Markets brace for EU, US inflation data

More signs of slowing momentum in the job market lifted US equities for a fourth straight session Wednesday, with the S&P 500 Index and the Nasdaq Composite ending near four-week highs, as investors grew increasingly confident the Federal Reserve may be done raising interest rates.  Meantime, European shares were a touch softer yesterday, with the Euro Stoxx 50 Index down 0.2%, after data showed an increase in inflation rates across Germany and Spain, bolstering expectations that the ECB’s tightening cycle might not end soon. 

Summary for 31.08.2023 

• Most Asian equities moved in a flat-to-low range this morning as mixed business activity data from China offset growing optimism over the Federal Reserve potentially ending its rate hike cycle.  Concerns over China’s property market also weighed, as Country Garden Holdings, China’s biggest property developer, logged a massive $7 billion loss and warned of a potential default. 
• European shares are headed for a steady open while US equity futures were little changed this morning as a slew of economic data is set to roll out on Thursday, including preliminary eurozone CPI numbers and US personal consumption data.  
• Oil prices eased on Thursday after data showed a drop in China’s manufacturing activity, with investors also eyeing a US personal consumption expenditure report due later in the day.  

• China’s manufacturing activity contracted for the fifth consecutive month in August, as calls grow for the government to take concrete steps to boost the economy.  The official manufacturing purchasing managers’ index rose slightly to 49.7 last month, in contraction but still an improvement over the 49.3 reading in July.  The nation’s manufacturers have been struggling for months because of a slump in global demand and subdued domestic spending.   
• The US economy grew at an annualised rate of 2.1% in the second quarter, compared to the preliminary figure of 2.4% and the first quarter’s expansion of 2.0%.  Downward revisions to both private inventory investment and nonresidential fixed investment were partially offset by an upward revision to state and local government spending.  
• Private businesses in the US hired 177,000 workers in August, the least in five months, missing market expectations of a 195,000 rise and following an upwardly revised 371,000 increase in July.   
• Contracts to purchase previously owned homes in the US increased by 0.9% month-over-month in July, marking the second consecutive month of increase and defying market expectations of a 0.6% drop, providing additional evidence that the housing market might be in the process of rebounding. 
• The German consumer price inflation rate moderated to 6.1% year-on-year in August, a marginal decline from 6.2% in the previous month and slightly above market expectations of 6.0T, a preliminary estimate showed.  Notably, the core rate was unchanged at 5.5%.  On a monthly basis, consumer prices advanced by 0.3% in August, the same pace as in the previous period. 

• Italian Prime Minister Giorgia Meloni’s coalition is considering selling minority stakes in selected state-owned companies to boost the country’s public finance.  Meloni told colleagues during a cabinet meeting on Monday that they need to pare back spending to pay for the government’s plan to cut taxes on wages and to help families in need. 
• Apple is testing the use of 3D printers to produce the steel chassis used by some of its upcoming smartwatches.  The technique would obviate the need to cut large slabs of metal into the product’s shape and would reduce the time it takes to build devices.  The new approach has the potential to streamline Apple’s supply chain and kick off a broader shift. 
• Salesforce late Wednesday reported stronger-than-expected fiscal second-quarter results, driven by double-digit subscription and support revenue growth, while it also raised its full-year financial outlook.  Shares rallied by more than 5% in extending trading. 
• Carvana, whose shares are up almost 1000% this year, rose more than 4% yesterday after its CEO increased his stake in the company.  The car-seller also announced same-day vehicle deliveries for the Charlotte, North Carolina region. 
• HP fell over 6% on Wednesday after the personal computer maker reported disappointing quarterly results.