Impact on Car Companies:

Companies like General Motors and Ford have seen their stock prices drop by about 2% before the US stock market opened. This happened because the workers' union for auto companies, called the United Auto Workers, decided to go on strike. This is a big deal and might last a long time. On the other hand, Arm, a tech company, has seen its shares go up by about 6%. This comes after a very successful first day of trading, where its shares went up by 25%.

What's the Triple Witching Options Event?

People who play the stock market are getting ready for something called the triple witching options event. This is when certain kinds of deals linked to the stock market end, and it can cause a lot of action and changes in prices.

Looking Ahead to a Big Meeting:

People are also getting ready for an important meeting of the Federal Reserve next week. Many experts think that the Federal Reserve will decide to keep things the way they are with interest rates. This might help prevent the economy from suddenly slowing down too much.

Why is the Euro Having a Tough Time?

The euro, which is the money used in many European countries, has been losing value for nine weeks in a row. This is the longest losing streak it's had since it was created more than 20 years ago. One reason is that people think the European Central Bank won't raise interest rates anymore. This has made the euro less valuable.

Good News from China:

In Asia, stock markets went up a lot because China, a big country in Asia, shared some really good news. It turns out that Chinese factories made more stuff in August than experts expected. Also, Chinese people spent more money, especially on travel, because they had a longer summer vacation this year.

More Money Going into Stocks:

People are feeling pretty good about the economy, so they're putting more of their money into stocks. In fact, more money went into stocks this week than in any other week in the past year and a half. This shows that a lot of people think the economy in the US will keep doing well.

What's Coming Up:

Later today, we'll get some important information about how much stuff factories in the US made in August. Also, we'll find out how confident people are about the economy.

Important Things This Week:

• US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index (Friday)

Market Movements:

• Stoxx Europe 600: +0.9% (as of 12:51 p.m. London time)

• S&P 500 futures: Little changed

• Nasdaq 100 futures: -0.1%

• Dow Jones Industrial Average futures: +0.2%

• MSCI Asia Pacific Index: +0.6%

• MSCI Emerging Markets Index: +0.4%

Currency Trends:

• Bloomberg Dollar Spot Index: Little changed

• Euro: +0.1% to $1.0654

• Japanese yen: -0.3% to 147.85 per dollar

• Offshore yuan: +0.2% to 7.2772 per dollar

• British pound: Little changed at $1.2406

Cryptocurrency Movement:

• Bitcoin: -0.3% to $26,505.7

• Ether: -0.3% to $1,624.37

Bond Yields:

• 10-year Treasuries: +3 basis points to 4.32%

• Germany’s 10-year yield: +6 basis points to 2.65%

• Britain’s 10-year yield: +7 basis points to 4.35%

Commodities Update:

• Brent crude: +0.4% to $94.07 a barrel

• Spot gold: +0.4% to $1,919.02 an ounce

Also Read: AMC Secures $325.5 Million in Share Offering: A Game-Changing Move Surge the AMC Stocks

Equity Offering and Market Response

In a strategic move, AMC secured a substantial infusion of $325.5 million through a well-timed equity offering. The initial market response was marked by some volatility due to concerns over potential share dilution. However, as trading progressed, the stock demonstrated a robust surge, reflecting investor confidence in AMC's financial strategy.

Reinforcing Financial Resilience Post-Pandemic

The completion of the equity offering on Wednesday represents a pivotal step in bolstering AMC's financial standing. This infusion of new equity capital not only significantly augments the company's cash reserves but also directly addresses ongoing liquidity concerns. These measures are essential as AMC charts its path to recovery following the substantial impact of the pandemic on its business operations.

Adam Aron's Perspective on the Milestone

President and CEO Adam Aron expressed his enthusiasm for the successful equity offering, stating, "The successful completion of this equity offering marks another significant milestone for AMC." Aron emphasized that the raised funds, exceeding $325 million, provide a substantial boost to the company's ability to not only survive but thrive in the current market climate.

Blockbuster Debuts Drive AMC's Performance

AMC's robust performance is further underscored by the impressive debuts of "Barbie" and "Oppenheimer" during the summer season. This dynamic duo, collectively known as "Barbenheimer," played a pivotal role in driving AMC to its strongest single-day performance since before the pandemic.

Financial Report Exceeds Wall Street Projections

In its most recent financial report, released on August 8, AMC surpassed Wall Street expectations on multiple fronts. The company reported revenue of $1.35 billion and adjusted earnings of $0 per share. This marks a significant departure, as it was the first time since the fourth quarter of 2019 that the company did not report an adjusted loss per share.

Ongoing Challenges and Future Prospects

While AMC celebrates its recent successes, it faces ongoing challenges, particularly in light of the Hollywood strikes and Warner Bros.' decision to delay the release of the "Dune" sequel. Nevertheless, there is a beacon of excitement on the horizon — Taylor Swift's highly anticipated Eras Tour movie, set to debut in theaters on October 13. AMC has labeled this event as the "theatrical extravaganza of the Millennium," with industry giants like Imax (IMAX) and Cinemark (CNK) poised to experience a surge in activity.

Also Read: Oil Prices Surge Towards 10-Month High on IEA Supply Shortfall Warning

Market Sentiment and Influences:

The trading day on Wall Street presented a mixed picture. The Nasdaq, known for its technology-heavy components, faced some challenges. Simultaneously, the energy sector saw a significant boost, leading to the Dow Jones Industrial Average, representing major blue-chip companies, moving into positive territory. The Nasdaq experienced a 0.82% drop, closing at 13,803.18 points. The Dow Jones Industrial Average rose by 51.97 points, or 0.15%, closing at 34,715.69. The S&P 500 lost 17.28 points, or 0.39%, closing at 4,470.18.

Oracle's Influence on Tech Stocks:

One noteworthy factor impacting the market was Oracle Corporation's projection of weaker-than-anticipated revenue for the current quarter. This announcement had a notable effect, particularly on technology-related stocks. This projection points to a broader trend of softening demand. Oracle's stock witnessed an 11.5% decline, hitting its lowest intra-day level in a month.

Energy Sector and Dow's Performance:

The energy sector experienced a substantial surge, with energy-related shares jumping by 2.3%. This surge played a crucial role in lifting the Dow Jones into positive territory. The primary driver behind this surge was a significant increase in crude oil prices. Crude oil prices rose by 1.78% to settle at $88.84 per barrel for U.S. crude, and Brent settled at $92.06, up 1.57% on the day.

Market Insights and Future Prospects:

Market experts expressed a cautious outlook, highlighting the importance of understanding the broader economic policies related to inflation, the labor market, prices, and consumer demand. The Federal Reserve, the central bank of the United States, is also adopting a "wait and see" approach, closely monitoring evolving economic data before making significant decisions. The Consumer Price Index (CPI) report, crucial for understanding inflation trends, is expected to show a 3.6% increase, up from July's 3.2% annual gain.

European and Global Market Overview:

European shares faced a modest decline, influenced by weaknesses in the technology sector following Oracle's revenue forecast. Additionally, global stocks experienced a slight dip due to cautious investor sentiment ahead of the CPI report. The pan-European STOXX 600 index lost 0.18%, and MSCI's gauge of stocks across the globe shed 0.26%.

Currency and Treasury Movements:

The US dollar rebounded against a basket of world currencies. This rebound was influenced by comments from Japan's top banker, which hinted at a potential shift away from a negative interest rate policy. Meanwhile, US Treasury yields remained steady in anticipation of the Labor Department's CPI report. The dollar index rose by 0.13%, with the euro down by 0.16% to $1.0731.

Gold Prices and the Strength of the Dollar:

Gold prices experienced a retreat to a more than two-week low. This drop was influenced by the strengthening US dollar. This dynamic reflects the intricate interplay between currency dynamics and the precious metals market. Spot gold dropped by 0.5% to $1,912.54 an ounce.

Please note that all information provided is based on market conditions as of the time of this report and is subject to change.

Also Read: Rising Oil Prices Drive Anticipated Increase in August Inflation Figures

Inflation Insights

Wednesday will bring the release of the Consumer Price Index (CPI) for August, a pivotal economic indicator. Projections suggest that headline inflation will continue its upward trend, driven in part by rising oil prices.

Apple's Moment

On the corporate front, Tuesday marks Apple's eagerly awaited fall event. Anticipation is high, with expectations of new iPhone models, Apple Watches, and the introduction of a new charging port for most devices.

Labor Negotiations Deadline

A potentially contentious labor negotiation deadline looms on September 14. The United Auto Workers face off against major automakers Ford, General Motors, and Stellantis. Workers have raised the specter of a strike if a new deal isn't reached by Thursday.

Market Performance Recap

Last week, markets saw continued volatility that began in August. Concerns about persistent inflation, particularly following an August services sector report, contributed to a mid-week dip in stocks. The tech-heavy Nasdaq took the most significant hit, dropping nearly 2% during the holiday-shortened trading week. The S&P 500 and Dow Jones Industrial Average also experienced declines of 1.1% and 0.4%, respectively.

Inflation Focus

Inflation will be a focal point this week, with Wall Street preparing for another uptick in headline inflation. Economists forecast a 3.6% rise in headline inflation from the previous year, surpassing July's 3.2% increase. A monthly increase of 0.6% is anticipated, with higher energy prices expected to be a significant factor.

Looking at core inflation, which excludes food and energy categories, a 4.3% rise over the previous year is projected for August, a slight slowdown from July's 4.7% increase. Monthly core price increases are expected to be around 0.2%.

The Federal Reserve's emphasis on core inflation gives confidence to economists and investors that there won't be a rate hike in September. As of Friday, markets were pricing in a 92% likelihood that the Fed will keep interest rates steady after their September 19-20 meeting.

Jefferies economist Thomas Simons noted, "We do not expect that [CPI data] will tip the scales towards a hike, given the mixed message delivered by the other employment reports and last month's inflation data."

Other Economic Highlights

Aside from inflation data, the August retail sales report will also be closely watched. Economists are anticipating a modest 0.1% increase, down from July's 0.7% surge. Additionally, data on producer prices, small business sentiment, and the weekly report on initial filings for unemployment insurance will be on the economic calendar.

iPhone 15 Launch

Apple's product unveiling on Tuesday is poised to be a market-moving event. This is a critical juncture for the tech giant, particularly in light of a recent dip in Apple's stock following Chinese government directives to avoid using iPhones at certain agencies. The release of a high-end phone by China's Huawei added further pressure.

