Global Stocks Rise Slightly with Rate Cuts and Trade Talks Ahead
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MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3%. China's Blue Chip added 0.5% after the July update. Consumer prices edged slightly higher last month, but factory price indexes "remained deep in deflationary territory." Korea's KOSPI flat after last week's 2.9% rally
On the other hand, futures in Europe were similarly higher—EUROSTOXX 50 gained 0.2%, FTSE 100 increased by 0.1%, and Germany's DAX advanced by 0. The U.S. S&P 500 and Nasdaq futures were up a touch, having posted gains on Friday: all three of the major Wall Street indexes made gains, and the Nasdaq scored another record closing high.
Key Index Levels
Nikkei Futures: 42,380 (+0.3%) – Close to record high
MSCI Asia-Pacific ex-Japan: +0.3%
CSI 300 (China): +0.5%
KOSPI (South Korea): Flat
EUROSTOXX 50 Futures: +0.2%
FTSE Futures: +0.1%
DAX Futures: +0.2%
S&P 500 Futures: +0.1%
Nasdaq Futures: +0.1%
U.S. Inflation Data Could Shape September Rate Cut
During the week, the U.S. consumer price index on Tuesday will be in the spotlight for global markets. Core inflation is forecast to increase 0.3% month-on-month, pushing the annual rate up to 3.0%, more than the Federal Reserve's target of 2%. Stronger-than-expected data could challenge market bets on a September interest rate cut, although weaker payrolls have already shifted the Federal Reserve tone towards easing.
Bruce Kasman, chief economist at JPMorgan, sees the Fed moving to cut rates beginning in September. He puts the odds of a recession at 40% but said he expects the cuts to be little—about 0.25% each. Markets are betting there's a 90% chance of a cut in September, with at least one more before the year ends.
Trade and Geopolitical Tensions Remain in Focus
The U.S.-China tariff deadline is due to expire on Tuesday, and while many investors believe they will be added, others think they will be delayed. US President Trump is also set to meet with Russian President Vladimir Putin in Alaska on Friday to address the Russia-Ukraine conflict, though no breakthroughs are expected.
There was also a Financial Times report that Nvidia and AMD might hand over 15% of the proceeds from AI chip sales to China to the U.S. government in exchange for export licenses. This is a highly unusual arrangement that has raised questions over its structure and impact on the semiconductor sector.
Commodities, Currencies, and Key Market Moves
On Monday, the price of gold dropped 0.6%, to $3,378 per ounce, following an erratic week caused by uncertainty about whether the U.S. would impose tariffs on Swiss gold bars. Crude prices weakened after U.S.-Russia sanctions discussions mentioned the possible removal of Russian crude sanctions. Brent Crude fell 0.6% at $66.22, and WTI dropped 0.7% to $63.44.
Currency markets were subdued, with the dollar index little changed at 98.066 following a 0.4% drop last week. The euro was 0.2% higher at $1.1670, the yen traded at 147.50 per dollar, and the Australian dollar slipped to $0.6520 as investors turned cautious before an anticipated Reserve Bank of Australia rate cut to 3.60%.
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