After losing 6% in Friday’s session, hitting historic highs, the Nikkei fell on Monday 5 August. At 7.25am Italian time, the Tokyo stock market index lost around 12% while the yen, fresh from a rate hike of 0.25% to 0.5%, rose 2.29% to 143.2 to the dollar. The Asia Dow lost 7.4%, while in China the Hang Seng lost 1.4% and Shanghai 0.7%. Meanwhile, the ten-year US T bond saw its yield hit a one-year low of 3.75%. The Nasdaq did poorly, closing in contraction territory on Friday (-2.4%) and today futures are in the red by 3.66%. Gold rose further to 2,492 dollars per ounce (+0.91%), while WTI oil was down 0.3% to 73.30 dollars per barrel.
What is happening in the markets? Bets prevail that the Federal Reserve will cut rates more aggressively after a weak US jobs report fueled concerns about a possible recession. Data on Friday showed that the US economy added 114,000 jobs in July, which was below expectations for an increase of 175,000. Also the rate of unemployment it is not expected to jump to a 2021 peak of 4.3%, and wage growth has slowed more than expected.
Markets now see a greater than 70% chance of a Fed rate cut 50 basis points in September, with about 155 basis points of total easing estimated for both this year and next. Investors are now awaiting US services PMI data and the San Francisco Fed president’s speech Mary Daly on Monday for more information.
High tensions in the Middle East between Iran and Israel do not help this.
Services growth in China has exceeded estimates
The Caixin China General Services PMI rose to 52.1 in July 2024 from June’s 8-month low of 51.2, above the market forecast of 51.4. It was the 19th month of growth in services activity, helped by faster growth in new orders, export sales and robust employment.
Oil fluctuates between fears of a US recession and tensions in the Middle East
WTI crude futures hit $73.5 a barrel on Monday, seeking to halt a two-day slide, as recession fears in the United States, the world’s top oil buyer, were offset by supply risk resulting from geopolitical tensions in the Middle East. Data on Friday showed a sharp slowdown in US job growth, a rising unemployment rate and slower wage growth.
Meanwhile, tensions flared in the Middle East after an Israeli airstrike hit two schools on Sunday, killing at least 30 people. Markets are also watching Iran’s response after it vowed revenge for the assassination of Hamas leader Ismail Haniyeh, which followed the killing of Hezbollah’s top commander in an airstrike in Beirut.
Blink at G7, Iran may attack Israel within 48 hours
The United States Secretary of State Anthony Blinken he told AI on Sunday G7 countries which is an attack by Iran and Hezbollah against Israel may begin monday This is reported by the American website Axios, citing three sources of knowledge about the call. Blinken called the conference call to reach out to close US allies and try to build last-minute diplomatic pressure on Iran and Hezbollah to reduce their retaliation against Israel. He emphasized that limiting the impact of their attacks is the best chance to prevent one total war.
Iran and its Lebanese ally Hezbollah have vowed to respond to Israel’s assassination of the political leader of Hamas Ismail Haniyeh in Tehran and the military commander of Hezbollah Fuad Shukr in Beirut.
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