Analysts, however, suggest that the market's reaction might have been overstated. The spotlight will be on "Wonderlust," where Apple is expected to reveal updates to its iPhone lineup, introduce new Apple Watches, and unveil USB-C charging ports across its device range.

Morgan Stanley analyst Erik Woodring commented, "Historically, the iPhone launch has been a sell-the-news event." Woodring also emphasized the potential for both unit and average selling price growth in the upcoming iPhone cycle.

Weekly Economic Calendar

Monday:

• No notable economic news.

• Earnings: Bowlero (BOWL), Casey's (CASY), Oracle (ORCL)

Tuesday:

• NFIB Small Business Optimism, August (Expected: 91.3, Prior: 91.9)

• No notable companies set to report earnings.

Wednesday:

• Consumer Price Index, month-over-month, August (Expected: +0.6%, Prior: +0.2%)

• Core CPI, month-over-month, August (Expected: +0.2%, Prior: +0.2%)

• CPI, year-over-year, August (Expected: +3.6%, Prior: +3.2%)

• Core CPI, year-over-year, August (Expected: +4.3%, Prior: +4.7%)

• Real average hourly earnings, year-over-year, August (Prior: +1.1%)

• Earnings: Cracker Barrel (CBRL)

Thursday:

• Initial jobless claims (Prior: 216,000)

• Retail sales, month-over-month, August (Expected: +0.1%, Prior: +0.7%)

• Retail sales ex auto and gas, August (Expected: 0.0%, Prior: +1%)

• Producer Price Index, month-over-month, August (Expected: +0.4%, Prior: +0.3%)

• PPI, year-over-year, August (Expected: +1.5%; Prior: +0.8%)

• Core PPI, month-over-month, August (Expected: +0.2%, Prior: +0.3%)

• Core PPI, year-over-year, August (Expected: +2.6%; Prior: +2.8%)

• Earnings: Adobe (ADBE), Lennar (LEN)

Friday:

• Import prices, month-over-month, August (Expected: +0.3%, Prior: +0.4%)

• Export prices, month-over-month, August (Expected: +0.3%, Prior: +0.7%)

• Empire Manufacturing, September (Expected: -10.7, Prior: -19)

• Industrial production, month-over-month, August (Expected: +0.1%, Prior: +0.5)

• University of Michigan consumer sentiment, September, preliminary (Expected: 69.4, Prior: 69.5)

• No notable companies set to report earnings.

This week promises a whirlwind of economic activity and corporate developments, ensuring investors will be on high alert for potential market shifts.

Also Read: Fast Ways to Earn Money Online Without Investment: Practical Tips and Examples

Market Sentiment Reversal

The probability of an economic downturn, previously priced into financial assets, has dropped to its lowest since April 2022, as per JPMorgan Chase & Co. This marks a significant shift from the prevailing pessimism of the past year, where a recession was widely anticipated.

Impact of Economic Data

Positive economic data, indicating potential inflationary pressures, now poses a challenge for investors. Such data might deter central banks, including the Federal Reserve, from cutting rates, which could have long-term consequences for the economy.

Bond Market's Perspective

Even the bond market, traditionally cautious and a hub for recession speculations, is exhibiting a more positive outlook. This shift is attributed to a series of data points that have exceeded expectations.

Treasury Yield Curve Reversal

The long-awaited inversion of the Treasury yield curve, a traditional indicator of economic distress, is finally abating. Traders have also reduced their bets on the extent of future interest rate cuts by the Fed to combat a recession.

Market Sensitivity to Economic Data

The correlation between the S&P 500 and Citigroup Inc.'s surprise index for the US economy has reached an unprecedented negative level. This implies that when economic indicators surpass forecasts, stocks decline, and vice versa.

Fed's Communication

Federal Reserve policymakers are actively discouraging expectations of a shift towards more lenient policies, emphasizing the possibility of rate hikes.

Market Dilemma

Currently, the market is grappling with the paradox where good economic news, though seemingly positive, might bring about inflation, higher policy rates, and consequentially, hinder corporate profits, business investments, and burden consumers with debt.

What's Ahead?

Market participants remain cautious about recession forecasts, given the strong performance of the US economy. The consensus is that the market will remain skeptical of recessions until there is concrete evidence.

In Conclusion, While the probability of a recession has significantly decreased in the eyes of investors, concerns about an overheating economy and potential inflationary pressures persist, posing new challenges for market strategies. The delicate balancing act between growth and inflation remains a focal point for both investors and policymakers alike.

Also Read: G20 Summit 2023: Advancements in Clean Energy, Hurdles in Fossil Fuel Transition

Japan's Growth Figures Unveiled

Japan, the world's third-largest economy, revealed a 4.8% growth rate for the April-June quarter. This figure, while positive, fell short of the earlier estimated 6%.

Unpacking the Growth Components

The growth was primarily driven by an impressive surge in exports, recording nearly 13% growth. However, private consumption experienced a decline of 2.2%, indicating weakened investment spending.

Wages and Consumer Power

A concerning trend emerged as a separate report indicated a 2.5% decline in wages from the previous year, marking the 16th consecutive month of decrease. This raises questions about consumer purchasing capacity.

Asian Markets React

Tokyo's Nikkei 225 index experienced a 1.2% drop, closing at 32,606.84. Seoul's Kospi also saw a minor dip, losing less than a point to reach 2,547.68. Hong Kong's markets remained closed due to a tropical storm.

Shanghai Composite and S&P/ASX 200 Movement

The Shanghai Composite index recorded a 0.2% decrease, concluding at 3,1016.87. Meanwhile, Australia's S&P/ASX 200 experienced a similar 0.2% reduction, closing at 7,156.70.

Wall Street's Performance

Wall Street saw mixed trading dynamics. The S&P 500 reported a 0.3% decline, marking its third consecutive loss. The Nasdaq composite was notably impacted by the drop in tech stocks, plummeting 0.9% to 13,748.83. The Dow Jones Industrial Average, with a lower emphasis on technology, rose 0.2% to 34,500.73.

Bond Market Influence

Stocks faced pressure from the bond market, where yields showed an earlier increase in the week. This followed a report indicating stronger growth in U.S. service industries than anticipated. Sustained high yields may impact inflationary trends.

Federal Reserve's Challenge

Positive economic reports, while reassuring about recession risks, may also contribute to inflation. The Federal Reserve, having elevated its main interest rate, faces the task of fine-tuning economic conditions.

Tech Giants in Focus

High-interest rates exerted downward pressure on stock prices, especially for technology companies. Apple, the most valuable stock on Wall Street, faced a 2.9% decline, following a 3.6% drop the previous day. Nvidia saw a 1.7% decline, resulting in a total loss for the week thus far at 4.7%.

Utility Stocks and Stability

Power companies and equities viewed as more stable investments held up better amidst market volatility. Utility stocks in the S&P 500 reported a 1.3% increase as a group, nearly double the gain of any of the other 10 sectors constituting the index.

Oil Markets in Focus

In Friday's trading, U.S. benchmark crude oil experienced a reduction of 41 cents, closing at $86.46 a barrel. This followed an increase of 67 cents on Thursday. Brent crude, forming the basis for international trading, underwent a decrease of 30 cents, reaching $89.62 a barrel.

Forex Markets in Flux

The dollar experienced a slip, falling to 147.19 Japanese yen from 147.30 late on Thursday. Meanwhile, the euro was trading at $1.0718, a slight increase from $1.0697.

Also Read: Oil Prices Dip Despite OPEC+ Efforts to Restrain Supply

Carsten Brzeski, global head of macro for ING Research, commented, “Germany’s industrial production continues to plummet, causing even the most steadfast pessimists to grow apprehensive.” He added, “The comprehensive set of hard macro data for July suggests a heightened risk of recession.”

Pressure mounts on US equity futures as details emerge about China’s plans to restrict the use of iPhones in specific government departments, state-backed agencies, and affiliated companies—a significant blow to Apple Inc.

Treasury yields have risen across most of the curve, extending the uptick from Wednesday that pushed two-year yields above 5%. These movements follow data from the Institute for Supply Management’s US services index, which, in August, reached 54.4—the highest monthly reading since February and surpassing all estimates in a Bloomberg survey of economists. A reading above 50 signifies growth.

Following a series of reports exceeding expectations—spanning consumer spending to residential investment—economists are revising up their forecasts for US gross domestic product. This marks a notable shift from three months ago when the consensus projected a stall in the economy for the current quarter—the last time policymakers updated their figures.

This momentum may be enough to lead Fed officials to reconsider their estimates for rate cuts in 2024. Traders in recent months have scaled back their expectations of the extent of future Fed easing—from well over 150 basis points early in 2023 to around 100 basis points.

Quincy Krosby, chief global strategist at LPL Financial, noted, “The ISM Services Sector report underscores the resilience of the largest portion of the economy.” She also highlighted the indication of higher prices within the data. “This is certainly not good news for a data-dependent Fed.”

A Call for Patience

Fed Bank of Boston President Susan Collins emphasized that policymakers will need to exercise patience as they evaluate economic data to determine their next steps. She suggested that further tightening may still be necessary. Meanwhile, former Fed Bank of St. Louis chief James Bullard remarked that officials should continue to pencil in one additional hike this year when they update their projections later this month.

This risk-averse sentiment extended into Asia, with all major markets experiencing declines. Chinese stocks were among the worst performers, weighed down by property developers, which partially retraced a prior session rally.

The yuan weakened as the People’s Bank of China set the so-called fixing at a stronger-than-expected level for the 54th consecutive day on Thursday. This marks the longest stretch since Bloomberg commenced the daily survey in 2018.

In the commodities sector, oil saw a decline and is poised to conclude a nine-day winning streak—its lengthiest run in over four years. Gold, on the other hand, saw a slight uptick after a drop on Wednesday.

