Investors are eagerly awaiting retail sales data and the Federal Reserve meeting. Expectations for rate cuts remain divided between 25 and 50 basis points, with potential impacts on economic growth and inflation being closely watched. The 10-year Treasury yield stood at 3.614% in Tuesday’s premarket.
In commodities, oil prices slightly dipped as investors assessed U.S. production after Hurricane Francine and expectations of lower inventories. The storm’s impact in the Gulf of Mexico offset concerns about Chinese demand, which remained weak as refinery output dropped in August. Meanwhile, potential Federal Reserve rate cuts boosted investor optimism.
At 5:56 AM, West Texas Intermediate crude for October fell 0.20% to $69.95 per barrel, while Brent for November dropped 0.33% to $72.51 per barrel.
Gold (PM:XAUUSD) was down 0.38% at $2,574.22. On Monday, gold hit a record $2,589.6 per ounce, driven by a weaker dollar. Goldman Sachs maintained a bullish outlook on gold, highlighting demand from central banks and the expected Federal Reserve rate cut. The bank forecasts a price target of $2,700 by 2025.
Cotton futures (CCOM:USCOTTON) fell 0.59% to $0.7314 after reaching their highest level since February on Monday, due to weather risks and lower production expectations, with traders covering short bets. U.S. hurricanes and drought in Brazil worsened the situation, and the USDA lowered its global cotton production estimate, citing declines in the U.S., India, and Pakistan.
Today’s U.S. economic agenda includes the August retail sales release at 8:30 AM, with a forecasted decline of 0.3% after a 1.0% gain in the previous month. Excluding autos, an increase of 0.2% is expected. At 9:15 AM, August industrial production is expected to rise by 0.1%, while capacity utilization is anticipated to climb to 77.9%. At 10 AM, July business inventories may increase by 0.4%, and the September builder confidence index is forecasted to rise to 40.
Asia-Pacific markets closed mixed on Tuesday, with extended holidays in China and South Korea leading to weaker trading conditions. Japan’s Nikkei 225 fell 1.03%, closing at 36,203.22, while the Topix declined 0.6% to 2,555.76. In contrast, Hong Kong’s Hang Seng rose 1.37% in the final hour of trading, while Australia’s S&P/ASX 200 gained 0.24%, closing at 8,140.9.
Weak industrial production and retail sales data in China negatively impacted economic sentiment, while the yen’s sixth consecutive session of appreciation raised concerns about Japanese exporters’ profits.
Traders in Asia are also monitoring Singapore’s non-oil exports, which grew 10.7% in August but fell 4.7% month-over-month. An annual rise of 15% and a monthly decline of 3.3% had been expected. Additionally, India’s wholesale prices are expected, with estimates of a 1.85% increase in August, down from July’s 2.04%.
Bank of Japan Governor Kazuo Ueda faces the challenge of maintaining market stability while signaling potential rate hikes. While the rate is expected to remain at 0.25% on Friday, an increase could occur by December. BOJ communication will be crucial to avoiding further volatility.
Among individual stocks, Midea Group shares closed 7.8% higher in their Hong Kong debut, reflecting strong demand after the city’s largest listing in three years, valuing the company at $4 billion.
BYD acquired the remaining 10% of its joint venture with Mercedes-Benz, taking full control of the Denza electric vehicle brand. The 13-year partnership ends amid trade tensions between China and Europe.
European markets rose, with all sectors posting gains in the Stoxx 600 index. In retail, Kingfisher (LSE:KGF) jumped 6.7% after revising its profit projections upward.
The Bank of England is likely to keep interest rates unchanged on Thursday. Expectations of less aggressive easing by the BoE have supported the British pound.
Poland’s Prime Minister, Donald Tusk, announced a comprehensive reconstruction plan for flood-affected areas, to be implemented after the waters recede. The program will be funded by the state budget and the European Union, aiming to support the recovery of local properties and infrastructure.
U.S. stocks closed mixed on Monday, with the Dow up 0.55%, the Nasdaq down 0.52%, and the S&P 500 gaining a slight 0.13%. Economically, regional manufacturing showed growth after nearly a year of contraction.
Investors are awaiting the Federal Reserve announcement, which is expected to cut interest rates, with a 65% chance of a 50-basis-point cut. Optimism surrounding the anticipated Fed rate cuts lifted investor sentiment, according to a Bank of America survey. The sentiment measure rose from 3.6 to 3.9, with managers predicting a 79% chance of a soft landing. Despite this, risk appetite dropped to an 11-month low, with greater interest in defensive sectors such as utilities. While global growth expectations slightly improved, 42% of participants still foresee a weaker economy.
Among individual companies, Micron (NASDAQ:MU) shares fell 4.44% after a negative Morgan Stanley review of the chip market. Bausch + Lomb (NYSE:BLCO) surged 14.47% on sale rumors. Nuvalent (NASDAQ:NUVL) jumped 28.19% following promising cancer drug results. Zillow (NASDAQ:Z) rose 4.8% on lower mortgage rates and analyst upgrades.
On the quarterly earnings front, Ferguson (NYSE:FERG) will report its numbers before the market opens.