Weekly Market Pulse - Week ending August 30, 2024
Market developments
Equities: North American stocks ended the week lower even after the latest economic data showed the economy is holding up. Despite a strong earnings report, Nvidia's shares fell by over 8% for the week, indicating that investor expectations may have been set even higher due to the company's previous performance and the overall AI hype.
Fixed Income: Interest-rate swaps show traders see a 20% probability that the Fed lowers its key rates by a half-point at the next policy meeting in September, compared to about a 24% chance prior to the data report. The markets will now be focusing on next week's jobs data to gauge whether the economy is cooling at an acceptable level or risking a more significant slowdown.
Commodities: OPEC+ plans to proceed with an oil output increase starting in October, despite concerns over sluggish demand, particularly from China. The news put downward pressure on the price of oil as it closed nearly 2% lower for the week.
Performance (price return)
Source: Bloomberg, as of August 30, 2024
Macro developments
Canada – Economy Strengthens in Q2 2024
The Canadian economy grew by 0.5% in Q2 2024, driven by increased government spending and a 6.5% rise in business investment in machinery and equipment. Annualized GDP growth reached 2.1%, exceeding expectations.
U.S. – PCE Inflation Holds Steady in July
The U.S. annual PCE inflation rate remained at 2.5% in July 2024, slightly below expectations of 2.6%. Historically, this inflation measure has averaged at 3.3% since 1960, with significant past fluctuations.
International – Eurozone Inflation Eases, Eurozone Unemployment Drops to Record Low, Tokyo's Core CPI Surges in August, Japan’s Retail Sales Growth Slows in July
Eurozone annual inflation fell to 2.2% in August 2024, the lowest since July 2021, primarily due to a sharp drop in energy costs. Despite this, inflation for services and food increased slightly, keeping overall inflation stable.
The Eurozone unemployment rate decreased to a record low of 6.4% in July 2024, with the number of unemployed individuals falling by 114,000. Youth unemployment also decreased slightly, with Spain still having the highest unemployment rate among major economies.
Tokyo’s core consumer price index rose by 2.4% in August 2024, the highest in six months, signaling a continued hawkish stance from the Bank of Japan. The headline inflation also increased, surpassing market forecasts.
Japan's retail sales grew by 2.6% year-on-year in July 2024, slower than growth in June and below expectations. Despite the slowdown, retail spending remained positive, with strong sales in non-store retailers and automobiles.
Quick look ahead
As of August 30, 2024