Key events this week include:

• China forex reserves report on Thursday

• Eurozone GDP data on Thursday

• US initial jobless claims on Thursday

• Bank of Canada Governor Tiff Macklem’s speech on the Economic Progress Report on Thursday

• Atlanta Fed President Raphael Bostic’s address on Thursday

• New York Fed President John Williams’ participation in a moderated discussion at the Bloomberg Market Forum on Thursday

• Japan GDP report on Friday

• Germany CPI data on Friday

• US wholesale inventories and consumer credit figures on Friday

Market Movements:

Stocks

• The Stoxx Europe 600 declined by 0.4% as of 8:12 a.m. London time

• S&P 500 futures fell by 0.3%

• Nasdaq 100 futures dropped by 0.5%

• Futures on the Dow Jones Industrial Average decreased by 0.2%

• The MSCI Asia Pacific Index saw a 0.7% decline

• The MSCI Emerging Markets Index also fell by 0.7%

Currencies

• The Bloomberg Dollar Spot Index saw a 0.1% rise

• The euro dropped by 0.2% to $1.0710

• The Japanese yen increased by 0.1% to 147.46 per dollar

• The offshore yuan decreased by 0.2% to 7.3328 per dollar

• The British pound fell by 0.3% to $1.2473

Cryptocurrencies

• Bitcoin saw a 0.3% rise to $25,745.36

• Ether increased by 0.5% to $1,635.96

Bonds

• The yield on 10-year Treasuries experienced little change at 4.28%

• Germany’s 10-year yield remained relatively stable at 2.65%

• Britain’s 10-year yield declined by two basis points to 4.51%

Commodities

• Brent crude declined by 0.3% to $90.34 a barrel

• Spot gold experienced a 0.1% rise to $1,918.51 an ounce."

Also Read:

• G20 Summit 2023: New Delhi Geared Up to Host World Leaders for Crucial Global Conference - Live Updates
• Stock Market Declines Amid Inflation Worries: Latest Market Update

Port Strike Disrupts Imports and Exports

The impact of a 13-day strike involving dock workers in British Columbia was felt in both import and export sectors during July. This labor dispute caused disruptions at two of Canada's busiest ports. Statistics Canada has cautioned that the repercussions of this strike may continue to affect trade activities in the months ahead as backlogs in freight are cleared.

Import-wise, July saw a substantial decline of 5.4%, marking the most significant percentage drop since January 2022. Imports were mainly affected by reduced imports of unwrought gold and collective declines in product categories such as consumer goods and electronics, which are heavily dependent on British Columbia ports. By volume, imports decreased by 4.3%.

On the export front, total exports increased by 0.7% in July. This growth was driven by higher exports of canola, aircraft, and other transportation equipment and parts, which helped offset the impact of the strike. However, when measured by volume, exports experienced a 0.2% decrease.

Bank of Canada's Rate Decision

In light of these trade developments, the Bank of Canada is expected to maintain its interest rates at a 22-year high of 5%, as suggested by analysts. This decision follows an unexpected economic contraction in the second quarter and data indicating that month-over-month GDP in July was likely to remain flat.

It is important to note that the exchange rate used in this article is $1 = 1.3652 Canadian dollars.

Also Read: Global Markets Rise as China's Policy Stimulus Boosts Sentiment

China's Policy Initiatives Light the Way

China has been at the forefront of economic policy moves designed to bolster its economy. Notably, embattled property developer Country Garden received approval from its creditors to extend payments for an onshore private bond, offering a glimmer of hope. Coupled with previous policy measures, these actions suggest that China is gaining traction in its efforts to uplift sentiment and stimulate consumer confidence.

Expert Insights: Ron Temple Weighs In

Lazard's chief market strategist, Ron Temple, underscores the significance of China's policy momentum. While he acknowledges concerns about the urgency of policy changes in China, Temple sees promising signs, especially when combined with improvements in PMI data.

Asia-Pacific Leads the Way

The Asia-Pacific region, excluding Japan, is leading the charge with remarkable growth. MSCI's broadest index for this region registered a 1.1% increase, building upon last week's 2.3% surge, driven primarily by a 1.3% rise in Chinese blue-chip stocks.

Global Impact: MSCI All-World Index and Currency Movements

The MSCI All-World index, fresh from its strongest weekly rally since mid-July, has experienced a 0.3% uptick. Simultaneously, the U.S. dollar has depreciated by approximately 0.2%, contributing to the overall positive sentiment.

Tech Sector Faces Scrutiny: Arm Holdings' IPO

This week, the tech sector faces a critical test with the impending initial public offering (IPO) of chip giant Arm Holdings. The company aims for a valuation between $50 billion and $54 billion, making it a pivotal event for market participants.

U.S. Economic Factors: Payrolls and Interest Rates

Developments in the U.S. labor market have substantially impacted market sentiment. While headline employment figures exceeded expectations, downward revisions to previous months and slower wage growth signaled a softer labor market.

Shifting Rate Hike Expectations

The evolving labor market has prompted a shift in expectations regarding interest rate hikes. Futures contracts now imply a 93% likelihood of unchanged interest rates this month, with a 67% probability that the tightening cycle has reached its conclusion.

Central Bank Meetings:

Canada, Australia, and the ECB Central banks in Canada and Australia are set to convene this week, with both expected to maintain their current interest rates. Meanwhile, European Central Bank President Christine Lagarde is scheduled to speak, with market sentiment leaning against a rate hike at the ECB's September meeting.

Currency Movements: USD and Euro

The relative strength of the U.S. economy continues to sway currency markets. The USD/JPY pair remains near its recent 10-month high, while the euro has seen a modest uptick.

Commodities Outlook: Gold and Oil

The reduced concern over a U.S. rate hike has boosted gold prices, reaching $1,940 per ounce. Meanwhile, oil prices are hovering near seven-month highs, supported by supply constraints, as Saudi Arabia is widely expected to extend a voluntary 1 million barrel per day oil production cut into October.

In conclusion, global markets are displaying remarkable resilience and positivity, driven by a combination of economic factors. As investors remain vigilant and navigate through the ever-changing landscape, the outlook remains cautiously optimistic. Stay tuned for further updates as these developments continue to unfold.

Also Read: Nvidia's Strong August Performance Amidst Tech Sector Volatility

August proved to be a challenging month for the technology sector, with many prominent tech companies experiencing market volatility. In this comprehensive news post, we will analyze how Nvidia Corp stood out by defying market trends and achieving significant market growth. We will also delve into the challenges confronted by other tech giants and uncover the key drivers behind Nvidia's exceptional performance.

Nvidia's Remarkable Market Surge

Throughout August, Nvidia's market capitalization experienced a noteworthy uptick. What set Nvidia apart from its peers was its robust profit forecasts, which outperformed the broader trend of declining values in the mega-cap tech sector. Let's take a closer look at what drove Nvidia to the forefront:

The Strength of Profit Forecasts

• Nvidia's profit forecasts surpassed analysts' expectations, underlining the company's resilience.

• The surge in demand for Nvidia's chips, driven by the artificial intelligence boom, played a pivotal role in its outstanding performance.

• The announcement of a substantial $25 billion share buyback program bolstered investor confidence and contributed to Nvidia's impressive performance.

Challenges in the Tech Sector

In stark contrast, other tech giants faced a challenging August. Notable difficulties included:

1. Apple and Microsoft

• Apple's market capitalization decreased by 4.4%.

• Microsoft Corp experienced a 2.4% drop in market value.

• Apple attributed its sales decline to slowing demand for its flagship product, the iPhone.

2. Meta Platforms Inc

• Meta Platforms Inc saw a significant 7.1% decrease in market capitalization.

• Meta faced challenges as the tech landscape continued to evolve.

Berkshire Hathaway's Success Story

While the tech sector encountered turbulence, Berkshire Hathaway achieved market growth. Key factors contributing to its success included:

• A market cap increase of over 2%.

• A historic milestone with quarterly operating profits exceeding $10 billion.

• The positive impact of rising interest rates on profit from fixed-income investments.

Challenges in China

Tech giant Tencent Holdings faced hurdles in China:

• A market cap decline of approximately 9%.

• Weaker-than-expected growth in Tencent's core gaming business.

Legal Hurdles for Johnson & Johnson

Johnson & Johnson grappled with significant legal challenges:

• A 10% decline in market capitalization.

• Legal setbacks as a U.S. judge rejected attempts to resolve talc-related lawsuits.

Conclusion

In conclusion, Nvidia's resilience amidst the tech sector's August turbulence reflects its ability to navigate challenging market conditions successfully. Nvidia's innovative technologies and strategic initiatives position it as a standout player in the ever-evolving tech landscape. As the tech industry continues to evolve, Nvidia remains at the forefront of innovation and market growth.

Also Read: Saudi Arabia's Crude Oil Exports Dip Amid OPEC Production Cuts

U.S. Indices Start the Week on a High Note

All three major U.S. indices—namely the benchmark S&P 500, the Dow Jones Industrial Average, and the tech-heavy Nasdaq Composite—kicked off the trading day with solid gains. Although trading remained light due to the last unofficial week of summer, investors are gearing up for a week filled with an array of pivotal economic indicators.

Robert Pavlik, Senior Portfolio Manager at Dakota Wealth in Fairfield, Connecticut, shared insights on the market's positive movement. He stated, "It's a positive continuation of Friday's movement after the market realized Powell was neither hawkish nor dovish; he was reiterating what everyone knew." Pavlik emphasized that inflation is easing and the economy remains resilient, leading to expectations that the Fed will likely maintain interest rates this September and possibly throughout the year.

Powell's Remarks and China's Economic Boost

In his speech at the central bank conference in Jackson Hole, Wyoming, Federal Reserve Chair Jerome Powell acknowledged that inflation remains a concern but emphasized the need for agile monetary policy given the ongoing economic uncertainty.

Adding to the market dynamics, Beijing's decision to halve the stamp duty on stock trading and support affordable housing has fueled optimism about China's economic trajectory post-COVID.

Key Economic Data Awaited

As the Labor Day weekend approaches, investors are bracing themselves for a barrage of high-profile economic data. The upcoming reports, including the August employment data, PCE inflation figures, ISM PMI, and the Commerce Department's revised Q2 GDP analysis, are expected to provide insights into the Fed's potential policy shifts.

Market Highlights

• Dow Jones Industrial Average: Up 0.63% at 34,564.09

• S&P 500: Increased 0.42% to 4,424.41

• Nasdaq Composite: Advanced 0.41% to 13,646.11

Global Market Trends

European stocks saw a sharp ascent, driven by the tech sector, with additional support from China-exposed industrials. The pan-European STOXX 600 index witnessed a rise of 0.85%, while MSCI's global stock gauge gained 0.69%. Emerging market stocks and Asia-Pacific shares outside Japan also reported positive movements.

Crude Oil's Rebound and Economic Considerations

Crude oil prices enjoyed an uptick due to Beijing's measures aimed at boosting its economy. U.S. crude climbed by 0.83% to reach $80.49 per barrel, and Brent crude followed suit with a 0.58% increase, settling at $84.97.

