Before the important U.S. labor market data (12:30 UTC+0) on Friday, investors and traders hold back.
Asian markets ended the second week in positive territory, with Chinese stimulus measures the main reason for the recovery of Asian markets – but also solid Japanese economic data played a role. Despite the announcement of further stimulus measures such as mortgage rate cuts, which drove commodity prices higher today in anticipation of rising demand, the end of the week saw selling which resulted in Chinese indices closing the day in negative territory.
European equities are mixed – benefiting from hopes that the ECB has little room to raise rates further given the weak economy – but on the other hand, economic data is deep in recessionary territory. Bad news remains good news in the U.S. as well. A weakening labor market this week is fueling hopes that the Fed sees enough signs of easing in the labor market to remain in a wait-and-see mode. A string of labor market data that came in much weaker than expected helped Wall Street rise this week and perform nearly flat in August. Signs of a slowdown in hiring today would further extend gains.
Meanwhile, Japanese companies advanced: Japan's Topix index posted its eighth straight month of gains – the longest winning streak since 2013 – and strong earnings data helped stocks end the week very strong. The robust Japanese economy makes it easier for the Bank of Japan to end its ultra-accommodative monetary policy, which would support Japanese equities in the long run and the JPY in all time frames.
Chinese stimulus measures also had a strong impact on oil and industrial metals prices. Oil prices have returned to 2023 highs, helped by signs that OPEC+ will extend production cuts. U.S. inventories continue to decline, indicating tight supply. Gold has also benefited from recent hopes that the Fed believes interest rates are sufficient and will continue to rise if signs of an easing labor market are confirmed by cooling NFP data.
We believe it is likely that the U.S. labor market picture is pointing to easing, as hiring in the U.S. is also slowing as the holiday season comes to an end.
👁 ROB'S MARKET OVERVIEW:
⚠️ We expect NFP data to confirm that US labor market cools – which would extend the currently cautiously optimistic market sentiment.
September 01, 2023
🇺🇸 US Markets ↕️/↗️ (gains extend, especially rate sensitive stocks if NFP data confirm cooling US labor market)
Cyclical Stocks ↕️/↗️
Tech/Growth Stocks ↕️/↗️
Financial Stocks ➡️/↗️
Defensive Stocks ➡️
Energy Stocks ↗️
Materials Stocks ↗️
JPY, AUD ➡️/↗️
EUR, GBP, CAD, CHF ➡️
USD ↕️/↘️ (USD to edge lower if NFP data confirm cooling US labor market)
⚒ Commodity Markets ↗️
Oil prices ↗️ (Also benefiting from a weaker USD – would rise if NFPs come in better-than-expected)
Natural Gas prices ↕️/↗️
Metal prices ↗️
Precious Metal prices ➡️/↗️ (continues to benefit from lower US Treasury yields & weaker USD; would fall sharply if NFPs come in better-than-expected)
⚡️Cryptos ➡️/↘️ (Recent optimism from ETF approval continues to fade)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)