InvestMacro

On Thursday, the Dow Jones (US30) Index rose by 0.36%, the S&P 500 (US500) gained 0.85%, and the tech-heavy Nasdaq (US100) closed up 0.60%. All three major indices closed at record highs, with expectations that ongoing inflation won’t prevent the Federal Reserve from easing rates next week. The August Consumer Price Index (CPI) report showed that consumer prices increased by 0.4% month-over-month, exceeding expectations, but the annual rate held at 2.9%, in line with projections. Signs of a cooling labor market were exacerbated by jobless claims, which rose by 27,000 to 263,000, the highest since 2021. Traders priced in a 93% chance of a quarter-point rate cut at the September 17th Fed meeting, while the odds of a more significant half-point hike increased.

European stock mostly went up on Thursday. The German DAX (DE40) rose by 0.30%, the French CAC 40 (FR40) closed up 0.80%, the Spanish IBEX35 (ES35) gained 0.68%, and the British FTSE 100 (UK100) closed up 0.78%. Frankfurt’s DAX Index rose on Thursday as investors weighed the expected decision by the European Central Bank (ECB) to hold rates steady. The ECB left its three key interest rates unchanged as expected: the deposit rate at 2.00%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%. Inflation remains close to the medium-term 2% target, and the overall outlook is unchanged from June. Among individual stocks, Airbus, Bayer, Heidelberg Materials, Zalando, and Deutsche Bank saw the largest gains, adding between 1% and almost 3%.

Sweden’s annual inflation rate in August 2025 rose to 1.1% from 0.8% in July, confirming preliminary estimates. This is the highest reading since February, although it remains below the Riksbank’s 2% target. On a monthly basis, consumer prices fell by 0.4%, the first decline in five months, reversing the 0.2% increase in July, in line with flash data.

WTI crude oil prices dropped more than 2% to $62.4 per barrel on Thursday, breaking a three-day rally. Concerns over US demand and a global supply surplus outweighed geopolitical risks in the Middle East and Ukraine. The International Energy Agency noted a larger-than-expected increase in supply driven by higher OPEC+ output, and the group itself confirmed plans to boost production from October. Additional pressure came from an unexpected increase of 3.9 million barrels in US crude oil inventories last week.

The US natural gas prices (XNG/USD) fell below the $3/MMBtu mark, nearing a two-week low due to weak LNG export demand and significant storage levels. Government data showed that for the week ending September 5th, storage volume exceeded the expected 71 billion cubic feet, compared to 36 billion cubic feet a year earlier and a five-year average of 56 billion cubic feet. Despite expectations of warmer weather and increased demand, surplus supplies continue to pressure the market.

Silver prices (XAG/USD) rose by 1% on Friday to $42 per ounce, hitting a new 14-year high, as strong expectations for a Federal Reserve rate cut next week supported demand. Markets are currently pricing in about a 93% probability of a 25 basis point rate cut at the September 17th Fed meeting, with the chance of a larger half-percent cut gradually rising. Safe-haven demand further supported precious metals amid ongoing geopolitical tensions.

Asian markets traded without a single trend yesterday. The Japanese Nikkei 225 (JP225) rose by 1.22%, China’s FTSE China A50 (CHA50) jumped 2.08%, Hong Kong’s Hang Seng (HK50) fell by 0.43%, and Australia’s ASX 200 (AU200) closed down 0.29%.

The offshore yuan weakened to 7.11 per dollar as renewed trade concerns negatively affected sentiment. The US has reportedly urged G7 countries to impose high tariffs – from 50% to 100% – on China and India for their continued purchases of Russian oil. This move is part of a broader Washington effort to pressure Moscow into peace talks over the war in Ukraine. In a separate development, China criticized Mexico’s plan to impose tariffs of up to 50% on vehicles and other imports from countries without free trade agreements, many of which are Chinese, calling the move discriminatory and subject to outside pressure.