Interest Rates and Treasury Yields

Investors showed interest in U.S. Treasury two-year yields, pushing them to their highest point in almost two months, signaling an inclination toward an extended period of low interest rates. The benchmark 10-year notes observed an increase in price, with a yield of 4.2177%.

Currency Movements and Precious Metals

The dollar index saw marginal gains of 0.02%, with the euro slightly appreciating at $1.0803. In currency markets, the Japanese yen exhibited a slight weakening against the greenback, while Sterling experienced a minor dip.

Gold's Performance

Gold prices experienced an uptick as investors continued to digest Jerome Powell's commentary from Jackson Hole. The precious metal managed to add 0.2%, reaching a value of $1,919.02 per ounce.

As the markets continue to respond to evolving economic indicators and Fed dynamics, investors remain watchful, recognizing the significance of the data scheduled for release throughout the week.

Also Read: Stock Market Update: Positive Start Amidst Focus on Key Data

The spotlight falls on the release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve's preferred gauge of inflation, slated for Thursday morning. Simultaneously, on Friday at 8:30 a.m. ET, the August jobs report is set to be unveiled.

Throughout the week, investors will closely track the weekly jobless claims data and ADP's monthly private payrolls report, both scheduled for Thursday. The monthly job openings overview on Tuesday will capture investor interest, alongside fresh insights into housing and manufacturing prices.

On the corporate side, the earnings calendar showcases heavyweights like Best Buy (BBY), Lululemon (LULU), and Salesforce (CRM), as the earnings season nears its conclusion.

Despite a challenging August for stocks, last week witnessed a reprieve, with the tech-oriented Nasdaq attracting investor interest ahead of Nvidia's (NVDA) robust quarterly earnings release.

As we enter the final stretch of August, the Nasdaq, S&P 500, and Dow Jones Industrial find themselves in negative territory over the past month.

Following a summer marked by positive economic surprises, Federal Reserve Chair Jerome Powell's recent remarks underscored the central bank's alertness. Powell acknowledged, "We are attentive to signs that the economy may not be cooling as expected."

This puts the spotlight on forthcoming data releases, which are crucial in gauging the economic trajectory.

Anticipated data on Thursday points to a 4.2% year-over-year increase in the "core" PCE, which excludes food and energy costs for July. This compares to a 4.1% rise in June. While the Fed targets an average inflation rate of 2%, the projection for "core" PCE in July is a 0.2% monthly increase.

Turning to Friday, economists are focused on the labor market's impact on inflation. Predictions are for the US economy to have added 168,000 jobs in August, while the unemployment rate remains steady at 3.7%. This aligns with the gradual labor market slowdown observed recently.

Powell's emphasis on the potential for a tighter labor market to spur inflation implies the significance of data trends. The anticipated job report for August is also expected to reflect the influence of ongoing labor strikes across various sectors.

Current market sentiment factors in a 47% probability of an additional Federal Reserve rate hike by the end of November, up 14 percentage points from the prior week, based on the CME FedWatch tool.

Recent retail earnings painted a picture of a cautious consumer sentiment, impacting retailers like Dick's Sporting Goods (DKS) and Foot Locker (FL). Store-related crimes have also been a concern and will continue to be closely monitored.

In the upcoming week, the earnings results from Best Buy and Lululemon will offer a fresh perspective on the sector. Of particular interest is Lululemon's performance, as it serves as an indicator of high-end consumer behavior.

In the technology arena, Salesforce (CRM), Okta (OKTA), and Crowdstrike (CRWD) will unveil their earnings post Nvidia's influential announcement. Salesforce's focus on AI introduces an interesting dynamic, given mixed market responses to AI-related narratives this quarter.

Nvidia's remarkable revenue growth and earnings beat sent ripples through the tech sector. However, it's worth noting that Wall Street's AI darlings like C3.ai and AMD experienced declines in the aftermath, sparking discussions about the evolving AI landscape.

According to Citigroup's Scott Chronert, the AI hype has entered the "show me" phase. This implies a recalibration of expectations as new information surfaces.

As the week unfolds, the economic calendar is packed with events:

Monday

• Economic data: Dallas Fed Manufacturing Activity

• Earnings: No notable earnings.

Tuesday

• Economic data: S&P CoreLogic Case-Shiller Home Price Index, Consumer Confidence, JOLTS Job Openings, Dallas Fed Services Activity

• Earnings: Best Buy (BBY), Big Lots (BIG), BMO (BMO), Box (BOX), and more

Wednesday

• Economic data: MBA Mortgage Applications, Wholesale and Retail Inventories, Second Quarter GDP and Personal Consumption, Pending Home Sales

• Earnings: Chewy (CHWY), Crowdstrike (CRWD), Express (EXPR), and more

Thursday

• Economic data: Personal Income and Spending, PCE Inflation, Initial Jobless Claims, Challenger Job Cuts

• Earnings: Academy Sports + Outdoors (ASO), Broadcom (AVGO), Campbell's (CPB), and more

Friday

• Economic data: Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings, S&P Global US Manufacturing PMI, Construction Spending, ISM Manufacturing

• No notable earnings.

Also Read: Federal Reserve Chief Powell Talks About Possible Changes in Interest Rates Due to Inflation

Inflation Data Surprises Market

The U.S. Labor Department reported a 0.3% increase in the producer price index (PPI) for final demand in July, surpassing economists' predictions of 0.2%. Moreover, the year-over-year PPI rise of 0.8% exceeded expectations of a 0.7% advance. However, the data for June was revised downward, indicating that the PPI remained unchanged instead of showing a slight increase as initially reported.

Market Reaction and Analyst Insights

Following the release of the data, global stock markets faced a downward trajectory. Meanwhile, U.S. Treasury yields surged, fueled by growing expectations that the Federal Reserve might maintain higher interest rates for a prolonged period. Market experts and analysts have noted that this uptick in inflation has led investors to scrutinize the underlying factors driving it. While disinflation seemed rapid in the past months, signs suggest that this trend might be leveling out.

Paul Christopher, the head of global investment strategy at Wells Fargo Investment Institute, emphasized that investors are delving deeper into inflation dynamics. He observed that disinflation, though swift at the macro level, could be stabilizing, potentially necessitating a continued cautious approach by the Federal Reserve.

Implications on Stock Market and Yields

The impact of the inflation data was palpable on Wall Street's major indices. The Dow Jones Industrial Average saw a modest rise of 0.08% to reach 35,203.64, while the S&P 500 experienced a decline of 0.30% to settle at 4,455.21. The Nasdaq Composite, however, faced a notable drop of 0.75%, closing at 13,634.40.

Internationally, the pan-European STOXX 600 index registered a significant fall of 1.09%, and MSCI's global stock gauge reflected a decline of 0.62%. Emerging market stocks mirrored the downward trend with a drop of 1.10%. Asian stocks also followed suit, with the MSCI Asia-Pacific index outside Japan slipping by 1.13% and touching a one-month low.

Expert Insights and Currency Movement

Market sentiment was further influenced by comments from Mary Daly, President of the San Francisco Federal Reserve Bank. Daly emphasized the need for further progress to combat inflation before the Federal Reserve could consider its mission accomplished. In the currency realm, the dollar index observed a rise of 0.107%, with the euro dipping by 0.18% to $1.0959. The Japanese yen experienced a slight weakening of 0.06% against the greenback, trading at 144.81 per dollar. Sterling, however, demonstrated strength, closing at $1.2704, a 0.23% increase attributed to unexpected second-quarter GDP growth.

Yield Movement and Commodity Impact

The impact of the inflation data on U.S. Treasury yields was significant. Benchmark 10-year notes experienced a rise of 6.2 basis points, reaching 4.144% compared to 4.082% at Thursday's close. The 30-year bond also witnessed an increase of 3.2 basis points, yielding 4.2651% as opposed to 4.233% previously. The 2-year note, meanwhile, registered a rise of 6.9 basis points, yielding 4.8904% from 4.821%.

In the commodities arena, oil prices edged slightly higher due to OPEC producer group optimism about robust oil demand in 2024. U.S. crude oil experienced a 0.4% increase, reaching $83.15 per barrel. Brent crude similarly climbed to $86.74, reflecting a 0.39% rise. However, the International Energy Agency (IEA) issued a note of caution, projecting slower demand growth for oil in the upcoming year due to various factors including lackluster macroeconomic conditions, a plateauing post-pandemic recovery, and the escalating adoption of electric vehicles.

Also Read: Stock Market Reacts to Shifting Inflation Signals: Insights from Latest Market Movements

Inflation Report's Significance

Market attention is riveted on the impending US consumer price report, a pivotal element in shaping expectations regarding the Fed's rate trajectory. Market experts anticipate that the reading for core inflation, aligning with the Fed's 2% annualized target, will sustain for the second consecutive period. Analysts from Bloomberg Economics project a 0.2% increase in the consumer price index, excluding volatile food and energy components, for the previous month. This mirrors a similar uptick observed in June.

Market Response Scenarios

Andrew Bell, CEO of Witan Investment Trust, highlights the potential for short-term fluctuations in both equity and bond markets should the inflation figure surpass expectations. Nevertheless, Bell asserts that any such short-term volatility is unlikely to sway the broader anticipation of the Fed's peak interest rate cycle. The prevailing evidence points to economic disinflation, suggesting that even an unexpected high inflation reading might not alter the forecasted trajectory.

Commodities Resurgence

A notable phenomenon amid these market dynamics is the revival of commodities. Following a year of decline, commodities are exerting upward pressure. Oil, in particular, has surged to a nearly nine-month peak. West Texas Intermediate futures have surged above $84 per barrel after a consecutive 3% gain over two preceding sessions.

Luxury and Travel Sector Boost

Luxury giants LVMH and Hermes International are showcasing notable gains, each experiencing a rise of over 2%. This surge follows China's Ministry of Culture and Tourism's announcement to lift travel bans for group tourists from countries including the US, UK, Australia, South Korea, and Japan. This decision is projected to have a positive ripple effect on European luxury goods sales, especially those driven by Chinese buyers, who contribute around 25% to the sector's sales.

Positive Developments for US Companies

In the US market, Walt Disney Co. has reported gains in premarket trading. The company's announcement regarding capital spending and expenses associated with movies and TV productions coming in below projected estimates has ignited investor confidence.

