Rate cut bets wane ahead of Jackson Hole

General market commentary

US large-cap equity markets extended their losses, with the technology-heavy Nasdaq down 0.4% and the S&P 500 falling for the fifth time in six sessions. The Dow Jones also slipped 0.3%, as sentiment remained pressured by renewed weakness in the so-called "Magnificent Seven" equities and a sharp post-earnings sell-off in Walmart, whose shares dropped 4.5% after disappointing quarterly results despite an upgraded full-year outlook. Most sectors ended in the red, led by consumer staples, with only energy and materials making gains.

Bond markets also sold off, with two-year US Treasury yields climbing to 3.8% and ten-year yields edging up to 4.33%, as investors pared back expectations for near-term rate cuts following robust economic data and hawkish comments from Federal Reserve officials. The dollar strengthened against major currencies, while oil prices inched higher, with WTI crude trading at $63 per barrel. Global equities also softened, with declines across Europe, Japan and emerging markets, as investors awaited Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium for clues on the policy outlook.

Latest market and economic update

Asian equities posted modest gains on Friday as investors awaited Powell’s Jackson Hole speech. Chinese markets led weekly advances, with the CSI300 at a 10-month high on stimulus hopes. Japan’s Nikkei was flat as sticky inflation pressured the BOJ. The Hang Seng edged higher but lagged on tech weakness, while Australia, Korea and India saw mixed weekly moves.

US equity index futures were steady overnight as investors awaited Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium for policy signals. S&P 500 futures inched up to 6,391.50, Dow Jones futures rose 0.1% to 44,890.0, while Nasdaq 100 futures were flat at 23,217.0, reflecting investor caution.

European equities eased as bond yields climbed and investors digested progress on a US-EU trade deal and stronger economic data. The STOXX 50 slipped 0.3% to 5,459, while the STOXX 600 was flat near recent highs. Autos and pharmaceuticals edged lower, even as Eurozone PMI hit a 15-month peak, bolstering hawkish ECB voices.

The dollar index held firm above 98.6 on Friday, near a two-week high, as investors awaited Jerome Powell’s Jackson Hole speech for policy cues. Rate futures price a 75% chance of a September cut, down from over 90% last week. The euro slipped, with EUR/USD trading at 1.1610, reflecting continued dollar strength.

Oil prices eased slightly in Asian trade this morning ahead of Federal Reserve Chair Powell’s Jackson Hole speech. Brent fell to $67.51 and WTI to $62.95, though both are set for weekly gains of 1.5–3%. Prices were supported by strong US demand and stalled Russia-Ukraine peace talks, which raised potential supply risks.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

TSMC is weighing returning its $6.6 billion US subsidies if the Trump administration demands an equity stake, the Wall Street Journal reported. The talks follow confirmation that Washington will take a 10% stake in Intel under the CHIPS Act. While Trump backs more local chipmaking, reports suggest firms like TSMC and Micron may avoid such requirements.

The Trump administration is reportedly considering redirecting $2 billion from the CHIPS Act to critical minerals projects, aiming to reduce US reliance on China. The reallocation would use existing semiconductor funds and expand Commerce Secretary Howard Lutnick’s role, creating a more centralised approach to government minerals policy.

NVIDIA has asked some suppliers to pause production of its China-specific H20 AI chip amid heightened scrutiny from Beijing, The Information reported. Chinese authorities recently questioned major developers on their H20 purchases, citing security concerns. Despite this, NVIDIA continues to view China as a key market, with CEO Jensen Huang engaging local officials.

Google has secured a six-year cloud computing deal with Meta worth over $10 billion, its second major AI-related agreement after OpenAI. Under the deal, Meta will use Google Cloud’s servers, storage and networking. The move supports Meta’s expanded AI data centre plans, while Google Cloud posted a 32% rise in second-quarter revenue, exceeding expectations.

Boeing is reportedly in talks to sell up to 500 jets to China, potentially marking its first major order there since former President Trump’s previous term. The deal, still under negotiation over models and delivery schedules, could feature in broader US-China trade discussions and help Boeing close the gap with Airbus in the world’s second-largest aviation market.

Loop Capital cut its Apple price target to $226, maintaining a Hold rating, citing shifts toward higher-end iPhone 17 models and weaker demand for lower-tier devices. September quarter shipments are forecast to rise 3 million units, but average selling prices fall, with full-year 2025 revenue and EPS slightly below prior estimates amid updated model expectations.

Bernstein upgraded Safran to “Outperform” from “Market Perform” and raised its price target to €370, citing strong aftermarket growth, particularly for the CFM56 engine. Revenue is projected to rise to €34.7 billion by 2026, with EBIT and free cash flow also increasing. Additional upside is seen in the LEAP engine, defence, and interiors segments.

Wedbush downgraded Maplebear, Instacart’s parent, to Underperform, citing competition from Amazon’s same-day grocery delivery. The price target was cut to $42, with slower growth and margin pressures expected. Instacart’s market share has fallen, and higher marketing costs may further limit its ability to meet long-term targets.

Upcoming data and events

Markets focus today will be on Federal Reserve Chair Powell’s speech at Jackson Hole for US policy cues and German GDP data for Eurozone insight, with investors monitoring these releases alongside broader economic indicators to gauge market direction.

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