The US government remains shut, which means the BLS will likely not release the September jobs report this Friday. Yesterday's ADP numbers, however, injected a strong dose of dovishness to keep investors going for a few days longer.
Last week ended on a positive note despite fresh tariff threats on pharma, trucks and kitchen cabinets. PCE data coming in line with expectations helped keep investor mood sweet after a week of hesitation. The S&P 500 rebounded after a three-day retreat, the Stoxx 600 held above its 50-DMA, and even the pharma-heavy SMI index bounced from August lows – confirming that trade news has become usual bad news.
Uh oh — that US growth report yesterday was just a bit too strong for investors' liking. On the surface, strong GDP should be good news but the problem is, such strong growth doesn't support further Federal Reserve (Fed) rate cuts, and it could even boost inflation expectations on top of potential tariff-led pressures. Understandably, October rate cut expectations took a hit after the GDP release.
Every time you think the AI rally has topped out, it finds another gear. Yesterday was one of those days... Nvidia surged nearly 4% to a fresh ATH after reports that it will deepen its partnership with OpenAI to build massive new data centers and AI infrastructure.
US equities broke one more record before the widely awaited Federal Reserve (Fed) decision, while the Stoxx 600 fell more than 1% as rate-sensitive sectors including banks and insurers led the index lower.
Another day, another record high for the S&P 500 on optimism that:
The week kicks off on a slightly positive note after last week's softer-than-expected US inflation data paved the way for a rate cut on Wednesday. Combined with signs of a rapidly deteriorating US jobs market, investors now expect the Federal Reserve (Fed) to begin a series of cuts this week.
The week started slowly in the US and Canada as markets were closed for the Labour Day holiday.
Chinese equities hit a fresh three-year high, while India's Nifty 50 rebounded on Monday after President Xi Jinping and Prime Minister Narendra Modi attended a weekend summit in Shanghai alongside leaders from Russia, Iran and Turkey. The meeting focused on strengthening ties among emerging markets in the face of what participants described as aggressive US trade policies.
Nvidia revealed its Q2 results yesterday after the closing bell and the numbers were, again, very impressive. The company made $46.7bn in revenue last quarter, broadly in line with expectations – and that without selling any H20 chips to China due to export restrictions. The profit margin climbed back above the 70% mark, and the company guided for $54bn in revenue this quarter – still excluding China, where the outlook remains complicated.
The week started badly for French assets, as the French PM called for a confidence vote that opposition parties immediately responded to with a 'no confidence.' The EURUSD consolidated below its 50-DMA despite a broadly pressured US dollar, which feels the pinch of a growing dispute between Federal Reserve (Fed) Governor Lisa Cook and US President Donald Trump, who attempted to fire her without necessarily having the authority to do so.
This week could have started calmly, with investors digesting Friday's policy shift at the Federal Reserve (Fed), consolidating recent gains and repositioning ahead of the all-important Nvidia earnings due Wednesday. But instead, Donald Trump chose to keep markets on edge by announcing the dismissal of Fed Governor Lisa Cook over alleged mortgage fraud.
Investors lapped up Jerome Powell's words like honey on Friday, as the man has apparently been troubled enough by the latest weakness in jobs numbers to say that this situation "suggests that downside risks to employment are rising" and that "if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment." And no one wants that to happen – especially after heavy criticism from the White House pointing at Powell as Mr. Too Late.
Selling pressure across most major US and European indices continued yesterday. Tensions between Russia and Ukraine persist with mutual attacks, while hawkish risks to the market's recent dovish Federal Reserve (Fed) narrative persist. Weekly jobless claims and the Philadelphia Fed survey were broadly consistent with concerns over a slowing labour market and lingering price pressures.
A selloff across US Big Tech names dampened market mood yesterday, triggered largely by mounting doubts over the AI boom. An MIT report revealed that 95% of companies investing in generative AI have yet to see returns, while OpenAI CEO Sam Altman himself warned that some sector valuations were "insane." The comments may have been a wake-up call for investors, sparking a sharp pullback in high-flying names.
All eyes were on Washington yesterday, where Zelensky finally hit it off with the US President, raising hopes that peace could be on the horizon. The next step is to bring Putin to the negotiating table and find a durable solution. Peace has rarely felt so close.