Market and Bond Insights

Treasury bonds have experienced a rise, causing the 10-year yield to drop below 4%. Despite initial concerns regarding investor resistance, the week's final substantial US bond sale for 30-year notes is proving to be met with robust demand.

Key Events in the Coming Days

• Thursday: US initial jobless claims, Consumer Price Index (CPI)

• Thursday: Pre-recorded remarks by Atlanta Fed President Raphael Bostic at an employment webinar

• Friday: UK industrial production, Gross Domestic Product (GDP)

• Friday: US University of Michigan consumer sentiment, Producer Price Index (PPI)

Market Movements

Stocks

• S&P 500 futures show a 0.5% rise at 8:02 a.m. New York time

• Nasdaq 100 futures surge by 0.6%

• Dow Jones Industrial Average futures exhibit a 0.5% uptick

• The Stoxx Europe 600 Index climbs by 0.3%

• The MSCI World index records a 0.2% increase

Currencies

• The Bloomberg Dollar Spot Index sees a 0.3% decline

• The euro advances by 0.4% to reach $1.1020

• The British pound witnesses a 0.4% increase, trading at $1.2768

• The Japanese yen remains relatively stable at 143.74 per dollar

Cryptocurrencies

• Bitcoin experiences marginal stability at $29,472.97

• Ether undergoes a minor dip of 0.2%, reaching $1,848.71

Bonds

• The yield on 10-year Treasuries witnesses a decline of two basis points, settling at 3.99%

• Germany's 10-year yield registers a modest one basis point increase, standing at 2.51%

• Britain's 10-year yield remains relatively steady at 4.36%

Commodities

• West Texas Intermediate crude sees a 0.7% drop, trading at $83.78 per barrel

• Gold futures reflect a 0.2% increase, reaching $1,955 per ounce

Also Read: Global Markets Anticipate Key Inflation Data: Modest Gains in Equities and Dollar

The latest data released by Chinese customs reveals a significant contraction in export value, measured in US dollars, marking the most substantial drop since February 2020, a time marred by the initial outbreak of Covid-19. Notably, this marks the third consecutive month of declining exports.

Experts at Capital Economics suggest that the extent of this decline is partly influenced by elevated figures from July of the previous year and a subsequent decrease in export prices. Adjusting for seasonal factors and price fluctuations, these analysts estimate that export volumes in July only slightly edged down by 0.9% compared to June.

Despite this nuanced perspective, forecasts indicate that exports could face further contraction in the coming months. This projection stems from the broader observation of diminishing global demand, driven by the unwinding of pandemic-related distortions and the tightening of monetary policies, impacting consumer spending patterns.

Analysts emphasize the challenging outlook for consumer spending in developed economies, raising concerns of potential mild recessions that could emerge later this year.

In the year's first seven months, China's exports have witnessed a cumulative decrease of 5% compared to the same period in the previous year. Particularly striking is the 13% plunge in shipments to the United States, which stands as China's largest trading partner.

During the pandemic, exports emerged as a rare positive aspect, providing vital support as China grappled with stringent Covid lockdowns and a sluggish housing market. Notably, these exports contributed 17% to China's GDP in the preceding year. However, the momentum shifted since last October due to surging inflation and rising interest rates, which dampened global demand.

The diminishing export scenario is a new setback for China's economy, which recently experienced a loss of momentum after a robust start to the year. Signs of deflation are gaining prominence, raising concerns of a prolonged stagnation phase.

The recent data also underscores a 12.4% decline in imports for July, a significant miss compared to a projected 5% decrease. This downturn in import volumes emphasizes a softening of China's domestic demand, as import levels reached their lowest point since the beginning of the year.

Market analysts now advocate for Beijing to take decisive measures to bolster its economy, including substantial efforts aimed at stimulating demand. As one potential strategy, currency depreciation—making Chinese exports more competitively priced—could potentially aid in the recovery of exports and the broader economic landscape.

On a recent note, the People's Bank of China, responsible for setting the yuan's daily trading range, established a midpoint of 7.1565 against the US dollar—slightly weaker than the previous day. This move prompted a foreign exchange market drop in the Chinese currency, with the offshore yuan experiencing a 0.3% decline against the US dollar.

Thus far, Beijing's policy measures, though implemented with the intent to stimulate the economy, have yet to make a considerable impact on investors. Given this context, currency depreciation may serve as a tool to invigorate exports and facilitate overall economic recovery.

Also Read: China's Economic Slowdown Weighs on Global Markets: Stocks and Bonds Show Drift

The dollar showed signs of recovery from a one-week low on Friday, reacting to disappointing job data for July. However, the positive aspects of solid wage gains and a decline in the unemployment rate suggest that the Federal Reserve may continue to maintain higher interest rates.

Federal Reserve Governor Michelle Bowman reiterated the possibility of further interest rate hikes to bring inflation in line with the Fed's 2% target. Her remarks, made to a banking group on Monday, reinforced the central bank's commitment to necessary monetary policy adjustments.

The dollar index, which measures the U.S. currency against six major peers, recorded a marginal 0.02% increase. Meanwhile, the Treasury market experienced mixed movements, with short-term bonds declining and long-term securities rising.

Market analysts, including Phillip Colmar, Global Strategist at MRB Partners, highlighted the potential risk rising bond yields pose for equity investors, despite the U.S. economy outperforming expectations and alleviating recession concerns. Colmar emphasized the current economic environment's limited justification for rate cuts, supporting the case for higher interest rates.

MSCI's global stocks gauge showed a modest 0.28% gain, indicating a cautious yet optimistic outlook among investors. However, the pan-European STOXX 600 index experienced a slight dip of 0.19%.

On Wall Street, the Dow Jones Industrial Average rose by 0.91%, the S&P 500 gained 0.62%, and the Nasdaq Composite added 0.18%.

Corporate earnings in the U.S. have exceeded expectations, with Refinitiv I/B/E/S data showing that approximately 90% of S&P 500 companies reported results that surpassed consensus estimates by 4%. More than 79% of companies have outperformed expectations, signaling a positive earnings season.

This week, market participants are closely monitoring the U.S. consumer price data, with forecasts indicating a slight uptick in headline inflation for July, reaching an annual rate of 3.3%. However, the core rate, a more critical metric, is expected to slow down to 4.7%.

Michael Hewson, Chief Market Analyst at CMC Markets, highlighted the significance of this week's Consumer Price Index (CPI) reports from the U.S. and China. Despite factors such as U.S. bond issuance affecting yields, several economic data points suggest a growing disinflationary trend.

Futures currently imply a mere 13.5% probability of a Fed rate hike in September, with expectations rising to 30.1% in November.

The U.S. Treasury Department's planned $103 billion sale of Treasuries this week aims to address a growing deficit and rebalance debt issues. However, last week's downgrade of the United States' credit rating by Fitch could potentially impact rates and yield curves.

Bank of America's economist, Michael Gapen, cautioned against overly optimistic policy easing expectations for next year, given recent robust economic data. Consequently, the bank revised its year-end forecast for two-year and 10-year yields to 4.75% and 4%, respectively.

The dollar's strength influenced other asset classes, with the euro declining by 0.11% to $1.1, and the yen weakening 0.27% to 142.11 per dollar.

The dollar's resilience also affected gold prices, as spot gold dropped 0.3% to $1,935.09 per ounce.

In the energy sector, oil prices experienced a slight decline following an extended rally, with support from Saudi Arabia and Russia committing to extend supply cuts through September.

U.S. crude recently fell 1.15% to $81.87 per barrel, while Brent settled at $85.32, down 1.07% on the day.

Investors worldwide are closely monitoring the forthcoming inflation data, which is anticipated to have a significant impact on market sentiment and asset valuations.

Also Read: Adidas Launches New Wave of Exclusive Yeezy Shoes for Clearance

Apple (AAPL) and Amazon (AMZN) Earnings Take Center Stage

Quarterly earnings reports from Apple and Amazon are the major highlights of this week. Market participants eagerly await these updates, as both companies play a crucial role in the technology and e-commerce sectors.

Apple, with its soaring stock value, has witnessed a remarkable year, recently crossing the $3 trillion market cap milestone. Analysts are curious to see if Apple's financial performance aligns with its stock's impressive run. Goldman Sachs analyst Michael Ng predicts Apple delivering earnings above consensus forecasts, attributing it to the growing iPhone installed base and increased average selling prices.

On the other hand, investors are keen to see Amazon's performance, particularly focusing on its Amazon Web Services (AWS) unit. Recent remarks by Microsoft regarding cooling revenue growth from Azure and cloud services have raised some concerns about AWS's performance. Nevertheless, Google Cloud's revenue growth, surpassing expectations, provides hope for Amazon's earnings report.

July Jobs Report and Economic Sentiment

The Bureau of Labor Statistics is scheduled to release the July jobs report on Friday, which will be closely monitored by economists and investors alike. The job market has been a crucial driver of economic growth, and its strength has a direct impact on consumer sentiment and overall economic recovery.

Economists expect the report to show that around 200,000 nonfarm payroll jobs were added to the US economy in July, with the unemployment rate remaining steady at a historically low 3.6%. The job market's performance will provide insights into the pace of economic recovery and the Federal Reserve's future monetary policy decisions.

Economic Data Continues to Impress

As the economy shows signs of recovery, positive economic data has been a recurring theme. Surprisingly robust second-quarter economic growth and moderating inflation have contributed to the optimism among market participants.

Economists are increasingly considering the possibility of a "soft landing" scenario, where the economy stabilizes without experiencing a significant downturn in growth. The Federal Reserve's Chairman, Jay Powell, has expressed his confidence in this outcome, stating that slowing inflation won't trigger a recession.

Earnings Season Update

As second-quarter earnings season approaches its midpoint, results have been largely positive, with companies exceeding earnings per share estimates. While earnings have declined for three consecutive quarters, companies have continued to outperform Wall Street expectations.

With 170 S&P 500 companies yet to report earnings this week, the market eagerly awaits these updates. The results will play a crucial role in shaping market sentiment and expectations moving forward.

Overall, the market remains optimistic, and investors are closely watching economic indicators and corporate earnings for further clues about the economy's trajectory. As earnings reports and economic data unfold this week, traders will be closely monitoring the developments and their potential impact on market sentiment and future monetary policy decisions.

