Today's markets: Investors draw a line under a panicky week

Last week was a tough one for global equity markets and the US wobbled again. The S&P 500 fell 4.3 per cent for its worst week since March 2023, while the Nasdaq was 5.8 per cent lower for its worst weekly performance since 2022. But European stock markets are on the front foot this morning after a bruising start to September, so often the cruellest month for stocks. The FTSE was up 0.7 per cent by mid-morning, with the Cac and Dax up 0.8 per cent each.

Friday’s jobs data did not allay fears about the US economy, even if the unemployment rate ticked lower to 4.2 per cent. The headline number missed at 142k vs 161k expected, while July was revised lower from 114k to 89k and June was revised lower from 179k to 118k. Average hourly earnings doubled to 0.4 per cent MoM in August, and came in hotter than 0.3 per cent estimates. To be honest, the report didn’t really resolve the debate on whether the Fed will cut by 50bps or 25bps later this month. Treasury secretary Janet Yellen said the US economy is “deep into a recovery” and “basically operating at full employment”. 

The dollar trades broadly firmer this morning after coming off last week as front-end Treasury yields fell. Notwithstanding last week’s greenback weakness, GBPUSD has retreated over the last couple of weeks from a high of 1.3260 and was barely holding the big 1.30 support this morning. Meanwhile, China CPI rose by 0.6 per cent year on year vs 0.7 per cent expected, while PPI remained stuck in deflation at -1.8 per cent vs a forecast decline of 1.4 per cent. 

Apple is set to launch the iPhone 16 at its autumn product event tonight with the tagline ‘It’s Glowtime’. Such events are usually market-moving. It’s usually a sell-the-news type event: shares usually rise in anticipation and then fall after. The stock’s lowest average returns occur during the month of the launches. Over the last 10 years, Apple has averaged a loss of 3.5 per cent in September. Investors are hopeful ahead of the launch, with the focus on Apple Intelligence integration into the iPhone 16 model.  

Tomorrow it’s debate time. The US presidential election debate taking place in Philadelphia on Tuesday will be of critical importance for the campaign outcome. Trump’s debate victory over Biden ultimately forced the president to step back in favour of Harris. Markets will want to see whether this debate moves the needle of the likely outcome and whether any new policy announcements are made.  

Also tomorrow OPEC is set to release its monthly report after a sharp fall in crude prices over the last week. 

Sandwiched between last week’s nonfarm payrolls data and the upcoming Federal Reserve meeting, the latest US inflation report will be the major focus for economic data on Wednesday this week. After a run of hotter-than-expected prints at the start of the year, which kept the Fed “higher for longer”, the data has since turned more decisively in the Fed’s favour. CPI rose 0.2 per cent in July, putting the 12-month inflation rate at 2.9 per cent, its lowest since March 2021. 

By Neil Wilson, chief market analyst at Finalto