Will markets sing 'wake me up when September ends'?
Market commentary by Jessica Amir, shared with Media 8.44 am Sydney time, Tuesday, 3 September 2024
Global equities hover near record highs, supported by European markets heading higher, carrying the load while the US was on holiday. Even though the World Index trades at sky-high levels, caution is in the air with the upcoming US jobs report on Friday, which could potentially mark a fork in the road before the US Fed’s next meeting—the most crucial one yet. Equities and investors could be upset if US jobs data show the economy is much stronger than the Fed thinks, and that one-in-four chance of a 50-basis-point cut could be quickly ruled out. Any chance that the Fed could stall rate cuts could be painful for shares.
The volatility index, known as the market's fear gauge, is behaving nicely (showing a reading of 15.5), so this could be the ‘calm before the storm,' especially as September marks the worst month for shares, and in contrast, September is historically a great month for gold, which tends to see one of its best monthly returns on average.
Price pressures are starting to creep up, as reflected in commodity prices. For example, wheat is now up 4.5% in five days—this is not good for chicken prices, given wheat accounts for 60% of the cost of growing a chicken. Live cattle prices are also on the rise, up almost 2% in five days. For investors, this means keeping an eye on companies such as Elders $Elders Ltd (ELD.AU)$, Australian Agricultural Co $Australian Agricultural Co Ltd (AAC.AU)$, and Inghams $Inghams Group Ltd (ING.AU)$.
Businesses are suffering from price pressures too with Volkswagen $VOLKSWAGEN A G (VWAGY.US)$ considering shutting factories in Germany for the first time ever to cost cuts and boost profits. The decision would mark a turning point for Europe’s car industry. Car sales are still nearly a 5th lower than pre-pandemic levels in Europe. Manufacturers including VW, Stellantis NV and Renault SA were operating more than 30 factories at levels analysts consider unprofitable, according to data from Just Auto. That includes Volkswagen's sprawling home factory in Wolfsburg — Europe’s largest.
Futures markets indicate Australia's market will open higher, while Hong Kong and China's markets are tipped to open lower, as investors fear that China's stimulus might not be delivered before the year is out, which is needed to support its property sector.
The US dollar index continues to hold up off its August lows, which is somewhat hurting some key commodity prices such as aluminum, copper, and nickel. Meanwhile, the iron ore price has shed 2.4%, with iron ore miners likely to face even more pressure for now. On a positive note, oil investors will get some reprieve today with Brent crude up 0.8%.
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Moomoo Official Market Strategist
Investment strategist seen and heard on global media such as Fox News Business, ABC, SBS, Reuters wires.
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151453268 witso : Nice whip round the Farm prices, you should get yourself an Akubra from Twiggy he needs some support at the moment, but seriously out here in the west we have had reasonable to good rains and good timing maybe a look at CBH grain i would bet another bumper harvest this year. just from my window seat view on my way to work this morning . Ps you would rock in an Akubra
102239008往事随风 :
Jooooohn : I literally just listened to this song in the car and I didn’t search it.