Global stock markets and Wall Street futures are rising as traders await signals on interest rate plans from the Federal Reserve conference, with investors hoping that the Fed officials will signal an end to interest rate hikes despite concerns about inflation not being fully under control yet.
Despite recent market gains, investors are concerned that the current rally may be the last hurrah before an economic contraction, especially after the Federal Reserve indicated that it could hike interest rates twice more this year.
Stocks turn volatile as Jerome Powell hints at more rate hikes, consumer inflation expectations rise, and consumer sentiment and expectations decrease; investors await Powell's speech at the Jackson Hole Economic Symposium.
The dollar is expected to continue strengthening as bond yields rise, with the Fed likely to hike rates at least once more this year, and a barrage of economic data this week will heavily influence Fed policy decisions and impact the direction of the dollar and interest rates.
Investors will have a lot to consider this week as they analyze economic indicators such as US nonfarm payrolls, wage growth, and inflation, as well as Eurozone inflation numbers and central bank commentary, all of which could impact policy decisions and market sentiment.
Stocks around the world are starting the week on a positive note, despite the possibility of higher U.S. interest rates, with U.S. futures pointing to a modest boost for indexes at the opening bell.
Asian equities rise to two-week high and dollar wobbles as weak US jobs data suggests the Federal Reserve may halt interest rate hikes.
The Federal Reserve meeting in September may hold the key to the end of the tightening cycle, as markets anticipate a rate hike in November, aligning with the Fed's thinking on its peak rate. However, disagreement among Fed policymakers regarding the strength of the economy and inflation raises questions about the clarity and certainty of the Fed's guidance. Market skeptics remain uncertain about the possibility of a "soft landing," with sustained economic expansion following a period of tightening.
Asian stocks may face a volatile session as investors monitor U.S. economic data, a second China manufacturing PMI reading, and the U.S. employment report, with any indication of central bank leaders approaching the end of tightening likely to generate risk appetite.
U.S. futures are up on the first trading day of September, with the Nasdaq 100, S&P 500, and Dow Jones Industrial Average all showing gains, while the recent data suggests that the U.S. labor market is cooling down and the Fed may pause the rate hike cycle in September.
Investors are hopeful that September will bring an end to the rise in interest rates, but the month is filled with risk events, making it potentially volatile for both stocks and bonds.
Asia-Pacific markets are expected to have a mixed start to the week as investors await key data from Australia and China, while in the US, the unemployment rate rose to 3.8% in August and traders are betting that the Federal Reserve may not raise rates further this year. Additionally, the highly anticipated IPO of Softbank-backed Arm is expected to arrive later in the month.
The coming week is expected to be lighter for investors, with the Federal Reserve's interest rate decision being the highlight, as US markets observe Labor Day and updates on the services sector and corporate earnings are anticipated.
The US Dollar is expected to trade sideways at the start of the week, with no major drivers or data points to monitor until markets open on Tuesday. The focus for the week will be on Wednesday's release of the Services PMI survey and several central bank speeches leading up to the next Federal Reserve meeting on September 20. Additionally, the article provides information on central banks and their role in monetary policy and interest rates.
Investors are becoming increasingly nervous due to concerns about the Fed potentially increasing interest rates, as well as rising 10-year interest rates and the VIX, which may put pressure on stocks; however, there are also positive factors emerging, such as improving S&P 500 profit estimates and a shift away from data dependence by Fed officials, which suggests a better finish to September is probable.
Investors should prepare for increased market volatility next week as the stock market faces multiple risk events, including U.S. CPI inflation, retail sales figures, and wholesale prices, which will impact the Federal Reserve's policy outlook.
U.S. stock investors are closely watching next week's inflation data, as it could determine the future of the current equity rally, which has been fluctuating recently due to concerns over the Federal Reserve's interest rate hikes and inflationary pressures.
Bond traders are anticipating that the Federal Reserve will continue with interest-rate hikes, and next week's consumer-price index report will provide further insight on how much more tightening may be required to control inflation.
The Bank of Japan has signaled a possible early end to its easy money stance, with the central bank considering interest rate hikes and an early end to its bond-buying policy, which caught markets off guard and caused the yen to surge and Japanese government bond yields to reach a 9-year high.
Uncertainty in various sectors, including potential strikes, government shutdowns, geopolitical tensions, and the question of future Federal Reserve interest rate hikes, is causing markets to lack conviction, but this week's inflation readings could provide direction for the markets. If inflation comes in below expectations, it may signal that the Fed will not hike rates further, while stronger-than-expected inflation could lead to more rate hikes and market volatility. Additionally, increasing energy prices and the potential strike by the United Auto Workers union add to the uncertainty.
Traders and investors are betting that the Federal Reserve will hold interest rates steady at its September meeting, indicating a shift in the market's interpretation of good economic news, as it suggests the Fed may be close to pausing its rate hike cycle despite inflation being above target levels and potential headwinds in the economy.
Markets have experienced volatile trading, leading to a rollercoaster ride for investors.
Investors should focus on the Federal Reserve's decision on interest rate hikes and the market's biggest themes during the coming week, according to CNBC's Jim Cramer.
The Federal Reserve is expected to keep interest rates unchanged at its meeting this week, but investors will be paying close attention to any indications of future rate increases as the central bank continues its fight against inflation.
