Overview of September: Fed’s Impact
Markets are experiencing significant fluctuations, especially following a recent sharp decline. The Federal Reserve’s July meeting on monetary policy, concluding on Wednesday, is drawing considerable attention.
The Fed’s potential signals of economic concerns could further alarm investors, already unsettled by turbulence in Big Tech stocks. Expectations for a rate cut are high, with a more than 90% probability for a September decrease due to signs of slowing inflation and a deteriorating labor market.
Key U.S. employment report will be released on August 2, providing insights into whether July’s gradual slowdown continues. Economists forecast 185,000 jobs created in July compared to 206,000 in the previous month.
Nervousness Around Big Tech: Earnings Reports and Expectations
The market is also anticipating earnings reports from major tech companies. Microsoft (NASDAQ) will report its results on Tuesday, followed by Meta (NASDAQ) on Wednesday, and Apple (NASDAQ) and Amazon (NASDAQ) on Thursday. Disappointing results could further undermine a market already concerned about overvalued stocks.
Particular attention is on Alphabet (NASDAQ), Google’s parent company. Despite better-than-expected earnings, rising costs associated with AI infrastructure may impact margins, contributing to a 5% drop in stock value.
Possible Rate Hike by the Bank of Japan: Effects and Outlook
Speculation is growing that the Bank of Japan may raise rates on Wednesday. High-level officials, including the Prime Minister, have hinted at the need for policy normalization due to the weak yen affecting households and businesses.
Despite the yen strengthening by 10 yen per dollar from a 30-year low early in the month, experts are debating the implications of a rate hike. Some argue that a rate increase might benefit the yen, while others fear negative impacts on the economy and consumer sentiment.
Expectations from the Bank of England: Economic Impact and Market Reactions
Thursday will see the Bank of England’s meeting. The market assigns a 48% probability to a rate cut for the first time since March 2020. Economic growth is modest, and inflation has returned to 2%. However, rising wages and persistent inflation in the services sector complicate the decision.
Investors will monitor results from HSBC (LON), Barclays (LON), and Standard Chartered (OTC) to gauge their performance amid current economic conditions.
Political Situation in Venezuela: Market Implications and Sanctions
On Sunday, Venezuelans will vote for their president. Opposition candidate Edmundo González is leading incumbent Nicolás Maduro. The election results are expected to significantly influence future U.S. sanctions against Venezuela, including restrictions on bond purchases from the government.
Currently, Venezuelan and PDVSA bonds are trading at very low levels but have seen a sharp increase since late last year. Investors will closely watch the election outcomes and their impact on the market.
Leave a Reply