U.S. Markets: A Mixed Bag Before Labor Day
Last week the stock scene in America was a bit of a roller‑coaster, with investors trading in a lighter‑than‑usual style as everyone powered up for the Labor Day weekend.
The Tech Tumble
- Follow the Nvidia story – the chip giant’s shares slumped almost 10%, wiping out about $300 billion in market value and dragging down the Tech‑heavy Nasdaq Composite.
- Meanwhile, value names outshone growth, achieving the widest spread in a long time and lifting many blue‑chip stocks.
Inflation and Consumer Pulse
- The Federal Reserve’s go‑to inflation gauge – the core PCE – nudged up 0.2 % in July, exactly where analysts had pegged it.
- Year‑over‑year, the increase came in a touch shy of forecasts at 2.6 %, giving investors a confidence boost that inflation is now firmly tamed.
- That lightness sent Nasdaq futures climbing, as traders sensed a breather at the Fed’s gate.
Spending, Income, and Growth
- Unexpectedly, personal incomes rose 0.3 % in July and spending jumped 0.5 %, both aligning with forecasts.
- GDP for Q2 was nudged upward to a solid 3.0 %, powered by stronger consumer spending.
- On the flip side, the housing market struggled: pending home sales fell 5.5 % in July, the lowest since 2001, thanks to affordability headaches and the looming elections.
- 10‑year Treasury yields edged higher as forecasts for a major Fed rate cut in September grew less certain.
Europe: A Winning Streak on Slowing Prices
The Eurozone Rally
- The STOXX Europe 600 climbed 1.34 % in local currency, hitting a record high for the fourth straight week.
- Softening inflation fed optimism of an ECB rate cut in September.
- Key national indices – Germany’s DAX, Italy’s FTSE MIB, and France’s CAC 40 – all posted gains.
Inflation’s Journey
- Eurozone inflation tumbled to 2.2 % in August from 2.6 % in July – the lowest in three years and just above the 2 % target.
- Core inflation ticked down, but services inflation nudged up to 4.2 % from 4.0 %.
- Some ECB chairs stayed cautious, insisting that data should keep backing any easing.
Sentiment and Business Outlook
- The euro area’s sentiment indicator climbed to 96.6 in August, the highest in over a year.
- But Germany’s Ifo Business Climate Index slid to 86.6 – the lowest since February – showing growing gloom among German firms.
UK: The Housing Market Gives a Relieving Nudge
- Net mortgage approvals hit the biggest level since September 2022, hinting at a pick‑up in home buying.
- The Bank of England noted a sizable rise in net mortgage lending.
- Nationwide’s house price index ticked up modestly year‑on‑year in August.
Asia: Japan Bounces Back While the Yen Wobbles
Stock Market Resurgence
- Japan’s Nikkei 225 and TOPIX rebounded after earlier losses, smoothing out worries over the Bank of Japan’s rate hike and U.S. growth concerns.
Bond Yields and Currency Moves
- 10‑year Japanese Gov’t bond yields stayed steady.
- The yen slipped against the dollar, rattling export‑heavy companies.
Inflation and BoJ’s Stance
- Tokyo’s core consumer price index climbed 2.4 % y/y, outpacing expectations.
- BoJ Governor Ueda reaffirmed the bank’s push to normalise policy as 2 % inflation steadies.
China: Earnings Miss, Markets Dip, and Growth Concerns Mount
- Corporate earnings fell short of expectations, tipping Shanghai Composite and CSI 300 into reticence.
- Hang Seng in Hong Kong, however, climbed.
- Economists trimmed 2024 growth forecasts due to a lingering property slump and weak domestic demand.
- People’s Bank of China injected liquidity, yet worries about hitting the official growth target persist.
In short, U.S. markets wobble amid controlled inflation and robust consumer spending, Europe rides higher on cooling prices, Japan’s stocks recover, and China faces a tough road ahead with earnings let‑down and lower growth expectations.
