September has begun with global equities facing some challenges as investors gear up for what is traditionally the most difficult month for stocks.
European equities, particularly in the consumer goods sectors, fell 0.2% from a record high set on Friday. This decline comes after data revealed a fourth straight month of contraction in Chinese manufacturing activity and a worsening slump in the country’s residential property market.
Major mining companies like Rio Tinto Plc and BHP Group Ltd. experienced declines following a drop in iron ore prices. On the other hand, Volkswagen AG saw an increase of more than 2% after announcing potential factory closures in Germany.
In the United States, equity futures remained mostly unchanged after the S&P 500 neared its all-time high on Friday. Meanwhile, the dollar held steady and cash Treasuries were closed for Labor Day.
Historical data compiled by Bloomberg indicates that September has been an unfavorable month for stocks over the last four years, with simultaneous outperformance of the dollar. The Cboe Volatility Index (VIX) has risen every September since 2021.
Investors are keeping a close eye on various factors including China’s manufacturing activity and upcoming US jobs report which will serve as an indicator for potential rate cuts by Federal Reserve.
The government will also release figures on July job vacancies before Friday’s report; it is anticipated that there will be around 8.1 million open positions – slightly above a three-year low.
JPMorgan Chase & Co analysts have indicated that even if Federal Reserve starts cutting rates due to slowing growth, there might still be tough times ahead given seasonal trends pointing towards challenges during September.
Aside from economic concerns, Germany experienced political turmoil as Chancellor Olaf Scholz’s ruling coalition suffered losses in two regional elections while trying to block far-right party Alternative for Germany from gaining power.
In Asia, multiple rounds of stimulus have failed to revive growth in China amid continued struggles with their property market slump affecting domestic demand adversely.
Looking ahead this week:
Various economic indicators will be released such as South Korea CPI on Tuesday; Switzerland GDP and CPI also expected Tuesday; US construction spending and ISM Manufacturing index also come out Tuesday among others throughout this week
Market movements so far:
- S&P 500 futures are relatively unchanged
- Dow Jones Industrial Average futures dropped slightly
- Stoxx Europe 600 fell approximately 0.2%
- MSCI World Index showed little change
Currency movements include:
- Limited movement within Bloomberg Dollar Spot Index
- Euro rose approximately .02%, trading at $1.1069
- Pound sterling also rose about .02%, trading at $1.3147
- Yen saw a decline of .6%, trading at rate of 147:02 per dollar
Commodities saw these changes:
West Texas Intermediate crude oil had minimal change rising just .01% to $73:64 per barrel;
Gold remained stable with no significant movement