By the end of Wednesday, the Dow Jones Index (US30) fell by 0.48%. The S&P 500 Index (US500) gained 0.30%. The Nasdaq (US100) Technology Index closed up 0.04%. The US stocks rose to new records on Wednesday, supported by lower inflation data and a strong Oracle report. The Producer Price Index for August fell by 0.1% against expectations of a 0.3% increase, the first monthly decline in four months. The annual Producer Price Index was 2.6%, below the expectations of 3.3%, which increased hopes that Thursday’s CPI report would confirm the disinflationary trend. The inflation surprise, combined with soft labor market data, fueled bets that the Fed could cut rates by 50 basis points next week instead of the expected quarter-point change.

Oracle shares surged 39% after the company announced a sharp increase in cloud service orders, driven by demand for artificial intelligence. The company’s value increased by $85 billion in a single day, a new record. Nvidia (+3.8%) and AMD (+2.4%) shares rose, while Apple shares fell by 3.2% after the launch of the new iPhone 17 was underwhelming.

European stock markets traded mixed on Wednesday. The German DAX (DE40) fell by 0.36%, the French CAC 40 (FR40) closed up 0.15%, the Spanish IBEX35 (ES35) gained 1.29%, and the British FTSE 100 (UK100) closed down 0.19%. The ECB is expected to leave borrowing costs unchanged today, although updates to economic expectations and guidance on the policy outlook will be closely watched. Geopolitical risks also remained in focus, with Israel striking Hamas targets in Qatar and Poland intercepting drones that entered its airspace during a Russian attack on Ukraine.

Annual inflation in Norway for August 2025 rose to 3.5%, the highest since February, compared to 3.3% in July and in line with expectations. On a monthly basis, the CPI fell by 0.6%, the first decline since March, offsetting the 0.8% increase in July, which was also in line with projections.

WTI crude oil prices rose more than 1.5% on Wednesday to $63.7 per barrel, posting a third consecutive gain as traders balanced geopolitics and economic signals. The momentum accelerated when President Trump questioned the Russian drone invasion of Polish airspace on social media, triggering short-covering amid speculation that he might soon impose sanctions on Russian energy exports. This followed reports that Trump had urged the EU to join him in imposing tariffs on China and India, major buyers of Russian oil, to force Moscow to the negotiating table. Additionally, Israel’s strike on Hamas leaders in Qatar reignited Middle East tensions and added a geopolitical risk premium. However, the gains were capped as US government data showed a larger-than-expected increase in crude oil inventories of 3.9 million barrels.

Asian markets were mostly higher yesterday. The Japanese Nikkei 225 (JP225) rose by 0.87%, the Chinese FTSE China A50 (CHA50) jumped 0.48%, the Hong Kong Hang Seng (HK50) gained 1.01%, and the Australian ASX 200 (AU200) showed a positive result of 0.31%.

The Hang Seng Index rose to a four-year high on broad-based gains. In China, the sharpest drop in the Consumer Price Index in six months in August rekindled hopes for new government support, which could lead to an increase in consumer prices, while producer deflation hit a four-month low as Beijing’s efforts to curb corporate price wars were successful. Following a bilateral currency swap deal between China and Europe, shares in the real estate and financial sectors rose. Technology stocks also climbed, fueled by optimism about AI earnings after strong results from Oracle in the US. Alibaba rose by 0.6% on the optimistic outlook, and Baidu HK gained 2.6% after unveiling an updated artificial intelligence model.

The Australian dollar rose to around $0.662 on Thursday, nearing its highest level since early last November, driven by an improved risk appetite amid growing bets on a Fed rate cut. The commodity-linked Australian dollar also continued to benefit from rising oil and gold prices as escalating geopolitical risks fueled demand for safe-haven assets. Looking ahead, today’s speech by an RBA official will be closely monitored for further policy signals, as markets have generally priced in a 25 basis point cut in November.

New Zealand Central Bank chief Christian Hawkesby said on Thursday that the future path of the official cash rate (OCR) would depend on the pace of the economic recovery. The main prognoses for the OCR suggests a cut to around 2.50% by the end of the year. In August, the RBNZ lowered the OCR to a three-year low of 3.00% and signaled that it would continue to ease the rate as domestic and global factors constrain growth.

