Markets remain cautious due to geopolitics and ahead of the annual Jackson Hole symposium

On Monday, the Dow Jones (US30) fell by 0.08%, and the S&P 500 (US500) dropped by 0.01%. The technology-focused Nasdaq (US100) closed slightly higher, up 0.01%. US equities showed mixed performance amid growing geopolitical concerns. European leaders and the President of Ukraine met with US President Trump in Washington to discuss potential terms for ending the Russian-Ukrainian war. The outcome could have significant macroeconomic consequences for tariffs and oil prices, and it could also profoundly affect European security.

European stock markets saw mixed movement on Monday. Germany’s DAX (DE40) declined by 0.18%, France’s CAC 40 (FR 40) was down by 0.50%, Spain’s IBEX35 (ES35) fell by 0.17%, and the UK’s FTSE 100 (UK100) closed up 0.21%.

European equities closed slightly lower overall as markets avoided risky assets in anticipation of a week of events that could shift the geopolitical landscape and the global rate outlook. Federal Reserve Chair Jerome Powell may offer guidance on the interest rate outlook at the Jackson Hole symposium, as softer labor market data has strengthened the position of dissenting voices within the FOMC. Meanwhile, Ukrainian President Zelenskyy and European leaders were scheduled to meet with US President Trump in Washington to discuss a potential peace agreement.

WTI crude oil prices rose by 1% to reach $63.4 a barrel on Monday following the Washington talks between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy, which took place after an inconclusive US-Russia summit in Alaska last Friday. Investors are closely monitoring the potential impact of the talks on global oil supply, including possible changes in sanctions or moves toward reconciliation. Concerns over energy flows were reignited after White House advisor Peter Navarro criticized India’s purchases of Russian oil.

Asian markets were mostly higher yesterday. Japan’s Nikkei 225 (JP225) rose by 0.77%, China’s FTSE China A50 (CHA50) climbed 0.50%, Hong Kong’s Hang Seng (HK50) fell by 0.37%, and Australia’s ASX 200 (AU200) closed with a positive result of 0.23%.

On Tuesday, the New Zealand dollar fluctuated around the $0.593 mark, staying in a narrow range as traders awaited the RBNZ’s rate decision. Markets have already priced in a potential 25 basis point rate cut to 3%, which would extend the current easing cycle to 250 basis points. Supporting a further easing is a 0.6% quarter-over-quarter rise in producer prices in Q2, which fell short of the 1% growth expected and was down from a 2.1% increase in Q1. Analysts, however, note that policy settings are close to neutral, and the effects of previous cuts are still working their way through the economy.

The offshore yuan held near 7.19 per dollar on Tuesday, trading within a tight range as the market’s focus shifted to the US Federal Reserve’s Jackson Hole symposium later this week for clues on policy direction and potential impacts on global currencies. Markets were watching the dollar amid expectations of a Fed pivot, with the probability of a 25 basis point rate cut in September now at 84%, down from 98% last week following stronger US wholesale and retail trade data, which tempered hopes for a more significant move. In China, markets are now awaiting this week’s loan prime rate decision, with expectations leaning toward the rate remaining unchanged.

The Westpac-Melbourne Institute Australian Consumer Sentiment Index rose by 5.7% in August 2025 to 98.5, its highest level since February 2022. Sentiment was boosted by the Reserve Bank’s 75 basis point rate cut since January and a more optimistic policy tone. The head of Australian macro expectations said that a long period of consumer pessimism may be ending, though additional easing might be needed to maintain momentum. However, he noted that policymakers are not in urgent need of further cuts.