Indices: “Fairly Highly Valued”
US equity index futures are steady after a session of losses for the (-0.6% to 6,656) and (-0.7% to 24,580) as investors pulled back a bit on tech and the AI trade (see Stocks below) and comments from Fed Chairman Powell who sees “by many measures…equity prices are fairly highly valued” (see FX/Central Banks below), with limited pullbacks for both (-0.2% to ) and the small-cap (-0.2% to 2,457); government shutdown likelihoods rise as US President Trump cancels meeting with top Democrats in Congress; OECD sees global growth at 3.2% in 2025 higher than its previous June projection, with 2026 growth seen at 2.9%, for the US at 1.8% and 1.5%, respectively
Stocks: Tech Takes a Breather, Boeing Rises, and Micron Beats on Earnings
Shares of Nvidia (NASDAQ: ) fall back 2.8% undoing much of Monday’s gains from the OpenAI deal announcement, with losses among key tech companies notable for Oracle (NYSE: ) (-4.4%), Amazon (NASDAQ: ) (-3%) and Tesla (NASDAQ: ) (-1.9%)
Partial recovery off the lows for shares of Kenvue (NYSE: ) (+1.6%) yet to undo losses suffered at the start of this week following Trump administration’s announcement linking its Tylenol to autism when used by pregnant women
Bloomberg report regarding “huge” deal between US and China for aircraft from Boeing (NYSE: ) sees its shares close 2% higher
Meme stock movers: Kohl’s (NYSE: ) (+2.3%), GoPro (NASDAQ: ) (-9%), Krispy Kreme (NASDAQ: ) (-2.7%), Opendoor (NASDAQ: ) (-15.5%), BlackBerry (NYSE: ) (-3%)
Most crypto stocks in retreat again: Coinbase (NASDAQ: ) (-3.6%), MicroStrategy (NASDAQ: ) (-2.4%), Mara Holdings (NASDAQ: ) (-3.5%)
Earnings:
Micron (NASDAQ: ): beats on both earnings and revenue and provides strong guidance though data center business sees sales decline; share price gains in extended trading fail to stick
Commodities: Capacity for Geopolitical Escalation Widens
Another record high for but much of the gains yesterday failed to stick with price hovering near $3,750 as of this morning and suffering a slightly larger percentage pullback; capacity for geopolitical escalation widens and on the monetary policy front the Fed’s Powell cautious
(WTI) climb over 2% as geopolitical tensions remain high with strikes on energy facilities in Bryansk and Samara, deal to resume oil exports from the Kurdish regional potentially stalling, and drawdowns: API’s weekly energy inventory readings show drawdowns for oil (-3.8m barrels) and gasoline (-1m) with a small surplus for distillate (+0.5m)
FX/Central Banks/Crypto: Powell’s “Challenging Situation”
Ongoing struggles for around $112K yet to find its footing while traders in Ether note whether its mid-term support level will continue to hold
Steady moves for the US dollar index near 97 lacking a clear catalyst; climbs following hotter Australian pricing data (see Data below)
Sweden’s Riksbank cuts interest rates from 2% to 1.75% to support economic activity with recent elevated inflation likely transitory, and sees the rate holding at this level “for some time”
Federal Reserve’s Chairman Powell on the “challenging situation” of near-term “risks to inflation are tilted to the upside and risks to employment to the downside” meaning “there is no risk-free path”, sees “by many measures…equity prices are fairly highly valued” even if it’s “not a time of elevated financial stability risks”, Bowman “concerned that the labor market could enter into a precarious phase and there is a risk that a shock could tip it into a sudden and significant deterioration”, but Bostic still worried over inflation and Goolsbee that “rates can come down a fair amount if we can get this stagflationary dust out of the air”
European Central Bank’s Pereira that inflation “seems to be on target” and that they “have to give buffers so you have room to maneuver in case of a shock”
Bank of England’s Pill that in the UK has proven to be more stubborn than expected, and wanted to keep QT at £100bn
Capital.com Client Sentiment: Shifts in the Nasdaq 100 While Gold Sentiment Moves Into Heavy Buy Territory
Indices: Long bias rises in nearly all indices in the report following yesterday’s pullback in price, pushing further into heavy buy territory in the S&P (72% from 66% yesterday morning), shifting in the Nasdaq (from a slight sell 53% to a majority buy 58%), and reaching extreme long in the (79%)
Commodities: Long traders continue to look for opportunities to latch onto gold’s bull run taking the bias among them into heavy buy territory (69% from 61% yesterday), and so too in silver (73% from 69%) while WTI’s price boost sees a significant unwind in extreme long sentiment (78% from 88%)
FX: Shifts from the middle in EUR/USD (to a slight sell 52%) and (to a slight sell 53%), no longer heavy sell in (62% from 67%) following another consecutive pullback in price, and fall out of extreme sell in AUD/USD (69% from 78%)
Data: Preliminary PMIs Mostly Worsen, and Hotter CPI in Australia
US preliminary PMIs (S&P Global) in September drop for both (to 52 from 53) and (from 54.5 to 53.9) though remain in expansionary territory; Richmond Fed’s for the same month worsens to -17 well beneath forecasts
EZ preliminary manufacturing falls back into contraction with a 49.5 print (vs improvement to an expansionary 50.9) while services improves to 51.4 above estimates, composite at 51.2 slightly above forecasts
UK preliminary PMIs disappoint with contraction in the sector worsening to 46.2 and still expansionary but falling notably to 51.9 (from 54.2)
Australian in August 3% y/y slightly above forecasts and at highs unseen in about a year
Today:
Mostly low-impacting items out of the US with the weekly mortgage applications (3pm Dubai time) and new home sales for the month of August (6pm); for energy traders EIA’s weekly energy inventory estimates (6:30pm); another FOMC member speaks
(12pm)