Global markets await economic data that could influence the Federal Reserve’s decision on interest rates in September. Stocks have been muted, while the dollar has steadied near five-week lows and gold has reached record highs. Investors are expecting the Fed to lower interest rates, with a 25 basis point cut having an 89% chance of being implemented, according to market expectations.
The upcoming economic data, including Friday’s U.S. nonfarm payrolls report, will play a crucial role in determining the central bank’s next steps. The report will be preceded by data on job openings and private payrolls, providing a clearer picture of the labor market. The U.S. inflation report for August, scheduled to be released on September 11, will also be closely watched.
The prospect of lower borrowing costs has supported Wall Street near record highs, while stocks in other regions have also gained in recent weeks. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was flat on Tuesday. Nasdaq futures fell 0.1%, while European futures eased 0.07%. U.S. markets were closed on Monday for a holiday, leaving few cues for Asian markets.
In China, stocks have been driven by AI enthusiasm but fell on Tuesday as investors locked in profits following a sharp rally. The blue-chip CSI300 index fell 0.9% after hitting a three-year high for the third straight session earlier on Tuesday. Hong Kong’s Hang Seng index eased 0.6% after surging 2% on Monday.
The dollar has clawed back some of its losses ahead of the European open, with the euro falling 0.16% to $1.16925 and sterling down 0.17% to $1.35264. The yen weakened 0.3% to 147.70 per dollar after the Bank of Japan’s Deputy Governor warned of global economic uncertainty. The dollar index was 0.2% higher at 97.847, still near the five-week low it hit on Monday.
The yield on benchmark U.S. 10-year notes was 2.4 basis points higher at 4.249%. As investors await the economic data, the focus will remain on the Federal Reserve’s potential rate cut and its impact on global markets. The next few days will be crucial in determining the central bank’s next steps, with the U.S. nonfarm payrolls report and inflation data set to play a significant role in shaping market expectations.