On Wall Street, investors had a choppy session, but major indices reversed losses from the opening session and ended higher.
Private sector business activity in the United States contracted for the second consecutive month in August, with particular weakness in the services sector as demand weakened in the face of inflation and tighter financial conditions.
the&Q The August flash composite Purchasing Managers’ Index (PMI) fell to 45 this month, the lowest since February 2021, from a final reading of 47.7 in July. A reading below 50 indicates a contraction in activity.
Robert Pavlik, senior portfolio manager at Dakota Wealth Management: “Weaker economic news fueled a small rally in the stock market, especially in Nasdaq stocks. It leads investors, especially algorithms, to believe that the Fed won’t be as aggressive in raising interest rates and thus will get a bit of a rally instead of selling pressure.”
Lawrence Gillum, Fixed Income Strategist at LPL Financial: “While the Jackson Hole Symposium is not a Fed Monetary Policy Committee meeting per se, it is an opportunity for Powell to boost market expectations.
“Markets have historically done a good job of predicting rate cuts, but with inflation pressures still significantly above the Fed’s target, Powell may need to readjust market expectations. If he doesn’t, the Fed’s job may become more difficult and the prospects for a soft landing could become more difficult.”
today’s agenda
Venue: RBA Jonathan Kearns Speech
Overseas Data: US Durable Goods Orders Jul; Pending US Home Sales July
Market Highlights
ASX futures are up 3 points or flat at 6868 by 4:04am AEST
USA
Stocks fluctuated after weak economic data, with traders hoping for more clarity on the Fed’s monetary policy path from the Jackson Hole central bankers’ symposium later this week.
the&P 500 wavered between gains and losses in a session of below-average trading volume.
High-growth stocks such as Nvidia and Tesla were each up more than 1%, while semiconductor stocks gained 1.4% in midday trading.
Trimming some of the gains, Zoom fell 14.8% after the company lowered its full-year profit and revenue forecasts.
“Global sentiment is nervous and volatile at the moment,” said Richard Hunter, director of markets at Interactive Investor. “There is little reason for optimism on the immediate horizon, with any glimmer of economic hope yet to take hold on a sustainable basis.”
Europe
The FTSE 100 ended 0.6% lower as a stronger pound weighed on shares of pharmaceutical and consumer staples companies.
The FTSE 100 Index is up 7% from lows in mid-June, fueled in part by strong corporate earnings and its composition of global companies and companies that are defensive in nature.
“Everyone is trying to answer the question of how much of the recent rally was due to short-covering in a bear market contraction or overly optimistic expectations for the central bank pivot in 2023 or a lot of the bad news. already discounted,” said Russ Mold. , chief investment officer at AJ Bell.
European stocks fell as investors worried about high energy prices and a weak economic outlook.
Euro zone business activity contracted for the second straight month in August as the cost-of-living crisis forced consumers to cut spending while supply constraints hurt manufacturers, a survey showed.
In Germany, the recession deepened in August as businesses saw demand weaken due to high inflation, rising interest rates and economic uncertainty.
Separately, the manufacturing index rose to 49.8 in August from 49.3 the previous month, beating analysts’ forecasts of 48.2. Germany’s DAX fell 0.3% after the data.
“It’s been another day of poor economic data for European markets, with the latest flash manufacturing PMI figures falling into contraction territory for Germany, France and the UK.” said Michael Hewson, chief market analyst at CMC Markets.
Still, Hewson noted that while the economic data has been poor, the markets’ reaction has been a bit more mixed.
raw Materials
Potential OPEC+ production cuts discussed this week by Saudi Arabia may not be imminent and are likely to coincide with Iran’s return to oil markets should it reach a nuclear deal with the West, nine sources told Reuters on Tuesday. of OPEC.
OPEC’s de facto leader Saudi Arabia on Monday signaled the possibility of introducing cuts to balance a market it described as “schizophrenic”, with the physical and paper markets increasingly disconnected.
OANDA’s Edward Moya: “I don’t think anyone expects Powell to become Volcker and that has provided some support here for gold. Powell still needs to justify his aggressive stance in Jackson Hole, but it looks like the markets won’t believe him.
It looks like gold is about to stabilize above the $1750 level before we hear from Fed Chairman Powell on Friday.”
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