The Dow Jones Industrial Average (US30) rose by 0.43% on Tuesday. The S&P 500 (US500) gained 0.27%, and the tech-heavy Nasdaq (US100) finished 0.33% higher. All three major indices hit record highs despite signs of a slowing economy. Investors digested revised employment data showing that the US added 911,000 fewer jobs than previously estimated in the year ending in March, the most significant downward revision since 2002. This weaker job outlook increased expectations of a Federal Reserve rate cut next week, with debate centered mainly on the size of the reduction. Attention will now turn to the Producer Price Index (PPI) and Consumer Price Index (CPI) reports, which will be closely watched for clues about the direction of the Fed’s policy.

The Mexican peso strengthened to 18.6 per US dollar. In August, headline inflation slowed to 3.57%, while core inflation held steady at 4.23%, reinforcing expectations that the Bank of Mexico’s cautious easing cycle will continue at a moderate pace. The minutes from Banxico’s August meeting confirmed that the board approved a 25 basis point (bps) rate cut to 7.75%, with the majority favoring a slower pace of cuts and a potential additional quarter-point reduction later this year.

The Canadian dollar is under new selling pressure and is currently the second-worst performing major currency of 2025, behind only the US dollar. A combination of a deteriorating domestic economy and ongoing tariff uncertainty continues to weigh on the loonie, making traders skeptical about its near-term growth prospects. Canada’s latest GDP release confirmed sluggish growth, highlighting the impact of weak domestic activity. In response, the Bank of Canada may continue to cut rates.

European stock markets were mostly higher on Tuesday. The German DAX (DE40) fell by 0.37%, the French CAC 40 (FR40) rose by 0.19%, Spain’s IBEX35 (ES35) gained 0.14%, and the UK’s FTSE 100 (UK100) closed 0.23% higher. European equities ended slightly up on Tuesday, continuing their gains from the previous session. The French Parliament passed a vote of no-confidence in Prime Minister Bayrou as parties failed to agree on budget cuts, forcing President Macron to appoint the country’s fifth prime minister in less than two years. At the same time, bond yields traded quietly despite the turmoil, providing support for stocks ahead of the European Central Bank’s likely rate hold this week.

Russian strike drones have invaded Polish airspace, threatening cities approximately 40-50 miles from the Ukrainian border. Airports in Warsaw, Lublin, and Rzeszow were closed due to the attack. Poland has put its air defense systems on high alert and, according to preliminary reports, has shot down all the drones. On Wednesday morning local time, Polish armed forces stated that all necessary procedures were enacted to ensure the security of national airspace as Russia conducted large-scale overnight strikes on Ukraine. This is not the first time Russian drones have violated Polish airspace, forcing fighter jets to scramble, but this time, the number of drones crossing NATO’s borders was around 8-10, which does not appear to be accidental.

WTI crude oil prices rose more than 1% on Tuesday, surpassing $63 a barrel. The increase followed reports of explosions in Doha, Qatar, where Israel reportedly struck high-ranking Hamas leaders. According to eyewitnesses, Qatar, a key mediator in the Israel-Hamas conflict and a host of Hamas officials, was rattled by smoke rising over the area. This geopolitical shock added to existing bullish factors for oil. Prices were already supported by a smaller-than-expected OPEC+ output increase. Markets also anticipate that China will continue to build up its oil reserves, further tightening supply. Meanwhile, fears of new Western sanctions against Russia have heightened following its largest aerial attack on Ukraine in months.

Asian markets were mostly lower yesterday. Japan’s Nikkei 225 (JP225) fell by 0.42%, China’s FTSE China A50 (CHA50) dropped 0.35%, Hong Kong’s Hang Seng (HK50) rose by 1.19%, and Australia’s ASX 200 (AU200) had a negative result of 0.63%.