Friday's meeting between Trump and Putin seems to have gone smoothly. Details are scarce, but so far there are no signs of fresh tensions with Russia and no new sanctions on countries such as China and India that continue buying Russian oil. US crude opened the week with a gap lower but has since recovered part of its losses. Direction remains uncertain, though the absence of immediate stress is notable.
Investors spent Wednesday betting that the Federal Reserve (Fed) would not only cut rates by 25bp in September but could even deliver a jumbo rate cut, after CPI data released the day before came in softer than analysts expected. Fed doves now see a huge opportunity for the central bank to focus on the slowing jobs market rather than tariff-led inflation risks that have yet to materialise.
Yesterday, US inflation data was mixed, but the market reaction was not. Core inflation in the US posted its strongest gains this year, and the yearly figure accelerated more than expected to 3.1% in July.
Trump extended the tariff truce with China – which was set to expire today – by 90 more days, announced that gold will finally not be tariffed, and confirmed that Nvidia and AMD will pay the US government a 15% cut of their Chinese sales.
The week starts with gains in most Asian indices, and futures are in the positive in the early hours of the trading week. The S&P 500 posted its strongest week since late June on the back of robust earnings, further appetite for technology stocks, and hopes of progress in the Ukrainian war.
European equity markets gained recently on hopes that Donald Trump might broker a meeting between Vladimir Putin and Volodymyr Zelensky. However, Putin has not yet agreed to dialogue with Kyiv. Regardless, US crude is below a key support level (and falling) this morning on rising hope of progress – a move that could rapidly reverse as Russia looks much less enthusiastic to end the Ukrainian war then Trump is.
The week kicked off on a positive note as investors rushed to buy the dips from last week's correction. While the European indices remain under the pressure of tariffs, there are now two distinct camps regarding whether the major US indices should return to fresh all-time highs or whether a further correction is in order.
Donald Trump continued his tariff reveals over the weekend, announcing that the EU and Mexico would be hit with 30% tariffs from August 1st. That's far more than what the EU expected — they were hoping for a figure closer to what the UK secured: a 10% tariff, with exceptions for key sectors like metals and pharmaceuticals. Instead, they got a big, fat 30%.
It's another day, another record for the S&P 500 and Nasdaq 100, while the Dow Jones hovers just a few points shy of its own all-time high. Small- and mid-cap stocks are also better bid—though still well below their post-election highs. Remarkably, all this optimism comes despite stronger-than-expected employment data that crushed any near-term hopes of a July Federal Reserve (Fed) rate cut. The odds of such a move dropped from around 27% to just 5% following the data.
The S&P 500 closed at a fresh record high yesterday, boosted by a 4% jump in Nike shares — now up 45% since April's dip on the back of the US–Vietnam trade deal. At first glance, the market reaction might suggest the deal was great news. But was it?
Rally in most major indices across Europe and the US paused yesterday, as Trump-driven optimism began to sour under the rocky glare of the summer sun. Less-than-ideal news on both the trade and political fronts served as a sharp reminder that all is not rosy—that trade negotiations, and Trump's friendships, can turn into onion soup faster than you can say 'tariff' or 'DOGE.'
Trump denied earlier intelligence reports suggesting that the US strikes on Iranian nuclear sites caused only limited damage. On the contrary, he claimed the operation was a historic success and even declared the war over — 'except that it could maybe restart soon.' Still, the US and Iran are scheduled to meet for diplomatic talks in Iran this weekend, which appears to be a signal that Trump genuinely wants to de-escalate tensions in the Middle East.
Headlines were busy over the weekend as hostilities between Iran and Israel continued. An Iranian gas field in the Persian Gulf was hit on Saturday, fueling concerns that the escalation could spill over into global energy markets. While the damage appears limited to Iran's domestic supply, the targeted gas processing facilities are linked to offshore oil production sites, potentially threatening broader energy flows.
Yesterday was yet another ugly session for US stocks. The increasingly heavier weight of Trump talk, deteriorating relationships across the globe – except Russia – combined with higher inflation expectations on tariffs, the uptick in inflation and weakening expectations from US consumers are certainly to blame for the selloff in equities – that boost appetite in bonds, considered to be a safer investment option.
The euro and the European equity futures are in the green this Monday morning on relief that the German elections didn't bring major surprises. Merz' CDU/CSU won the election with around 28.5% of the votes – a good result for the center right though slightly weaker-than-expected, Olaf Scholz' SPD gained around 16% of support – as expected, while the AfD amassed 20% of the votes.
