U.S. indices erased their initial gains and are currently trading with little change. Only small-cap companies remain in positive territory, with the US2000 index gaining 0.60% to 2,200 points. The rise in US2000 companies can be attributed to the upcoming interest rate cuts in the U.S. tomorrow. Easing monetary policy is expected to benefit smaller businesses, which have been hit hardest by the Fed's restrictive policy.
European indices closed the session with mixed sentiments: polish WIG20 gained 1.4%, Spain’s IBX35 rose by 0.4%, and Austria’s ATX20 increased by 0.1%. On the downside, Germany’s DAX fell by 0.3%, France’s CAC40 by 0.4%, the UK’s FTSE 100 by 0.35%, and Italy’s FTSE MIB by 0.1%.
Retail sales data from the U.S. were mixed. Contrary to forecasts, retail sales increased by 0.1% month-on-month (vs. the expected decline of -0.2%). Additionally, July’s growth was revised up by 10 basis points to 1.1% (previously: 1%).
Industrial production for August rose significantly above market expectations, along with “non-recessionary” sales data, signaling a promising outlook for a soft landing scenario. The final data showed a monthly increase of 0.8% compared to market expectations of 0.2%, and -0.6% previously.
As of the report’s release, markets are pricing in a 65% chance of a 50 basis point cut during tomorrow’s FOMC meeting, with only a 35% chance of a 25 bp cut. Expectations surged this week—just a week ago, the odds of a double cut were at 34%.
Germany's economic sentiment report, ZEW, came in much lower than expected. Both the headline and current sentiment readings confirmed continued declines. Today’s ZEW reading of 3.6 (vs. expected 17) is the lowest since October 2023.
Canada’s CPI inflation reading was lower than expected. The current data shows a year-on-year price change of 2.0% compared to the expected 2.1% and the previous 2.0%. Core inflation fell even further to 1.5% year-on-year (from 1.7%).
The U.S. dollar reduced its early losses and was gaining at the time of publication. The rise came after stronger-than-expected data from the U.S. economy. The USDIDX dollar index is up 0.30% to 100.6000 points.
Bitcoin rebounded by 4.50% to $60,800, once again moving above the psychological barrier of $60,000. Market sentiment is gradually improving, with investors anticipating the positive effects of the first U.S. interest rate cut at tomorrow’s meeting.
In the precious metals market, recent bullish tendencies are slowing down: gold loses 0.7%, silver is 0.45% lower, and platinum is down 0.8%. However, gold remains at historically high levels, above a recently broken recistence.
Cotton futures are backing down (COTTON: -1.25%) after initial gains driven by concerns over the U.S. hurricane season. Current forecasts from the National Hurricane Center in Miami suggest that tropical storm Gordon will weaken and turn away from the U.S. in the coming days.