A look at the day ahead from Sujata Rao.
From Fed boss Jerome Powell on Friday to the Cleveland Fed’s Loretta Mester on Monday, the doves have been out in force, sending the dollar to two-week lows, Treasury yields below 1.3% and putting the S&P 500 on track for its longest monthly winning streak since 2018.
But China is rocking the boat.
Its non-manufacturing PMI fell to a contractionary 47.5 in August (53.3 in July) and the composite PMI recorded its first sub-50 reading since February 2020.
The impact of new rules restricting under-18s from playing video games for more than three hours a week is also weighing — Shenzen-listed tech shares are down more than 2%.
And a Reuters report of a regulatory probe into the property investments of Ping An Insurance sent its shares 7% lower at one point.
Still, world shares scaled new record highs, while Wall Street futures are almost half a percent higher. The main focus in Europe is the euro zone “flash” inflation data following Germany’s 3.4% reading on Monday. Economists polled by Reuters predict 2.7% — that would be the highest reading since 2012.
Bond markets however, shrugged off Germany’s outsized reading and are likely to keep their eyes firmly trained on the Fed and Friday’s August U.S. jobs data.
On the corporate front, dealmaking never really took a break over the summer but expect the pace to pick up in coming weeks.
Today’s big news is the $4.7 billion purchase by tech investor Prosus of Indian payments platform BillDesk. And the familiar laments about supply chain disruptions continue – business supplies distributor Bunzl is the latest.
Finally, watch travel stocks after EU removed the United States and five other countries from its safe travel list. The United States, on its part, has issued a “do not travel” advisory for several European nations.
Developments that should provide more direction to markets on Tuesday:
– Japan’s industrial output shrank in July.
– Germany’s centre-left SPD cement hold on first place ahead of Sept 26 elections.
– Zoom Q2 revenues rose 54% to $1.02 billion, beating forecasts of $991 million; BlackRock AUM at record $9.49 trillion in Q2 vs $7.32 trillion a year earlier
– Chinese Evergrande New Energy Vehicle shares down after big H1 loss.
-Chile central bank meeting
-Chicago PMI due out
Graphic: Global markets in 2021:
Reporting by Sujata Rao; editing by Dhara Ranasinghe