
Markets Shift to Holiday Mood, Reports Reuters
Market Overview: Key Insights for the Week Ahead
As the week begins, there’s a sense of calm in Asian markets, particularly with Japan on holiday for Mountain Day. This pause comes after significant turbulence last week that set global markets on edge.
If the Tokyo exchange were operational, futures indicate the Nikkei could be trading approximately 400 points higher, although it would still fall short of its position prior to last Monday’s remarkable decline.
Most other Asian stock markets are seeing positive movement, led by a 2% increase in Taiwan, while U.S. futures remain relatively unchanged.
The U.S. dollar is hovering around 147.00 yen, signaling a temporary halt to the unwinding of the yen carry trade. Recent data from the International Monetary Market (IMM) indicated a sharp reduction in net short positions, now at 11,354, down from 184,000 as of early July.
Treasury futures reflect little change, and expectations for a half-point rate cut by the Federal Reserve in September have settled to a 49% probability after peaking at 100% just a week ago.
Federal Reserve officials have downplayed notions of an inter-meeting rate cut. Fed Governor Michelle Bowman remarked over the weekend that inflation remains uncomfortably high, though she acknowledged a gradual reduction in rates may be necessary if inflation continues to decline.
The market will be closely monitoring upcoming U.S. consumer price data set for release on Wednesday. Predictions suggest a slight dip in annual core inflation to 3.2%, which would be the lowest figure since April 2021. A reading below expectations could prompt discussions about the Fed’s responsiveness to inflationary pressures.
Additionally, July retail sales data is scheduled for Thursday and may exceed forecasts, which predict an increase of 0.3%. The range of predictions spans from no growth to a rise of 0.9%. Insights from major retailers may provide further clarity on consumer demand, and weekly jobless claims may also attract attention given last week’s unexpectedly significant drop.
On the geopolitical front, tensions in the Middle East persist, with Israeli Defense Minister Yoav Gallant informing U.S. Defense Secretary Lloyd Austin of concerns regarding a potential large-scale attack by Iran on Israel.
In a notable move, the Pentagon announced the deployment of a nuclear-powered guided missile submarine to the region and accelerated the deployment of the Abraham Lincoln strike group.
Key Events to Follow This Week:
- Discussions involving German Economy Minister Robert Habeck and RWE Chief Executive Markus Krebber.
Stay tuned for further developments that could impact market sentiment.