Today’s Outlook:
• US MARKET: The S&P 500 rose 0.6% to 6,643.70 points, while the NASDAQ Composite rose 0.4% to 22,484.07 points on Friday. The Dow Jones Industrial Average rose 0.7% to 46,247.29 points. But all three indexes ended lower for the week, having tumbled from recent record highs on losses in technology stocks.
Wall Street indexes rose on Friday after PCE price index data– the Federal Reserve’s preferred inflation gauge- rose as expected in August. The print indicated that Trump’s trade tariffs did not boost inflation as sharply as some market participants were fearing, and kept investors largely geared towards more interest rate cuts by the Fed in the coming months.
Markets are pricing in a 90.8% chance for a 25 bps cut in October and a 63.8% chance for another 25 bps cut in December, CME Fedwatch showed.
Funding for U.S. government operations is set to expire at midnight on September 30, with Congress having still not agreed to a replacement or extension. Negotiations are ongoing, with Republicans pushing for at least a stop-gap funding bill till November, while Democrats are demanding that recent cuts to healthcare and Medicaid spending be reversed, as a condition to approve a resolution. Congressional leaders from both parties are set to meet with President Donald Trump on Monday to discuss legislation. Trump told Reuters that he believed the Democrats wanted to reach an agreement. A government shutdown this week could delay the release of key labor market data scheduled for Friday. An extended shutdown could also delay future data releases and greatly disrupt economic activity
• EUROPEAN MARKET: European stocks clawed their way back from three-week lows on Friday, lifted by gains in financials and industrials, leaving the benchmark index more or less where it began the week. The DAX index in Germany climbed 0.8%, the CAC 40 in France gained 1% and the FTSE 100 in the U.K. rose 0.8%. The pan-European STOXX 600 rose 0.8%, and ended the week just 0.07% higher.
On the European economic data slate, Spanish gross domestic product rose 0.8% on the quarter in the second quarter, more than expected, data released earlier Friday showed, while Italian business and consumer confidence numbers are due later in the session. In corporate news, all eyes were on Europe’s largest drugmakers, as investors reacted to the news that Trump has announced fresh tariffs, including 100% duties on branded pharmaceuticals.
• ASIAN MARKET: Most Asian stocks fell on Friday, with pharmaceutical stocks leading losses after U.S. President Donald Trump imposed steep import tariffs on the sector, while declines in technology shares also weighed. Japanese stocks were outliers, rising marginally as a soft consumer inflation print fuelled speculation that the Bank of Japan will not raise interest rates soon.
South Korea’s KOSPI was the worst performer in Asia, sliding 2.1%, while Hong Kong’s Hang Seng index shed 0.8%. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell between 0.3% and 0.5%.
Trump on Thursday evening announced a slew of trade tariffs, most notably a 100% levy on all branded and patented pharmaceutical goods. The duty will take effect from October 1. The move heralds substantially more pressure on Asian pharma exporters, with a bulk of regional companies having heavy exposure to U.S. markets. Still, Trump said that companies building manufacturing facilities in the U.S. will be exempt from the duty
• COMMODITIES: Oil prices rose on Friday as Ukraine’s drone attacks on Russia’s energy infrastructure cut the country’s fuel exports. Brent futures settled at USD 70.13 a barrel, up 71 cents, or 1.02%. U.S. West Texas Intermediate (WTI) crude finished at USD 65.72 a barrel, gaining 74 cents, or 1.14%.
Russia will introduce a partial ban on diesel exports until the end of the year and extend an existing ban on gasoline exports, Deputy Prime Minister Alexander Novak said on Thursday. The drop in refining capacity has left several Russian regions facing shortages of certain grades of fuel.
• INDONESIA: The Jakarta Composite Index (JCI) closed higher, rebounding +0.73% into the green zone at the 8,099.33 level. Attention should be given to banking stocks, which are approaching oversold support areas, making current valuations attractive for accumulation. For those seeking a more aggressive strategy, it is advisable to monitor momentum and sector rotation, as well as conglomerate stocks and companies with promising narratives. Meanwhile, if there is a pullback in gold-based commodity stocks, they may provide trading opportunities once signs of weakness appear.
Download full report HERE.
