Stock Market

Marketmind: As Policymakers Plan Future Strategies, Markets Remain Patient

Get ready, folks! This week is one to watch closely. Three of the world’s heaviest hitting central banks are gearing up to announce their next steps, and China’s head honchos are rumoured to be rolling out some support strategies as their economy falters.

While all this goes on, it seems like the markets are just hanging back, waiting for the show to start.

On the dawn of this eventful week, we saw a slight dip in MSCI’s comprehensive index of Asia-Pacific shares excluding Japan by a mere 0.3%. European stock futures weren’t feeling too sprightly either, and US futures stood their ground with no changes to report.

A curveball in the mix, Hong Kong’s Hang Seng index stumbled and fell by 1.5%, largely thanks to Chinese property developers taking a rough 5% tumble. Ouch!

With an almost definite quarter-point hike from both the Federal Reserve and the European Central Bank later this week, all eyes are on Fed Chair Jerome Powell and ECB President Christine Lagarde. We’re on the edge of our seats to see what they have to say about rate predictions.

If the market chatter is anything to go by, we might be witnessing the Federal Reserve’s last rate increase and the ECB’s penultimate hike. We’re all eagerly watching the closing act of the global tightening party, with rate reductions potentially hot on its heels.

Things are also heating up on the earnings front, with tech titans like Meta Platforms, Microsoft, and Alphabet set to share their report cards. They better have some good news to justify the S&P 500’s rather hefty 20-times earning multiple and the sturdy 19% gains we’ve seen so far this year.

Over in Asia, the Bank of Japan, contrary to whispers in the wind, appears to be sticking with its current yield control policy. It seems they want to wait and see more data before making any drastic moves to ensure wages and inflation continue to rise, insiders have hinted.

As we kick off the new week, the yen is finding its footing at 141.36 per dollar after a two-week low of 141.95 per dollar last Friday.

But not everything’s peachy in Japan. The country’s manufacturing sector continued to face a downward trend this July, and the service sector isn’t growing as fast as we’d like. It seems that global demand is still pretty sluggish, causing a bit of a headache for Japanese businesses.

China’s big politburo meeting, expected later this week, might not be the grand saving grace some are hoping for. Recent attempts to shore up the property sector and stimulate consumer spending haven’t exactly hit the mark. Beijing marches to the beat of its own drum, and despite slowing growth, it’s still within the government’s ballpark figure of around 5% for the year. Although, some global banks have only just revised their forecasts to align with this.

So, what’s on the docket for today? We’ve got earnings from Whirlpool, NXP Semiconductors, and Domino’s. The Chicago Fed’s National Activity Index is also set to be unveiled. Now, let’s sit back and watch the show unfold!

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