Also Read: Change Your Name to ‘Subway’ and Win Free Sandwiches for Life

In a strategic response, Adidas disclosed its plan to sell the remaining Yeezy stock, with proceeds going towards supporting organizations impacted by Kanye's statements. Initially projected to face substantial revenue losses of $1.3 billion this year, due to unsold Yeezy clothing and shoes, the sportswear giant has managed to recover some of the losses through robust sales of the remaining inventory.

Adidas is releasing a second batch of Yeezy sneakers next month as it sheds its inventory and association with the rapper Kanye West https://t.co/cSo4AKNmwS

— WSJ Business News (@WSJbusiness) July 28, 2023

The latest clearance event features exclusive Yeezy brand products from 2022, available for purchase online only. Running until August, Adidas is dedicated to donating a significant portion of the proceeds to selected organizations actively combating discrimination, hate, racism, and antisemitism.

Fashion enthusiasts and sneaker aficionados can now seize this unique opportunity to get their hands on sought-after Yeezy products from the iconic collaboration with Kanye West. Hurry and secure your exclusive pair while supplies last!

Also Read: US Consumer Sentiment Soars Amid Slowing Inflation: University of Michigan Survey

The quarterly earnings reports of major restaurant chains are scheduled to kick off this week, with industry giants Starbucks and Yum Brands (parent company of KFC) poised to disclose their financial results in the coming week.

Investors and industry analysts are keenly observing the American fast-food customer's response to ongoing challenges posed by high food prices and overall economic pressures.

Despite concerns over a potential recession later this year, Jeffrey Bernstein, an analyst at Barclays, remains optimistic, citing encouraging signs in current industry fundamentals.

Furthermore, commodities like chicken and dairy have shown signs of price easing, providing some relief by offsetting higher costs for items like beef and potatoes. Additionally, wage pressures have stabilized, allowing restaurants to operate with a fuller workforce.

The Context:

While footfall has experienced fluctuations, fast-food companies have yet to witness a significant sales slowdown, despite lower-income consumers ordering fewer items or reducing their visits.

As the U.S. economy transitions into disinflation mode and consumer confidence reaches a near 1-1/2-year high in June, analysts predict that restaurants will continue to gain market share from food-at-home channels like grocers and supermarkets.

Data from Placer.ai shows that McDonald's experienced an 8.4% increase in visits during the second quarter, while Starbucks and Chipotle recorded 6.9% and 15.7% rises, respectively.

Jim Sanderson, an analyst at Northcoast Research, expects earnings discussions to revolve around the surprising resilience of consumer demand, which has surpassed expectations. He believes that concerns about macroeconomic headwinds and inflation pressures are less impactful than previously thought.

Price hikes implemented in previous quarters, with minimal resistance from consumers, are anticipated to further bolster profits in the remaining months of the year.

The Fundamentals:

• McDonald's is projected to report an 8.9% rise in global same-store sales for the second quarter, with an expected profit per share of $2.79.

• Chipotle, set to report on Wednesday, is expected to post a 7.5% increase in quarterly comparable sales, with anticipated earnings of $12.31 per share.

Wall Street Sentiment:

• Year-to-date, McDonald's shares have risen by approximately 12%, and Chipotle has surged by 51%. Starbucks and Yum Brands have seen increases of about 4% and 8%, respectively.

• The S&P 500 Restaurants index has advanced 13.5% during the same period.

• McDonald's has an average rating of "buy" with 39 analysts covering the stock, and at least six brokerages have recently raised their price targets on the stock.

• Chipotle's current average rating is "buy" with 34 analysts covering the stock, and the median price target is $2,250, up from $2,175 a month earlier.

As the restaurant industry approaches the second half of 2023 with cautious optimism, it remains to be seen how the economic landscape will evolve and impact the overall performance of these major restaurant chains in the months ahead.

Also Read: Domino's Share Surges as Surprise Partnership Marks Shift in Delivery Strategy

In Asia, futures for the S&P 500 and Nasdaq 100 have also ticked lower, primarily driven by Netflix's decline of 8.18% in postmarket trading. The company's sales missed estimates, and its third-quarter forecast fell short, affecting market confidence. Tesla, on the other hand, witnessed a 4.98% drop in profitability during the second quarter, indicating potential pressure on the electric-vehicle maker's margins.

Official trading on Wednesday saw the S&P 500 rise for a third day. The tech-heavy Nasdaq 100 ended marginally lower, while the blue-chip Dow Jones Industrial Average extended its winning streak into an eighth day, marking the longest rally since September 2019. Notable companies like Apple Inc. made advances, with Bloomberg reporting on their efforts to develop artificial intelligence tools. Goldman Sachs Group Inc. also closed positively, despite a profit slump that stood in contrast to earlier beats from peer investment firms.

US Treasuries gained momentum following a UK inflation report that led to a decline in guilt yields. This suggests that central banks might adopt a more cautious approach to raising interest rates. However, gains in the Treasury curve were dampened by a spike in commodities, including wheat, after Russia warned that any ships to Ukraine would be seen as carrying arms.

The dollar showed strength against most of its Group of 10 counterparts, while the pound experienced a significant intraday drop of 1.3%, the largest in over four months. The yen and the Aussie were also among the underperformers on Wednesday.

Meanwhile, in the US, data revealed that new home construction retreated in June after a surge the previous month. Additionally, applications to build, which serve as a proxy for future construction, also slipped.

Looking ahead, Japan's trade deficit is expected to narrow for the previous month as exports increased, while Australia is set to report jobs figures for June following an unexpected surge in the prior month.

Amidst easing price pressures in the US and UK, investors remain optimistic that a campaign of monetary tightening is nearing its end. However, the Federal Reserve's path to victory is not entirely secure, as shaky economic reports continue to raise concerns.

According to Neil Dutta, head of economics at Renaissance Macro Research, "The risk of recession has receded dramatically." Yet, he cautions that the market should be wary of becoming overly optimistic about a soft-landing scenario, as a resurgence of inflationary boom is still plausible.

In the corporate world, Carvana Co. experienced significant gains of 40% after reaching a deal to restructure its debt and filing to sell up to $1 billion in stock. Additionally, AT&T Inc. rose 8.5% after providing reassuring information, stating that less than 10% of its nationwide copper-wire telecom network had lead-clad cables.

As investors keep a close eye on the situation, key events for the week include China loan prime rates, US initial jobless claims, existing home sales, Conf. Board leading index, and Japan CPI.

In the stock market, S&P 500 futures fell 0.3%, Nasdaq 100 futures fell 0.6%, and Nikkei 225 futures fell 0.4%. Australia's S&P/ASX 200 Index futures remained unchanged, while Hang Seng Index futures rose 0.3%.

Regarding currencies, the Bloomberg Dollar Spot Index held steady, the euro remained unchanged at $1.1204, the Japanese yen remained at 139.65 per dollar, and the offshore yuan remained steady at 7.2314 per dollar. The Australian dollar also experienced little change at $0.6768.

Cryptocurrencies Bitcoin and Ether showed minor declines of 0.3% and 0.6%, respectively.

In the bond market, the yield on 10-year Treasuries declined by four basis points to 3.75%, while Australia's 10-year yield advanced by four basis points to 3.91%.

As for commodities, West Texas Intermediate crude fell 0.2% to $75.23 a barrel, and spot gold remained unchanged.

Also Read: Dollar Slides, Stocks Rally Ahead of US Inflation Data: Market Highlights

The Challenge of Overconcentration

The Nasdaq-100 index has faced criticism due to its heavy reliance on a handful of tech giants. Companies such as Amazon, Apple, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla have experienced significant growth, leading to a skewed index composition. While these stocks have contributed to the market's recent rally, their dominance poses potential risks and makes the index vulnerable to market swings driven by a select few.

Addressing Concentration through Rebalancing

To foster a more balanced and diversified representation, the Nasdaq plans to implement a special rebalancing initiative. Unlike the regular quarterly rebalancing, this exercise will redistribute weights without introducing new stocks or removing existing ones. The goal is to prevent individual stocks from exceeding 4.5% weightage and ensure that the combined weight of select stocks does not surpass 48% of the total index value. This adjustment aims to reduce concentration risks and enhance market stability.

Investor Caution Amidst Concentration Risks

Financial experts emphasize the importance of cautious portfolio assessment, especially for investors tracking the Nasdaq-100's performance. The dominance of a few stocks with inflated valuations can create a distorted view of the index's overall performance. Investors are advised to reevaluate their investment strategies and consider diversifying their portfolios to mitigate potential risks associated with concentrated holdings. A diversified portfolio can offer better resilience against market fluctuations driven by a limited number of stocks.

Promoting Market Stability and Confidence

The Nasdaq's decision to rebalance the index demonstrates its commitment to promoting a healthier and more stable market environment. By addressing overconcentration, the rebalance aims to provide investors with a more accurate representation of the broader market dynamics. This move enhances transparency, fosters confidence, and reduces the risk of large market swings influenced solely by a handful of companies.

The Future of the Nasdaq-100 Index

As the Nasdaq-100 index undergoes this special rebalancing, market participants eagerly anticipate a more diversified index composition. By spreading the weightage across a broader range of companies, the index aims to reduce the concentration risk associated with a few tech giants. This adjustment paves the way for a more inclusive and stable Nasdaq-100 index that reflects the evolving landscape of the technology sector and provides a fairer representation of the overall market.

In conclusion, the upcoming rebalancing of the Nasdaq-100 index signifies a proactive approach to address concentration risks and promote market stability. Investors are encouraged to reassess their portfolios, diversify their holdings, and remain vigilant to navigate potential market fluctuations. The rebalancing initiative is a step toward creating a more resilient and transparent investment landscape for all market participants.

Also Read: Dollar Slides, Stocks Rally Ahead of US Inflation Data: Market Highlights

Bloomberg Economics suggests that the trend of easing inflation in the US could significantly impact policymakers in the coming months. Federal Reserve officials have emphasized the necessity of higher interest rates to ensure that price growth aligns with the central bank's target of 2%. With a 25-basis-point rate increase anticipated on July 26 after the pause in June, the future course of monetary policy remains uncertain.

Joachim Klement, Head of Strategy, Accounting, and Sustainability at Liberum Capital, commented on the decoupling of US and European equity markets from the inflation narrative in recent months. He emphasized the importance of the June release of US inflation data, cautioning that an unexpected uptick in core inflation could catch investors off guard and result in market softness.

