US Markets
• Slight Uptick in Futures: U.S. stock futures, specifically tied to the Dow, S&P 500, and Nasdaq, rose modestly on Friday as markets awaited Federal Reserve Chair Jerome Powell’s remarks at the annual Jackson Hole Economic Symposium
• Scene Setter for Rates: Markets are keenly focused on the speech for indications on the Fed’s next moves, particularly concerning interest rate policy in the face of softening labor data versus stubborn inflationary pressures
• Rate-Cut Odds Drop: According to the CME FedWatch Tool, expectations for a September rate cut fell to 71.3%, down from 85.4% a week earlier
• Market Weakness: The S&P 500 and Nasdaq are on track for their worst weekly performance of the month, dragged lower by a broad sell-off in technology stocks. Meanwhile, sector gains came primarily from energy and real estate.
• Stock Movers:
• Nvidia dropped 1.1% after asking Foxconn to halt work on its H20 AI chip due to export restrictions.
• Alphabet jumped 1.2% following a $10 billion cloud services agreement with Meta, whose shares also rose slightly
• Workday slid 4.4% after offering a neutral outlook for the current quarter
European Markets
Mixed but generally muted:
o Germany’s DAX slipped slightly (-0.1%), the UK’s FTSE 100 edged down similarly (-0.1%), while France’s CAC 40 saw a modest uptick (+0.2%)
o Another report noted European and Asian shares edged moderately higher amid optimism over potential U.S. rate signals, with markets treading carefully.
Economic pressure from Germany:
o Europe’s dominant economy contracted in Q2 (–0.3% vs. an expected -0.1%), dampening sentiment. However, losses were cushioned by the anticipation of Powell’s address.
Improving business indicators:
o Some European business surveys (and in Japan) showed positive surprises. These brightened investor sentiment and provided support for local currencies, even as equities lagged.
Bottom Line
Both U.S. and European markets are operating in a cautious holding pattern, awaiting clearer signals from Powell's Jackson Hole speech. While U.S. futures show minor upside, Europe remains more restrained, hampered by economic weakness, particularly in Germany, though somewhat buoyed by supportive business surveys.
