Major bourses in Europe failed to hold early gains on Monday, with the Euro Stoxx 50 Index losing 0.1%, as optimism regarding China’s property support measures faded.  Meanwhile, traders increasingly bet the Fed is done with interest rate hikes while the ECB is mostly seen leaving borrowing costs unchanged this month.  Utilities and financials were the biggest laggards while tech and industrials were the top performers.  On the other side of the Atlantic, US equity markets remained closed for the Labour Day holiday. 

Summary for 05.09.2023 

  • Asian equity markets were broadly lower this morning with Chinese shares retreating on continued concerns over slowing growth and a property sector meltdown.  Meanwhile, hot inflation readings from across the region also pushed up concerns over higher interest rates. 
  • European equities are on track for a muted open as a rally in Chinese shares stalled on soft economic data.  Meantime, US equity futures were muted this morning to start the holiday-shortened week, while investors look for fresh cues that could fuel the recent market rally further. 
  • Oil prices fell slightly from their strongest levels for the year on Tuesday as markets waited on Russia and the OPEC+ to outline more production cuts, while focus also remained on more Chinese cues this week. 
  • The Reserve Bank of Australia maintained its cash rate at 4.1% during its September meeting, extending the rate pause for the third successive month, in line with market consensus.  The board said that inflation in the country had passed its peak but the reading remains too high and will stay so for some time yet.  The central bank reiterated that some further monetary tightening may be needed to bring back inflation to the target range in a reasonable timeframe. 
  • The Caixin China General Service PMI slipped to 51.8 in August from 51.9 in July, missing market forecasts of 53.6.  It was the softest increase in service activity since the start of the year, amid mounting downward pressure on the economy. 
  • Retail sales in the UK jumped 4.3% on a like-for-like basis in August from a year ago, accelerating from a 1.8% gain in July and at the fastest pace in four months.  The rebound came as holiday purchases such as health and beauty products boosted consumer spending.  Still, the August figure came in below the 6.8% consumer inflation rate in the UK for July, indicating that sales fell in volume terms. 
  • Christine Lagarde avoided giving an indication of whether the European Central Bank will raise or hold interest rates next week as she delivered a speech in London.  ECB officials meeting on the 14th of September must assess if a recent slowdown of the economy is sufficient to warrant a first pause in the relentless tightening cycle that began more than a year ago. 
  • Goldman Sachs this morning lowered its probability that a US recession would start in the next 12 months to 15% from an earlier 20% forecast.  The investment bank said it expected a reacceleration in real disposable income next year on the back of continued solid job growth and rising real wages. 
  • Country Garden has made interest payments on two US dollar bonds just as a grace period was due to end on Tuesday, in a relief for the embattled developer and crisis-hit Chinese property sector.