Asian equities have experienced a robust start to the week, with most markets showing gains—except for China, where recent interest rate cuts have heightened investor concerns about economic conditions.
In Europe and the U.S., stock futures are pointing upwards. Investors are hopeful for a more dovish stance from the Federal Reserve and possibly a rate cut from the Bank of England, although the latter remains uncertain.
In the Middle East, tensions have risen following a rocket attack in the Israeli-occupied Golan Heights, attributed by Israel and the U.S. to the Lebanese militant group Hezbollah. This geopolitical development has led to a slight increase in oil prices and has caused disruptions at Beirut airport, including flight cancellations and delays due to insurance concerns.
Market expectations are pricing in a 25 basis point cut by the Federal Reserve in September, with some speculation of a 50 basis point reduction. By the end of the year, markets anticipate 70 basis points of easing, with rates expected to stabilize around 3.6% by late 2025.
The Bank of England’s meeting on Thursday has investors divided, with futures reflecting a 52% chance of a rate cut to 5%. Meanwhile, the Bank of Japan’s meeting on Wednesday shows a 66% probability of a 10 basis point increase to 0.2%, with a possibility of a 15 basis point hike.
Key data releases this week include the U.S. jobs report for July, important surveys on U.S. and global manufacturing, and economic indicators for the Eurozone, such as GDP and inflation figures.
The U.S. Treasury will announce its bond issuance plans for the upcoming quarter later today, while China’s politburo meeting might reveal additional stimulus measures following last week’s unexpected rate cuts.
On Wall Street, earnings reports from major S&P 500 companies—including Microsoft, Apple, Amazon.com, and Meta Platforms—are expected this week. Given the high expectations, any shortfall could impact the valuations of these tech giants significantly. Options trading suggests Microsoft’s stock could swing nearly 5% in either direction following its results on Tuesday.
In U.S. political news, PredictIT now shows Donald Trump and Kamala Harris at 53 cents and 50 cents respectively, a shift from a few weeks ago when Trump was at 64 cents and Harris at 27 cents.
