Global markets saw a partial recovery on Monday following last week’s selloff triggered by weaker-than-expected US jobs data.
This development left investors divided over the Federal Reserve’s next steps on interest rate cuts.
The Stoxx Europe 600 index gained 0.5%, recovering some of its 3.5% loss from the previous week. In the US, futures for both the S&P 500 and Nasdaq 100 rose, signaling a positive start after Friday’s slump. The 10-year US Treasury yield increased for the first time in five days, while European bonds fell, with Germany’s 10-year yield rising by five basis points. The US dollar also strengthened slightly.
The main debate for investors remains how aggressively the Fed will cut rates in response to economic conditions. Wednesday’s US consumer inflation report is highly anticipated, as it could influence the Fed’s decision-making at its upcoming September meeting. A rate cut this month is expected, but the size and timing of future cuts remain uncertain. According to Louis Kuijs, Asia-Pacific chief economist at S&P Global, “the global economic risks are significant,” which will play a key role in shaping the Fed’s rate strategy.
September has been volatile for markets, with stocks and commodities sliding due to concerns over slowing global growth. The Cboe Volatility Index, a measure of market fear, reached its highest level in a month on Friday. Asian stocks were hit hard on Monday, with markets from Taiwan to Australia falling. Japan’s Nikkei 225 dropped for the fifth consecutive day, while China’s CSI 300 Index continued its decline, deepening concerns about China’s economic struggles.
Key economic events this week include the European Central Bank’s interest rate decision on Thursday, US inflation data on Wednesday, and China’s trade data on Tuesday. Investors are also closely watching commodities, with oil prices rising after a deep weekly loss and iron ore dropping below $90 a ton, driven by weaker demand from China.
In the currency markets, the US dollar rose against most major currencies, including the euro, yen, and British pound. Meanwhile, cryptocurrencies saw a slight recovery, with Bitcoin and Ether both posting gains.
With input from U.S. News & World Report, and Yahoo Finance.