Stocks fluctuate as traders wait for indications of rate cuts: Markets close in line

(Bloomberg) — Stocks fell as investors waited for an annual review of U.S. employment data and Federal Reserve meeting minutes for further clues on interest rate cuts.

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Europe’s Stoxx 600 edged higher and US stock futures showed small moves. Ten-year Treasury yields were flat, while a gauge of dollar strength halted a three-day streak of declines.

Expectations are rising ahead of Fed Chairman Jerome Powell’s Jackson Hole speech at the end of the week, which could decide whether the markets’ blistering recovery will continue. Bond traders are betting big on a rally in the Treasury market, driven by expectations that a cycle of Fed rate cuts is approaching.

The market moves are “indicative of investors’ cautious wait” for Powell’s message, said Homin Lee, senior macro strategist at Banque Lombard Odier & Cie SA in Singapore. Wednesday’s data could “call into question the underlying strength of the U.S. labor market.”

Signs of weakness in the annual U.S. payrolls recalibration could point to the need for aggressive Fed rate cuts and bring back memories of August’s market meltdown after a disappointing payrolls report.

Economists at Goldman Sachs Group Inc. and Wells Fargo & Co. expect the government’s preliminary benchmark revisions on Wednesday to show that wage growth in the year to March was at least 600,000 weaker than currently estimated. While forecasters at JPMorgan Chase & Co. seeing a drop of about 360,000, Goldman indicates it could be as high as a million.

Chinese technology

Stocks in Asia posted a three-day winning streak, dragged along by Chinese stocks in Hong Kong.

Technology stocks fell on concerns about the country’s consumption prospects, Walmart Inc.’s planned sale. of his interest in JD.com Inc. and poor profits from key players including Kuaishou Technology.

Brent crude fell a third day due to a possible ceasefire in Gaza. Gold held steady around a record high after the dollar’s recent string of losses on interest rate cut expectations. A weaker dollar is generally good for gold because it is priced in US currency.

Main events this week:

• Minutes of the US Fed’s preliminary annual review of payrolls from the BLS, Wednesday

• HCOB PMI eurozone, consumer confidence, Thursday

• ECB will publish the report on the July interest rate decision on Thursday

• U.S. initial jobless claims, existing home sales, S&P Global PMI, Thursday

• Japanese CPI, Friday

• Bank of Japan Governor Kazuo Ueda will attend a special session of Japan’s parliament on Friday to discuss the July 31 rate hike

• Sales of new homes in the US, Friday

• Fed Chairman Jerome Powell will speak at the Jackson Hole Symposium in Wyoming on Friday

The story continues

Some of the major moves in the markets:

Stocks

• The Stoxx Europe 600 was little changed at 8.13am London time

• Futures on the S&P 500 were little changed

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average rose 0.2%

• The MSCI Asia Pacific Index fell 0.4%

• The MSCI Emerging Markets Index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro was little changed at $1.1123

• The Japanese yen fell 0.4% to 145.83 per dollar

• The offshore yuan fell 0.2% to 7.1291 per dollar

• The British pound was little changed at $1.3028

Cryptocurrencies

• Bitcoin rose 0.5% to $59,614.73

• Ether rose 0.4% to $2,601.34

Bonds

• The yield on 10-year government bonds was little changed at 3.81%

• The German ten-year yield remained little changed at 2.21%

• The British ten-year yield remained little changed at 3.91%

Raw materials

This story was produced with the help of Bloomberg Automation.

–With help from Rob Verdonck and Jeanny Yu.

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