An uptick in Treasury yields and mixed economic signals helped erase two days of gains for the S&P 500 Index and Nasdaq Composite on Friday – leaving both indices lower for a second-straight week – as investors readied for the Federal Reserve’s policy meeting later this week.  The S&P 500 was down 1.2% on Friday and 0.2% for the week, the Dow Jones Industrial Average was down 0.8% but up 0.1% for the week, while the Nasdaq Composite was down 1.6% for the day and 0.4% for the week.  Technology shares were among the market’s weakest performers Friday after Reuters reported Taiwan Semiconductor Manufacturing Co. had told its major suppliers to delay delivery of high-end chipmaking equipment because of concerns over demand.  Most market sectors were under pressure, including energy, despite crude oil futures extending a climb above $90 a barrel.  Meantime, European equities rose in the second week of September, with the Euro Stoxx 50 Index climbing 0.4%, as prospects of the ECB nearing the end of its monetary tightening cycle further boosted risk sentiment. 

Summary for 18.09.2023 

  • Most Asian shares fell on Monday as investors remained broadly risk-off before a string of major central bank events this week.  Hong Kong’s Hang Seng index was the worst performer among its peers, down 1.6% and in sight of a 10-month low amid renewed selling in property shares.  China Evergrande Group slid nearly 20% after the embattled developer delayed a decision to restructure its debt.  Elsewhere, shares in Australia and South Korea declined, while mainland China shares gained.  Japanese markets are closed for a holiday. 
  • European shares are headed for a muted start while US equity futures drifted flat to slightly positive this morning, as traders gear up for a busy week for central bank decisions. 
  • Oil prices rose for a third straight session this morning, buoyed by forecasts of a widening supply deficit in the fourth quarter after Saudi Arabia and Russia extended cuts and on optimism of a demand recovery in China.  Brent crude futures rose 0.4% to $94.32 a barrel while US West Texas Intermediate futures were at $91.30 a barrel, up 0.6%. 
  • Ursula von der Leyen, the head of the European Commission, visited Italy’s island of Lampedusa on Sunday after Giorgia Meloni’s call for extraordinary measures to curb a surge in migrants from northern Africa.  Von der Leyen acknowledged that the influx is a Europe-wide problem, and pledged to address it is a 10-point action plan, including support for managing the inflow and transfer of migrants, as well as stopping smugglers by bolstering air and sea surveillance.  
  • In the US, the University of Michigan consumer sentiment fell to 67.7 in September from 69.5 in the previous month, retreating further from the near-two-year high of 71.6 in July and missing market estimates of 69.1.  The figure aligns with slowing optimism among other forward-looking indicators. 
  • Industrial production in the US went up 0.4% from a month earlier in August, above market expectations of a 0.1% increase and compared with a downwardly revised 0.7% rise in July.   Capacity utilisation moved up to 79.7% in August, in line with its long-run average. 
  • The wage growth in the Eurozone eased slightly to 4.6% year-on-year during the second quarter of 2023, down from an upwardly revised 4.9% increase in the previous three-month period.  The rate continued to indicate mounting inflationary pressure in the bloc but was well below the average inflation rate for the same period, which stood at 6.2%, suggesting that real income continued to decline. 
  • Turkish President Tayyip Erdogan asked Tesla CEO Elon Musk to build a Tesla factory in Turkey, the country’s communications directorate said on Monday.  It cited Musk as saying that many Turkish suppliers are already working with Tesla and that Turkey was among the most important candidates for its next factory. 
  • Adobe shares fell 4.2% on Friday as its sales seemed to disappoint investors.  The software company’s higher-than-expected quarterly results failed to impress. 
  • Lennar Corp. shares were down about 2% Friday after reporting that rising interest rates had eaten into its margins.  The homebuilder also reported stronger-than-expected quarterly results.  Delta Air Lines shares fell about 0.7% on Thursday after the company cut its earnings forecast for the current quarter because of rising costs, a day after American Airlines lowered its profit outlook for similar reasons. 
  • This week, the financial landscape will be heavily influenced by the Federal Reserve’s interest rate decision on Wednesday.  Additionally, in the US, all eyes will be on the release of S&P Global PMI figures, as well as several housing indicators.  Furthermore, central banks in the UK, Japan, China, Turkey, Norway, and Brazil will be deliberating on their monetary policy direction.  Investors will also closely monitor inflation rates in the UK, Canada, and Japan, along with flash services and manufacturing PMI data for France, Germany, the UK, the Euro Area, Japan, and Australia.