In Asia, stock performance was mixed, with Japan experiencing a decline, while Australia and India saw gains. Hong Kong stocks rose following robust credit expansion data from China, and Chinese tech firms recorded their third consecutive day of gains, buoyed by positive remarks from the country's top economic planner and news of meetings between officials and key companies, instilling optimism regarding policy support for the sector.

In contrast, China's domestic benchmark CSI 300 index dipped 0.4%, reflecting the desire of local investors for stronger stimulus measures to revive a struggling economy.

The yen attracted attention as it broke the key 140 level, partly due to speculation that the Bank of Japan may make policy adjustments later this month.

Elsewhere, the offshore yuan continued its upward trajectory against the US dollar, supported by China's central bank through a stronger-than-expected daily reference exchange rate.

Meanwhile, the New Zealand dollar initially pared gains but strengthened later after the Reserve Bank of New Zealand's decision to keep interest rates unchanged for the first time in nearly two years. The country's sovereign bond yields declined as a result.

In the commodities market, oil prices stabilized after indications of a drop in Russian crude production, suggesting a potential end to the oversupply situation. Gold remained steady amid market uncertainties.

Key events to watch this week include the Bank of Canada's rate decision, speeches by Bank of England Governor Andrew Bailey, the US Consumer Price Index (CPI) release, the Federal Reserve's Beige Book publication, and earnings reports from US banks.

Major Market Moves:

Stocks:

• Stoxx Europe 600 index: +0.4%

• S&P 500 futures: +0.1%

• Nasdaq 100 futures: +0.2%

• Dow Jones Industrial Average futures: Unchanged

• MSCI Asia Pacific Index: +0.5%

• MSCI Emerging Markets Index: +0.7%

Currencies:

• Bloomberg Dollar Spot Index: -0.2%

• Euro: +0.2% to $1.1026

• Japanese Yen: +0.5% to 139.69 per dollar

• Offshore Yuan: +0.2% to 7.1957 per dollar

• British Pound: Unchanged at $1.2941

Cryptocurrencies:

• Bitcoin: +0.8% to $30,819.28

• Ether: +1.1% to $1,893.86

Bonds:

• 10-year Treasury yield: -2 basis points to 3.95%

• Germany's 10-year yield: +1 basis point to 2.66%

• UK's 10-year yield: -3 basis points to 4.63%

Commodities:

• Brent Crude: Unchanged

• Spot Gold: +0.1% to $1,934.39 per ounce

Noteworthy Events This Week:

• Canada rate decision

• Speech by Bank of England Governor Andrew Bailey

• US Consumer Price Index (CPI) release

• Federal Reserve's Beige Book publication

• Speeches by Neel Kashkari, Loretta Mester, and Raphael Bostic (Federal Reserve officials)

• China trade data

• Eurozone industrial production data

• US initial jobless claims and Producer Price Index (PPI) release

• US University of Michigan consumer sentiment data

• Earnings reports from US banks

Also Read: Tesla's Dominance in China's EV Market Driven by Record-Breaking Deliveries

Remarkable Growth: Tesla's China Deliveries Soar:

Tesla, the renowned electric car manufacturer, witnessed a substantial surge in deliveries from its Shanghai factory during the second quarter, contributing to over half of its global sales. Recent data unveiled by the China Passenger Car Association (CPCA) highlights Tesla China's remarkable performance, with wholesale deliveries reaching an impressive 247,217 vehicles between April and June. This figure represents a staggering 120% increase compared to the same period last year, cementing Tesla's strong foothold in the Chinese electric vehicle (EV) market.

Noteworthy June Figures Signal Continued Success:

Preliminary data from the CPCA reveals that Tesla China's wholesale deliveries in June alone amounted to 93,680 vehicles, reflecting a significant 19% year-on-year growth. These robust sales figures further solidify Tesla's dominant position in China's EV market, thanks in large part to the success of its Shanghai Gigafactory.

China's EV Market Flourishes Amid Supportive Policies:

The second quarter witnessed a remarkable surge in China's EV market, driven by substantial price cuts from car manufacturers and generous government subsidies at the local level. The China Passenger Car Association reports that sales of new energy vehicles, including battery-powered EVs, plug-in hybrids, and fuel cell vehicles, reached an unprecedented high in June. This surge reflects the positive impact of China's supportive policies and the growing demand for eco-friendly transportation alternatives.

Tesla's Global Success Amplified by Shanghai Factory:

Tesla's strong sales from its Shanghai factory played a vital role in boosting the company's global performance to new heights. Globally, Tesla achieved a record-breaking delivery of over 466,000 vehicles in the second quarter, marking an all-time high. Although Tesla does not disclose region-specific sales figures, the CPCA data suggests that deliveries from the Shanghai factory accounted for approximately 53% of the company's total sales during this period. The exceptional performance in China has propelled Tesla's shares and solidified its position as a key player in the global EV market.

BYD's Unprecedented Quarter Strengthens Competition:

China's prominent electric car manufacturer, BYD, also experienced a record-breaking quarter, surpassing previous milestones. Supported by renowned investor Warren Buffett, BYD sold over 700,000 new energy vehicles between April and June, nearly doubling its sales compared to the same period last year. This exceptional achievement has propelled BYD to become the leading EV brand in China, outperforming Tesla according to the CPCA's rankings. In terms of battery-powered EVs specifically, BYD's sales figure of 352,163 vehicles in the second quarter outpaced Tesla China's sales of just under 250,000.

Also Read: Tesla Exceeds Second-Quarter Delivery Estimates with Record Vehicle Deliveries

Background:

The Biden administration introduced export controls in October, prohibiting Chinese companies from purchasing advanced chips and chip-making equipment without a license, citing national security reasons. The restrictions were aimed at safeguarding US interests in various sectors, including smartphones, self-driving cars, advanced computing, and weapons manufacturing. To effectively implement the controls, the participation of key suppliers from the Netherlands and Japan was crucial. China, in response, took retaliatory actions, such as launching a cybersecurity probe into Micron, a major US memory chipmaker, and banning the company from selling to Chinese firms involved in critical infrastructure projects.

The Significance of Gallium and Germanium:

Gallium is a soft, silvery metal widely used in semiconductors and light-emitting diodes. Germanium, a hard metalloid, is crucial in the production of optical fibers for transmitting light and electronic data. Although not classified as rare earths, these materials are expensive to mine or produce. They are typically obtained as byproducts of mining common metals like aluminum, zinc, and copper, processed in countries with appropriate facilities.

China's Dominance and Market Impact:

China is the world's leading producer of gallium and germanium, accounting for a staggering 98% of global gallium production and 68% of refined germanium production, as per the US Geological Survey. China's market dominance stems from its economies of scale, integrated mining and processing operations, and state subsidies, which allow it to export processed minerals at lower costs compared to other operators.

The announcement of export controls on gallium and germanium had an immediate effect on the market. Chinese producers of these raw materials experienced a significant surge in their stock prices. Additionally, Australian rare earths producers also saw an increase, as investors anticipated potential export curbs on rare earths, another group of strategically important minerals.

Impact on the Chip War:

The United States heavily relies on China for gallium and germanium, with more than 50% of these materials imported from China in 2021, according to the US Geological Survey. China's export controls on gallium and germanium are seen as a warning shot to the United States, Japan, the Netherlands, and other countries involved in high-end chip production. The objective is to deter these countries from imposing further restrictions on Chinese access to advanced chips and related technologies.

The Road Ahead:

Despite the potential impact of China's export controls, alternative producers and substitute materials provide some buffer for the United States and its allies. The US imports a considerable amount of gallium from the United Kingdom and Germany, while Belgium and Germany are significant suppliers of germanium. These alternative sources help mitigate the risks associated with China's controls.

Looking ahead, industry analysts speculate that if China's current actions fail to yield the desired results, rare earths could be the next target of export curbs. However, imposing such restrictions carries a double-edged sword, as past attempts by China to leverage its rare earth dominance resulted in reduced availability and increased prices. Higher prices incentivized mining and processing ventures outside of China, ultimately diminishing China's global market share.

Conclusion: China's implementation of export controls on gallium and germanium marks a significant escalation in the ongoing chip war. The implications of these measures are yet to fully unfold, and the response of the United States and other countries will shape the future dynamics of the conflict. As the battle for technological supremacy continues, the global chipmaking industry braces itself for further disruptions and uncertainties.

Also Read: Understanding the Growth Dynamics: A Comparative Analysis of the Indian and Chinese Economies

Investor attention is now shifting towards upcoming central bank decisions later this week, which hold potential implications for the market.

The dollar index strengthens by 0.28% to reach 103.21, recovering from its four-week low of 102.66 observed on Wednesday. The recovery comes after the Fed's decision to maintain interest rates while signaling a possible 50 basis point increase by the end of December.

The European Central Bank is expected to announce its next rate decision on Thursday, with market expectations leaning towards a 25 basis point hike and another increase in July, followed by a pause for the remainder of the year.

On Friday, the Bank of Japan will release its decision, anticipated to maintain an ultra-dovish stance and yield curve control settings.

Bank of Singapore currency strategist Sim Moh Siong suggests that the Fed's announcement implies a "hawkish pause" and signals the tightening of monetary policy. This stance could potentially support the dollar in the near term.

Amid these developments, the euro experiences a 0.12% decline against the dollar, settling at $1.0818. Conversely, it strengthens by 0.35% against the Japanese yen, reaching 152.26 yen.

The yen, on the other hand, weakens against the dollar, dropping 0.46% to $140.735.

New Zealand's kiwi dollar faces a decline of 0.68% against the dollar, reaching $0.6170. This decline comes in the wake of data revealing that the country's economy entered a technical recession in the first quarter.

China's yuan also slides, experiencing a 0.1% decline and reaching 7.1872 per dollar, marking its weakest point since November. This decline follows the People's Bank of China (PBOC) decision to cut the borrowing costs of its medium-term policy loans for the first time in 10 months. The PBOC had also reduced the short-term policy lending rate earlier in the week.

Bank of Singapore's Sim Moh Siong points out that there is a high expectation for broader stimulus measures to support China's economy following the recent rate cut.

Also Read: Dollar Stumbles Ahead of Inflation Data, Yuan Slips on Rate Cut

• Morgan Stanley's top stock strategist, Mike Wilson, predicts further stock market declines.

• Two key factors driving the decline: the possibility of a recession or the Federal Reserve maintaining high-interest rates.

• Both factors are likely to negatively impact corporate earnings.

