Global markets were subdued on Tuesday, with stocks muted, the dollar steadying near five-week lows, and gold climbing to fresh record highs, as investors awaited key U.S. economic data that could shape expectations for a Federal Reserve rate cut in September.
Markets currently price in an 89% chance of a 25 basis point Fed cut later this month, according to Reuters. However, upcoming data will determine whether policymakers could opt for a larger move. Attention is fixed on Friday’s nonfarm payrolls report, preceded by job openings and private payrolls figures, which together will provide a clearer view of the labour market. The U.S. inflation report for August, due September 11, will also be critical ahead of the Fed’s policy meeting a week later.
Optimism over lower borrowing costs has kept Wall Street near record levels, with gains spilling into other regions. On Tuesday, MSCI’s broadest Asia-Pacific index outside Japan was flat. Nasdaq futures slipped 0.1%, while European futures edged down 0.07%. U.S. markets had been closed Monday for a holiday.
China’s recent AI-driven rally cooled as investors booked profits. The CSI300 fell 0.9% after touching a three-year high for the third consecutive session, while Hong Kong’s Hang Seng dropped 0.6% after Monday’s 2% surge.
In currency markets, the dollar firmed modestly ahead of the European open. The euro dipped 0.16% to $1.16925, sterling slid 0.17% to $1.35264, and the yen weakened 0.3% to 147.70 per dollar. Bank of Japan Deputy Governor Ryozo Himino signalled further rate hikes but cautioned against moving too quickly amid global uncertainties.
The dollar index rose 0.2% to 97.847, still hovering near Monday’s five-week low. U.S. 10-year Treasury yields climbed 2.4 basis points to 4.249%.
