data expected in the coming days.
European equities, notably the Stoxx 600, saw an uptick of 0.75% after recent losses in Europe, bolstered by China's recent stimulus efforts as well as speculation that US interest rates may soon normalize.
In Asia, China takes proactive measures in its property sector, signaling potential relief for global markets, although structural changes are needed. A notable step included allowing major cities to reduce down payments for potential homeowners and enticing lenders to reduce rates on current mortgages. Because of this, Hong Kong indices soar, particularly in the real estate sector which grew over 7%. The news of the Chinese builder, Country Garden Holdings, obtaining creditor approval for an extended CNY bond due date also boosted market sentiment.
US traders will get some time off from the stock market today (Labor Day). US markets experienced an impressive run last week, helped by a host of economic data that pointed towards a slowing economy, easing labor market and increasing bets that the Federal Reserve could hold off on further rate hikes.
August's NFP report was mixed, though jobs created at 187,000 slightly above expectations, unemployment rate rose significantly to 3.8% (from 3.5%). Consequently, prospects of a rate hike in September appear less likely.
Oil, a significant market influencer, remains steady after sharp gains in the previous week. Anticipation builds around extended OPEC+ supply reductions, especially as Russia announces prolonged export curbs. Market observers also keenly watch Saudi Arabia's next moves, expecting it to extend its voluntary curbs into October. Gold rises past $1,943 per ounce, hovering near the $1,950 resistance.
With rising signs of slowing demand, ongoing high rates, increasing unemployment, a stronger USD, higher energy prices and in many economies stubborn inflation, we see the market in a bull trap situation - meaning that the risks of a sharp reversal becomes increasingly likely. Positive sentiment is carried by hopes of an end of Fed rate hikes, as well as gains in big tech names, supported by gains in AI stocks and other reasons, such as falling yields which generally supports growth stocks.
Key events today:
EUR Balance of Trade - 06:00 UTC+0 (released)
EUR ECB President Lagarde Speech - 13:30 UTC+0
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