2024-08-13 04:40:38
Ankur Banerjee’s outlook on the future of European and global markets
Japanese stocks made a strong comeback after a holiday on Tuesday, erasing all of last week’s losses as a stable yen gave cautious investors relief, while a slew of U.S. data this week will also provide more clarity on the Federal Reserve’s next move.
U.S. producer price data is due later today and could have an impact on the market before focus turns to July consumer price index data due on Wednesday. Thursday’s retail sales report is part of this week’s data roundup.
Investors will analyze the data to determine whether the Fed will cut interest rates by 50 basis points or 25 basis points at its September meeting. The CME FedWatch tool shows that traders are currently neutral on a rate cut.
At one point last week, they fully priced in a 50 basis point rate cut amid a sell-off sparked by fears of a U.S. recession.
That made traders reluctant to make big bets ahead of the data, which nonetheless took center stage in an otherwise uneventful Asian session as a steadier yen calmed investor nerves after last week’s wild swings.
Japanese stocks rose more than 2%, meaning prices are back to where they were on August 2. What kind of market crash?
The yen, another focus of last week’s sharp sell-off, was slightly weaker at 147.435 per dollar, well below a seven-month high of 141.675 hit last Monday.
The yen has been relatively flat over the past few trading days, and the market has regained some calm, leaving investors wondering whether the unwinding of carry trades has ended.
Investors will also be watching for comments from Atlanta Federal Reserve President Rafael Bostic later in the day, while the European session will likely be dominated by UK wage data.
Meanwhile, many users were unable to access the live broadcast of Republican presidential candidate Donald Trump’s interview with billionaire entrepreneur Elon Musk due to long delays caused by technical problems, and attendees had to wait for some time before it could start.
Key developments that could impact markets on Tuesday:
UK June wage data, UK June ILO unemployment rate, Germany August ZEW economic survey and current situation
(Written by Ankur Banerjee; Edited by Muralikumar Anantharaman)
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