(Bloomberg) — Global equities neared record highs on Monday as investors braced for what is traditionally seen as the most challenging month yet for stocks.
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Europe’s Stoxx 600 index pared its biggest losses since the start of the session after closing at an all-time high on Friday. Volkswagen AG rose 1.3% after the carmaker said it was considering an unprecedented plant closure in Germany, while Rightmove Plc rose 27% in London on takeover interest from Rupert Murdoch’s REA Group Ltd.
US equity futures were unchanged. The dollar edged higher after its worst month of the year, while cash Treasuries closed for the US Labor Day holiday. Mexican stocks gained as Brazilian assets retreated.
Historically, September has been the poorest month for stocks in the past four years, according to data compiled by Bloomberg. Wall Street’s gauge of fear — the Cboe Volatility Index, or VIX — has risen every September since 2021.
The trend could persist, especially with the US jobs report due on Friday, which will provide important insight into how quickly or slowly the Federal Reserve can cut rates and as the US election campaign progresses. Traders are pricing in a U.S. easing cycle that will begin this month, with about a one-in-four chance of a 50-basis-point cut, according to data compiled by Bloomberg.
“I think the market pretty much knows what’s going to happen — there’s going to be some cuts,” Fiona Boal, head of global equities at S&P Dow Jones Indices, told Bloomberg Television. “As we go through the fall, we’re going to see the VIX think more about the market, think about political issues.”
JPMorgan Chase & Co. strategists warned that the equity market rally could stall even if the Fed starts cutting rates. Any policy easing would be in response to the slowdown in growth, while the seasonal trend for September would be another obstacle, the team led by Mislav Matejka wrote in a note.
“We are not out of the woods yet,” said Matejka, citing his preference for the defense sector against the backdrop of a decline in bond yields. “Sentiment and position indicators appear to be away from interesting political and geopolitical uncertainties, and seasonality is more challenging.”
Job data potentially points to a very gradual cooling of the US labor market could lead traders to set expectations to cut rates to benefit the dollar, according to Valentin Marinov, head of G-10 FX strategy at Credit Agricole CIB.
“The market may be leaning too dovish going into the September Fed meeting,” Marinov told Bloomberg Television. “The dollar could recover some ground if the market realizes that the Fed will be more cautious.”
Benchmarks for Asian shares retreated on worries about the health of the economy in China, where a sluggish property market has dampened domestic demand.
“I think there is a big problem – now everyone knows,” Hao Hong, chief economist at Grow Investment Group, told Bloomberg’s David Ingles and Yvonne Man in an interview. “The government needs to do more.”
In commodities, oil fluctuated between small gains and losses as traders weighed a planned production increase from OPEC+ next month, economic pressure in China and lower output in Libya.
This week’s highlights:
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US markets are closed for the Labor Day holiday on Monday
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South Korea CPI, Tuesday
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Swiss GDP, CPI, Tuesday
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South Africa’s GDP, Tuesday
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US construction spending, ISM Manufacturing index, Tuesday
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Mexican unemployment, Tuesday
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Brazil’s GDP, Tuesday
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Chile’s tariff decision, Tuesday
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Australian GDP, Wednesday
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China Caixin services PMI, Wednesday
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Bloomberg CEO Forum in Jakarta, Wednesday
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Eurozone HCOB services PMI, PPI, Wednesday
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Polish tariff decision, Wednesday
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Fed Beige Book, Wednesday
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Canadian tariff decision, Wednesday
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South Korea’s GDP, Thursday
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Malaysia tariff decision, Thursday
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CPI Philippines, Thursday
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Taiwan CPI, Thursday
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CPI Thailand, Thursday
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Eurozone retail sales on Thursday
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German factory orders, Thursday
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US initial jobless claims, ADP employment, ISM services index, Thursday
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Euro Zone GDP, Friday
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US nonfarm payrolls, Friday
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Canadian unemployment, there
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CPI Chile, Friday
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CPI Colombia, Friday
Some of the main movements in the market:
Savings
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S&P 500 futures were unchanged as of 15:49 New York time
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Futures on the Dow Jones Industrial Average were little changed
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The MSCI World Index was little changed
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Nasdaq 100 futures rose 0.1%
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MSCI Asia Pacific index down 0.4%
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MSCI Emerging Markets index down 0.3%
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Mexico’s S&P/BMV IPC rose 0.9%
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Ibovespa index down 0.9%
currency
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The Bloomberg Dollar Spot Index was little changed
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The euro rose 0.2%, more than its closing gain since August 23
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The British pound rose 0.2% to $1.3147
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If Japan fell 0.5%, down for the fourth day in a row, the longest losing streak since June 21
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The offshore yuan fell 0.4%, more than its closing loss since August 15
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The Mexican peso fell 0.4% to 19.8002
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The Brazilian real fell 0.1% to 5.613 per dollar
Cryptocurrencies
Bond
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The yield on 10-year Treasuries was little changed at 3.90%
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Germany’s 10-year yield advanced four basis points to 2.34%
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UK 10-year yields advanced four basis points to 4.05%
Commodity
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West Texas Intermediate crude rose 0.7% to $74.04 a barrel
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Spot gold fell 0.2% to $2,499.51 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Catherine Bosley, Sagarika Jaisinghani and Sebastian Boyd.
(Correct the spelling of Hao Hong’s name)
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