US Dollar Index: The US Dollar Index performed weakly this week, mainly affected by economic data. The US dollar maintained consolidation at the beginning of the week, but as the August ISM manufacturing PMI was lower than expected, market concerns about economic slowdown re-heated, and the US Dollar Index began to fall. On Wednesday, due to poor US JOLTs job vacancy data in July, the US Dollar Index plunged nearly 50 points. After the release of non-agricultural data on Friday, the US Dollar Index fluctuated sharply, but eventually rose.
Spot gold: Gold prices rose this week. At the beginning of the week, gold was close to $2,470 due to the failure of the European session to hit the $2,500 mark. Later, due to the weak US economic data, gold prices rebounded. On Thursday, the "small non-agricultural" data showed that the growth rate hit a three-year low. Gold once stood at $2,520. Although there was a short correction afterwards, it still stabilized at the $2,510 mark. After the release of the non-agricultural data on Friday, gold experienced a short-term shock and then fell.
Non-US currencies: USD/JPY fell for four consecutive days, falling below 143, a new low since early August, but rebounded above the integer mark after the non-farm data on Friday. EUR/USD and GBP/USD both recorded gains this week.
International oil prices: Oil prices fell sharply this week. On Monday, oil prices rose slightly due to tensions in the Middle East and the attack on a Saudi cruise ship, but then fell sharply due to the expected end of Libya's oil supply disruptions and weak summer driving demand in the United States. On Thursday, OPEC+ postponed its October production increase plan, and oil prices rose slightly, but still remained near a 14-month low. Both crude oil prices continued to fall on Friday.
Stock market: U.S. stocks suffered a "bad start" this week. Nvidia fell 9.5% on Tuesday, and its market value evaporated by nearly $280 billion. Both the S&P 500 and the Nasdaq closed down this week. The S&P had its worst performance since March last year, and the Nasdaq had its worst single-week performance since 2022, with a cumulative decline of 5.8%.
Events of the week
The US unemployment rate has fallen, the non-farm data is disappointing, but is there still no hope for a 50 basis point rate cut?
The Federal Reserve Beige Book shows that economic activity in most districts has remained flat or declined recently, with moderate increases in prices and wages. Although Atlanta Federal Reserve President Bostic said that the Fed's dual mission has reached a balance for the first time, this week's employment data is still weak.
Core data analysis: A New York Fed survey showed that companies related to artificial intelligence technology did not lay off employees on a large scale. Despite this, data on Thursday showed that layoffs hit a five-month high in August, with the technology industry being particularly hard hit. Employers laid off 75,891 people in August, the largest increase last year. Job vacancies fell to 7.67 million in July, the lowest level since January 2021, while the "small non-farm" ADP data showed that new employment increased the smallest amount since January 2021, further indicating a cooling in the job market.
Non-farm data: Non-farm employment increased by 142,000 in August, falling short of the expected 160,000, and the unemployment rate fell to 4.2%, a record low since June this year. It is worth noting that the average hourly wage in August was 3.8% per year, higher than the expected 3.7% and the previous value of 3.6%. In addition, the non-farm data last month was significantly revised down to 89,000.
Market reaction: After the release of the non-farm data, the market's expectations for the Fed to cut interest rates by 50 basis points in September once increased, but soon turned to expectations for a 25 basis point rate cut. Traders' divergence on the rate cut reflects the complexity of the market's interpretation of economic data. Fed officials expressed support for a moderate rate cut, which may lay the foundation for future policy adjustments.
Large-scale demonstrations break out in Israel, calling for ceasefire
The Israeli Defense Forces reported that the bodies of detainees were found in the southern Gaza Strip, triggering large-scale demonstrations across the country. Demonstrators called on the government to reach a ceasefire agreement with Hamas. Although the White House actively promoted ceasefire negotiations, the two sides have not made any substantial progress. Israeli Prime Minister Netanyahu insisted on maintaining control of the "Philadelphia Corridor", while Hamas was reserved about the ceasefire proposal.
Guotai Junan Securities merges with Haitong Securities, causing market turmoil
Guotai Junan Securities and Haitong Securities announced the launch of the merger process. After the merger, the new company will become China's largest domestic securities firm in terms of assets. This merger is the largest A+H bilateral market integration case in the history of China's capital market, marking a major progress under the "Nine National Policies". It is expected that the merger will further reshape the structure of China's securities market.
The central bank still has room to cut the reserve requirement ratio, but deposit and loan interest rates face constraints
Zou Lan, director of the Monetary Policy Department of the People's Bank of China, said that the statutory deposit reserve ratio of financial institutions still has room to fall. Although the loan market benchmark interest rate has fallen this year, the further decline in deposit and loan interest rates is constrained by factors such as bank deposit diversion and narrowing net interest margins. The central bank will reasonably adjust monetary policy based on economic recovery.
OPEC extends production cuts
The eight OPEC members agreed to extend an additional production cut of 2.2 million barrels per day until the end of November 2024, and plan to gradually cancel the production cuts from December. This decision is aimed at stabilizing international oil prices. Although Libya is expected to resume some production, the overall market is still subject to supply uncertainty.
Bridgewater sells off gold ETF, market volatile
Bridgewater's massive reduction in gold ETF holdings in the first half of this year reflects a possible change in its views on the gold market. However, Bridgewater's position adjustment does not necessarily represent its overall view on gold, and the fund remains flexible in asset allocation to achieve portfolio diversification.
Taobao will support WeChat payment, and the payment market will be reshuffled
Taobao announced that it will fully support WeChat Pay, a move that will further change the landscape of China's payment market. The cooperation between WeChat Pay and Taobao platform merchants will provide users with more payment options, and Alipay will continue to promote industry development on the basis of open cooperation.
FTSE China A50 Index undergoes major adjustments
FTSE Russell announced that the FTSE China A50 Index will include China National Nuclear Corporation and Huaneng Hydropower, while removing China Duty Free Group and Golden Dragon Fish. This adjustment will take effect on September 20, 2024, which may affect the market performance of related companies.
Putin is willing to negotiate with Ukraine, but the conditions are tough
Russian President Vladimir Putin said he was ready to negotiate with Ukraine, but the conditions were based on the Istanbul Agreement in 2022. Ukraine said that military operations would continue until all goals were achieved, and the negotiations between the two sides had not made any breakthrough progress.
Bank of Canada cuts rates for third straight time as economic growth weakens
The Bank of Canada cut its key policy rate by 25 basis points to 4.25%, its third straight rate cut, as weak economic activity makes the outlook for growth in the second half of the year uncertain despite easing inflationary pressures.
Domestic refined oil prices see seventh reduction this year
The National Development and Reform Commission announced that the price of gasoline and diesel will be reduced by 100 yuan per ton from 24:00 on September 5. This adjustment will reduce the fuel costs of private car owners and logistics companies. For private car owners, filling up a tank of 92-grade gasoline will cost about 4 yuan less.
This week's economic data fluctuated, and the market's expectations for the Fed's policies changed frequently. Non-farm data that was lower than expected and the decline in unemployment had a significant impact on expectations of interest rate cuts. The global economy and market dynamics remain complex and volatile, and investors need to pay close attention to policy trends and changes in economic data.
The market is unpredictable and opportunities are fleeting. Only by paying close attention to every subtle change and seizing your own opportunities can you remain invincible in the ups and downs of the market. Are you ready today? Let's look forward to the wonderful performance of the market together!
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