By Anna Szymanski What matters in U.S. and global markets today By Anna Szymanski, Editor-in-Charge, Reuters Open Interest Wall Street looks set for a weak opening ahead of the bell on Thursday. Federal Reserve Chair Jerome Powell’s warning about stretched valuations has perhaps injected a bit of caution into markets, given the run-up in equities this […]
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By Anna Szymanski
What matters in U.S. and global markets today
By Anna Szymanski, Editor-in-Charge, Reuters Open Interest
Wall Street looks set for a weak opening ahead of the bell on Thursday. Federal Reserve Chair Jerome Powell’s warning about stretched valuations has perhaps injected a bit of caution into markets, given the run-up in equities this year. Fed watchers will be busy today, with multiple officials from the central bank set to speak. Investors will also soon get a bit more color about the factors weighing on both sides of the Fed’s mandate, with the final estimate of U.S. second-quarter GDP coming out today, followed by the latest PCE inflation index reading tomorrow.
* Powell’s remarks on asset valuations and the Fed’s“tightrope” policy stance have led investors to pare backexpectations for aggressive easing. San Francisco Fed PresidentMary Daly echoed the need for further cuts but stressed that thetiming remains uncertain. Markets are now pricing in a more than90% chance of an October cut, but expectations for furthereasing through year-end have fallen to 100 basis points, downfrom earlier projections of 125 bps total easing. In othercentral bank news, the Swiss National Bank announced on Thursdaythat it was keeping its key policy rate unchanged at zero, itsfirst pause since late 2023. The SNB noted that the Trumpadministration’s tariffs had dimmed the economic outlook. * Over in Asia, stocks were subdued on Thursday, while theyen came under selling pressure, particularly against the euroand Swiss franc. MSCI’s broadest index of Asia-Pacific sharesoutside Japan fell slightly, having rallied over 5% for themonth and 9% for the quarter. Japan’s Nikkei rose modestly,after rising 7% for the month and 13% for the quarter. Chineseshares continued to outperform, with Chinese tech shares up fora record eighth consecutive week. * Finally, crude prices slipped early after spiking 2%overnight, hitting a seven-week high, amid news of a surprisedrop in U.S. inventories and ongoing concerns about the impactUkraine’s strikes on Russia’s energy infrastructure could haveon supply.
Today’s Market Minute
* The White House asked federal agencies on Wednesday to prepare plans for mass firings during a possible government shutdown next week, marking a sharp departure from the temporary furloughs of workers typically seen during past shutdowns.
* Chinese drone experts have flown to Russia to conduct technical development work on military drones at a state-owned weapons manufacturer that is under Western sanctions, according to two European security officials and documents seen by Reuters.
* Several investors in Walt Disney on Wednesday asked the media giant to share documents about its decision to suspend Jimmy Kimmel’s show last week for inspection.
* Which countries make up the “Dirty Dozen,” the nations likely to play a key role in determining future pollution trends? Find out in the latest piece from ROI global energy transition columnist Gavin Maguire.
* Debate around the politicization of the Federal Reserve has mostly centered around its ability to set interest rates. But, writes ROI markets columnist Jamie McGeever, another part of the central bank’s toolkit is also back in the spotlight, one that could perhaps have even greater significance for global financial stability.
Chart of the day
Oil prices moved down early on Thursday from the previous session’s seven-week high, with investors likely taking profits in anticipation of slower winter demand and the return of more supplies from Iraq and Kurdistan. Oil flows from Iraqi Kurdistan are expected to restart in days after eight oil firms struck a deal on Wednesday with Iraq’s federal and Kurdish regional governments to resume exports. Meanwhile, the threat of a revival of international sanctions on Iran is looming, but ROI energy columnist Ron Bousso argues that these measures are unlikely to curtail Tehran’s vital oil exports but could benefit Chinese refiners, offering them access to a larger share of discounted Iranian crude.
Today’s events to watch
* U.S. 2Q GDP final estimate (8:30 AM EDT) * U.S. August Durable Goods Orders (8:30 AM EDT) * Fed Vice Chair for Supervision Michelle Bowman speaks(9:00 AM EDT) * Fed Governor Michael Barr speaks (1:00 PM EDT) * Treasury auction $44 billion 7-year notes
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Anna Szymanski; Editing by)