• Wilson warns that corporate earnings could fall below estimates.

Morgan Stanley's top stock strategist, Mike Wilson, is warning that stocks will likely fall further due to two factors: the possibility of a recession or the Federal Reserve keeping interest rates high. These headwinds are likely to weigh on corporate earnings and cause them to fall below estimates. While recent stock market sentiment has been upbeat, Wilson believes investors are expecting interest rate cuts and durable growth, which are both unlikely. He warns of a "fire-and-ice" scenario where high inflation and the possibility of a recession will make it a difficult environment for stocks. Wilson predicts the worst earnings recession since 2008 could hit the market this year, causing stocks to fall 26%.

Investors Expect the Best of Both Worlds

Wilson points out that investors are currently expecting both interest rate cuts and durable growth, despite the probability of both happening being low. While this may be encouraging for the stock market, it is unlikely to occur, leading to trouble for corporate earnings and stocks.

Fire-and-Ice Narrative

Wilson previously warned of a "fire-and-ice" scenario, where high inflation and the possibility of a recession will weigh on corporate earnings. He believes this scenario is becoming more likely, and the negative impact on stocks will follow.

Worst Earnings Recession Since 2008

Wilson predicts that the worst earnings recession since 2008 could hit the market this year, causing stocks to fall 26%. He bases this prediction on leading indicators pointing to downward trends in earnings-per-share margins in the coming months.

Federal Reserve Actions

The Federal Reserve has already hiked interest rates, and investors are pricing in a 33% chance of a rate cut in July. However, other Wall Street strategists believe the Fed will pause and keep rates elevated. High-interest rates have already raised the odds of a recession and negatively impacted corporate profits by increasing the cost of borrowing.

Conclusion:

Wilson's warning of economic headwinds likely to impact the stock market reinforces the importance of diversifying investment portfolios. A well-diversified portfolio can help mitigate the impact of market fluctuations caused by factors outside of investors' control.

Also Read: Unleashing the Oracle of Omaha's Success: The Journey of Warren Buffett

Top 10 Cryptocurrencies Experience Loss of Momentum:

Bitcoin, the world's largest cryptocurrency, experienced a sharp drop of 1.34% to reach US$28,594, failing to cross the resistance level of US$30,000. The decrease occurred in the 24 hours leading up to 09:00 a.m. in Hong Kong, according to CoinMarketCap data. Ether, the second-largest cryptocurrency, also faced a similar setback. It dropped by 1.34% to reach US$1,882, inching down 0.10% for the week. The Ethereum Foundation, as per Etherscan data, transferred around 15,000 Ether (US$30 million) to crypto exchange Kraken, a move that usually precedes sales.

Except for Litecoin, which rose 0.71% to US$84.48, other top 10 non-stablecoin cryptocurrencies traded flat to lower for the past 24 hours. XRP led the losers, declining by 1.88% to US$0.4514, and moving down 4.31% for the week. Polkadot also saw a price drop of 0.40% to reach US$5.64, traded down 4.30% for the past seven days. However, despite the drop in price, the Polkadot blockchain is gaining acceptance from traditional finance. Deloitte, a renowned accounting firm among the Big Four, recently declared its adoption of the KLT protocol, a parachain on the Polkadot network. The primary aim of the integration is to upgrade the verification process for the company's Know Your Customer (KYC) and Know Your Business (KYB) checks.

The total crypto market capitalization fell 1.03% to US$1.18 trillion in the past 24 hours. The total trading volume fell 24.79% to US$28.93 billion. The downward trend in the crypto market might increase with the US President Joe Biden's push for a tax on cryptocurrency miners equivalent to 30% of the cost of the power they use. Miners may need to sell more Bitcoin to stay profitable, adding downward pressure to the crypto market.

NFT Market Shows Signs of Decline as Wash Trades Surge

The non-fungible token (NFT) market performance can be measured through indexes managed by CryptoSlam, which is a sister company of Forkast.News under the Forkast.Labs umbrella. The Forkast 500 NFT index dropped by 1.81% to reach 3,524.43 within a span of 24 hours, while it plummeted 5.59% for the week.

In the Ethereum blockchain, there was an increase of 1.69% in NFT sales during the 24-hour period, with the sales volume reaching US$14.99 million. However, the data from CryptoSlam reveals that "wash trades" of US$11.11 million, which increased by 30.27%, were also recorded. These trades involve an investor buying and selling an asset to manipulate prices and generate misleading trading volume, which is illegal in the U.S. securities markets.

Forkast Labs NFT strategist, Yehudah Petscher, explained that wash trades still make up a significant portion of monthly transactions, and are primarily driven by traders farming points on the Blur marketplace. According to his observations, the Forkast 500 index, which excludes wash sales, revealed a decline of more than 2%, indicating a reduction in the overall worth of the NFT market, despite the fact that the total USD volume of global NFT sales grew in the past week.

US stock futures mixed, concerns on debt default loom

At 9:00 a.m. in Hong Kong, U.S. stock futures were trading with little change, with the Dow Jones Industrial Average futures dropping 0.07%, the S&P 500 futures decreasing 0.10%, and the Nasdaq Composite futures inching down 0.09%. However, on Friday, the three U.S. stock indexes experienced a surge, fueled by strong earnings at Apple and a 4.69% increase in the company's share price. In addition, concerns about the U.S. banking sector were somewhat relieved after JPMorgan Chase upgraded the outlook of three U.S. regional banks, stating that their stock prices were "substantially mispriced," according to Bloomberg. Furthermore, the share price of PacWest Bancorp rose by 81% on Friday following a 50% decline the previous day.

According to Bloomberg on Sunday, April's Consumer Price Index (CPI) figures, to be released on Wednesday, are predicted to increase by 5.5% on a yearly basis, slightly lower than the previous month's 5.6% rise. This inflation rate is being monitored as an indicator of whether the Federal Reserve will halt its interest rate hikes in June. Meanwhile, concerns persist that the United States government may default on its debt as early as June, with U.S. Treasury Secretary Janet Yellen cautioning on Sunday that a constitutional crisis may arise if Congress does not raise the debt ceiling on time, according to Reuters.

According to Mikkel Morch, Chairman and Non-Executive Director at crypto hedge fund ARK36, in an emailed statement on Friday, the potential default of the U.S. government may "negatively impact the price of Bitcoin and other cryptocurrencies as part of a further risk-off approach by investors." The Fed's next move on interest rates is due on June 14, with analysts at the CME Group now predicting a 90.4% probability that the Fed will maintain interest rates at 5% to 5.25%, and a 9.6% probability of another 25 basis-point rate hike.

Read Also: Morgan Stanley Announces Plan to Lay Off 3,000 Employees as Wall Street Continues to Cut Jobs

• Sources indicate that Morgan Stanley intends to cut 3,000 jobs by June-end

• The job cuts planned by Morgan Stanley, which are set to take place by the end of June, will affect approximately 5% of the bank's workforce in New York, excluding certain groups such as financial advisors and support staff who will be spared from the layoffs, according to an individual familiar with the matter.

• In the past few weeks, several major banks, such as Citigroup and Bank of America, as well as smaller financial advisory firms like Lazard, have either announced job cuts or implemented plans to do so.

Top advisory firms on Wall Street, including Morgan Stanley, Bank of America, and Citigroup, are turning to job cuts as the slump in IPOs and mergers deepens this year. Morgan Stanley, according to a source with knowledge of the plans, is set to eliminate approximately 3,000 positions by the end of June. These cuts equate to roughly 5% of the New York-based bank's workforce when excluding the financial advisors and support staff who will be spared in the cuts.

The banking and trading staff are expected to be impacted the most by the layoffs, as Bloomberg reported earlier. The pandemic's historic boom in deals was followed by a bust that began last year after the Federal Reserve started raising rates to hit the brakes on an overheating economy. IPOs, debt issuance, and mergers that feed Wall Street have all remained muted this year, with IPO volumes 74% lower than last year, according to Dealogic data.

Morgan Stanley's job cuts demonstrate that Wall Street is wrestling with expenses as the slump drags on for longer than expected. The bank already reduced about 2% of its workforce in December, as reported by CNBC. In particular, the rising costs and falling revenue in the firm's investment bank and wealth management division hurt profit margins.

The bank's moves aren't unique. The industry's job cuts began in September when Goldman Sachs reintroduced the practice of culling low performers. Nearly all the major Wall Street firms followed, and Goldman itself had to resort to another, deeper round of layoffs in January.

In recent weeks, Citigroup and Bank of America have cut a few hundred jobs each, relatively surgical cuts that should position the banks well when a rebound in deals finally arrives. Furthermore, Lazard, a top boutique advisor, has announced that it plans to cut 10% of its workforce this year due to restrained capital markets activity and wage inflation that pumped up salaries across banking.

In conclusion, the current job cuts on Wall Street suggest that the industry is grappling with expenses as the slump continues. It is expected that the job cuts will continue in the near future, and other top advisory firms may follow suit to weather the impact of the prolonged slump.

• Wall Street closely monitoring the banking sector due to concerns over First Republic Bank's financial health.

• Ongoing turbulence in the financial sector, including a debt ceiling standoff in Washington.

• A plethora of economic data to be released, including weekly jobless claims, mortgage rates, and pending home sales, as well as the release of first-quarter GDP figures.

• Several major companies are scheduled to release their quarterly earnings reports today, including Amazon, American Airlines, Samsung, Barclays, Unilever, Activision Blizzard, Southwest Airlines, Crocs, Hershey, Domino’s, MasterCard, Keurig, Dr. Pepper, Snap, Mondelez, Capital One, and T-Mobile.

• Stay tuned for live updates and expert analysis on these latest developments.

Key Points to Note:

• The S&P 500 index could potentially tumble 22% in the coming months, so investors should not wait any longer to exit the stock rally.
• The recent rally has been driven by technical factors and narratives, but recessions are not necessarily bad for revenue or earnings.
• Experts such as Jeremy Grantham and Morgan Stanley's top stock picker Mike Wilson have warned that the rally is unlikely to last.

Troy Gayeski says that the strongest rallies have always been in bear markets, which are usually driven by technical factors. He thinks that the recent narrative surrounding inflation slowing down and the potential for a recession doesn't make sense.

While the S&P 500 has advanced about 8% this year, Gayeski expects the bear market to be meaningfully worse than the 2018 correction or the shocks experienced in the post-Great Financial Crisis period, but not as bad as the financial crisis.