Introduction: Markets lifted by soft-landing hopes
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Global stocks continue to push higher, on hopes that policymakers are executing a ‘soft landing’ in their battle against inflation.
After gains on Wall Street last night, shares across Asia have hit a one-month high today – as investors continue to move on from the volatility that gripped markets last week.
MSCI’s index of Asia-Pacific shares outside Japan hit a one-month high, before dipping back slightly, while Japan’s Nikkei has surged by 1.8%, or 674 points, up to 38,062
The rally is being driven by expectations that the US Federal Reserve will start to cut its key policy rate next month, and that America will dodge a recession.
Jerome Powell, the head of the US Federal Reserve, could cement those hopes – or shake them – when he speaks at a major economic symposium in the Rocky Mountains resort of Jackson Hole on Friday.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:
The week kicked off on a positive note on expectation that when Federal Reserve (Fed) Chair Jerome Powell speaks at the Jackson Hole meeting on Friday, he will deliver a strong hint that the rate cuts will begin soon in the US.
How soon? Probably in September? By how much? Probably a reasonable 25bp? Would the markets be upset with the idea of a 25bp cut instead of a 50bp? Probably not, because a 50bp cut would require a severe economic slowdown, a crisis or a panic mode, which is not good for risk appetite.
Therefore, the best of both worlds would be the hint of a 25bp cut that would keep the market mood in the sweet soft-landing spot. And this is what investors hope to hear.
European markets are set for a mixed open, with Germany’s DAX being called higher but the FTSE 100 expected to fall a little.
The agenda
-
8.30am BST: Sweden’s Riksbank interest rate decision
-
9.30am BST: UK insolvency statistics for July
-
10am BST: Eurozone inflation report for July (final reading)
-
1.30pm BST: Canadian inflation report for July
Key events
European stock markets have opened higher, with the pan-European Stoxx 600 index gaining 0.3% in early trading.
Germany’s DAX and France’s CAC are both 0.3% higher.
But in London, the FTSE 100 has dipped by 14 points or 0.15%. Shell and BP are among the fallers, tracking the decline in the oil price.
Over in Italy, as fresh search is underway for six people – including tech entrepeneur Mike Lynch – after the Bayesian yacht capsized off Sicily before dawn on Monday.
Lynch’s 18-year-old daughter Hannah, Morgan Stanley International chairman Jonathan Bloomer, and Clifford Chance lawyer Chris Morvillo are also among those missing.
China’s July oil imports from Russia fall 7.4%
Speaking of oil….China’s crude imports from top supplier Russia have fallen.
Official data shows that China imported 7.4% less oil in July than a year ago.
Russian oil arrivals, including via pipelines and shipments, totalled 7.46m metric tons last month, or 1.76m barrels per day (bpd), according to data from the General Administration of Customs.
That’s lower than the 1.9 million bpd recorded in July 2023, as well as June’s 2.05 million bpd.
That suggests weaker demand for energy in China, as its economy remains subdued – as export growth slows and factory activity weakens.
This will also make a dent in Moscow’s revenues; Russia has redirected its oil exports from Europe to China, and India, after Western countries imposed sanctions following its invasion of Ukraine.
Oil drops on hopes of easing Middle East tensions
Oil is not joining the rally, though.
Brent crude, the international benchmark, has dropped 0.5% this morning to a near-two-week low of $77.29 per barrel.
That adds to its $2/barrel fall on Monday, on hopes of success in the Middle Eastern peace talks.
US secretary of state Antony Blinken is visiting the region, again; yesterday he met with Israel’s prime minister Benjamin Netanyahu for three hours. Netanyahu’s office says the meeting was “positive and conducted in a good spirit”.
Kyle Rodda, senior financial market analyst at Capital.com, says:
Reports that the US have cajoled Israeli Prime Minister Benjamin Netanyahu into a ceasefire agreement raised hopes of a de-escalation in the Israel-Gaza war.
The markets remain on the lookout for potential reprisals from Iran on Israel for the assassination of Ismail Haniyeh, which could reinflame tensions. Regarding a potential ceasefire, the onus shifts to Hamas and whether it accepts the arrangement.
Introduction: Markets lifted by soft-landing hopes
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Global stocks continue to push higher, on hopes that policymakers are executing a ‘soft landing’ in their battle against inflation.
After gains on Wall Street last night, shares across Asia have hit a one-month high today – as investors continue to move on from the volatility that gripped markets last week.
MSCI’s index of Asia-Pacific shares outside Japan hit a one-month high, before dipping back slightly, while Japan’s Nikkei has surged by 1.8%, or 674 points, up to 38,062
The rally is being driven by expectations that the US Federal Reserve will start to cut its key policy rate next month, and that America will dodge a recession.
Jerome Powell, the head of the US Federal Reserve, could cement those hopes – or shake them – when he speaks at a major economic symposium in the Rocky Mountains resort of Jackson Hole on Friday.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:
The week kicked off on a positive note on expectation that when Federal Reserve (Fed) Chair Jerome Powell speaks at the Jackson Hole meeting on Friday, he will deliver a strong hint that the rate cuts will begin soon in the US.
How soon? Probably in September? By how much? Probably a reasonable 25bp? Would the markets be upset with the idea of a 25bp cut instead of a 50bp? Probably not, because a 50bp cut would require a severe economic slowdown, a crisis or a panic mode, which is not good for risk appetite.
Therefore, the best of both worlds would be the hint of a 25bp cut that would keep the market mood in the sweet soft-landing spot. And this is what investors hope to hear.
European markets are set for a mixed open, with Germany’s DAX being called higher but the FTSE 100 expected to fall a little.
The agenda
-
8.30am BST: Sweden’s Riksbank interest rate decision
-
9.30am BST: UK insolvency statistics for July
-
10am BST: Eurozone inflation report for July (final reading)
-
1.30pm BST: Canadian inflation report for July