Global stock markets had a positive close last week as bond yields retreated from decades-high levels and took pressure off the equity markets. Wall Street snapped a three-week losing streak amid dip-buys in growth stocks following a slew of weaker-than-expected economic data, which re-ignited hopes for the Fed to end its rate hiking cycle sooner. It will be a shortened week on the US markets as Monday is a public holiday for Labor Day. The market trend could go with the flow in thin liquidities.
The focus can be shifted back to the APAC region. China’s mortgage rate cuts and stimulus measures to support its private firms did not offer much support to market sentiment, though the selloff eased on the Chinese stock markets. Investors need more evidence for a materialized economic rebound. This week, China will report a bunch of influential economic data, including CPI, PPI, Trade Balance, and New Yuan loans, to guage the country’s economic trajectory.
The weaker-than-expected July CPI data sent a positive note to the local stock markets, with ASX 200 up 2.3% for the week. However, the Austrlian dollar Elsewhere, the Australian markets are facing a busy week as the RBA is set to decide on the Official Cash Rate (OCR), and the second-quarter GDP will also be eyed.
What are we watching?
- Bond yields retreat: The global government bond yields retreated from the recent highs, driven by declining inflation, underwhelming economic data, and bets for a sooner end of central banks’ hiking cycle.
- US dollar losses steam: The rally in the US dollar has taken a breather as the US bond yields pulled back from decades-high levels, while the commodity currencies, such as the Australian dollar, Canadian dollar, and the New Zealand dollar, consolidated above their recent lows.
- Dip-buys in tech: Growth stocks outperformed other sectors last week as tech giants saw a sharp rebound. Investors may have rotated back to the AI-powered stocks amid the rebounding tailwind.
- Oil popped: Crude oil price reclaimed a month-high on supply concerns as OPEC+ will likely further cut their outputs to stabilize the oil markets, while a softened USD lifted commodity prices in general. Plus, the US oil inventory saw a much larger draw than expected.