The New Zealand dollar rose to $0.594 USD on Wednesday as the US dollar strengthened ahead of key inflation reports. Traders are awaiting the release of the US PPI and CPI data this week, which could provide more clues about the Federal Reserve’s path for interest rates. Meanwhile, in China, New Zealand’s largest trading partner, data released today showed that consumer prices fell in August and factory gate deflation eased, pointing to continued deflationary pressures in an economy facing slowing growth.

By the end of Monday, the Dow Jones Index (US30) had risen by 0.25%. The S&P 500 (US500) gained 0.21%, and the Nasdaq (US100) Technology Index closed up 0.46%. Wall Street started the week with gains on Monday as investors positioned themselves ahead of a data-heavy week, which includes two key inflation reports that are likely to influence the Federal Reserve’s policy expectations. A weak August jobs report, combined with softer labor market data last week, fueled hopes that the Fed will cut rates at its September meeting, with traders increasingly pricing in the possibility of a more significant 50 basis point (bps) rate cut. This week, investors will monitor the PPI and CPI for new signals on the economy’s direction.

Stock markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.89%, France’s CAC 40 (FR40) closed up 0.78%, Spain’s IBEX35 (ES35) gained 1.02%, and the UK’s FTSE 100 (UK100) closed up 0.14%. European stocks closed with solid gains, as markets continued to assess the outlook for European rates and the latest corporate news. Banks closed sharply higher as Eurozone yield spreads narrowed, easing fragmentation concerns that had emerged in recent weeks before the expected dissolution of the French parliament. Prime Minister François Bayrou is expected to lose a confidence vote as the government rejects the current budget proposal, creating political risk and likely increasing the country’s budget deficit.

WTI crude oil prices rose 2% on Monday, climbing above the $63 per barrel mark and recovering from a three-day slide. The gains came as OPEC+ announced a smaller-than-expected production increase and concerns over potential new US sanctions on Russian oil intensified. The group agreed to raise production by 137,000 barrels per day from October, which is far below the increases of 555,000 bpd in August and September and 411,000 bpd in June and July. Analysts noted that some members are already overproducing, meaning the real impact on the market may be limited.

Silver prices (XAG/USD) climbed back above the $41 per ounce mark, reaching their highest level since August 2011, as signs of a cooling US labor market boosted expectations for a Federal Reserve rate cut this year. Markets are fully pricing in a 25 bps rate cut later this month, with some betting on a more significant half-point shift. On the industrial side, strong demand from solar panels, electric vehicles, and electronics has tightened the physical silver market amid limited supply.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) rose by 1.45%, China’s FTSE China A50 (CHA50) fell by 0.10%, Hong Kong’s Hang Seng (HK50) gained 0.85%, and Australia’s ASX 200 (AU200) ended the day with a 0.24% loss. In early Tuesday trading, Hong Kong stocks jumped 1.4%, rising for the third consecutive day to their highest level since October 2021, as all sectors saw gains. Optimism on Wall Street on Monday lifted the mood ahead of an expected Fed rate cut later this month. Hong Kong real estate company stocks were among the top gainers, rising by about 2% after the city of Shenzhen eased home purchase restrictions last week. Technology, financial, and consumer stocks also rose, supported by a third consecutive day of gains in mainland markets as Beijing moves toward a record trade surplus despite August exports hitting a six-month low. However, gains were capped by caution ahead of the release of China’s CPI and PPI data on Wednesday, as concerns about deflation persist.

The Westpac-Melbourne Institute Index of Consumer Sentiment in Australia fell by 3.1% month-over-month to 95.4 in September 2025, offsetting the 5.7% increase in August. This decline reflects renewed anxiety about the interest rate outlook, despite some easing of the cost-of-living crisis and support from monetary policy easing. Assessments of the economy worsened, with the 12-month outlook falling 8.9% to 92.2 and the 5-year outlook declining 5.9% to 92.7. The Head of Australian Macro Expectations said the survey shows that the recovery in consumer demand since mid-2024 remains sluggish and further policy easing will likely be needed. He expects the RBA to cut rates by 25 basis points in November and two more times in 2026.