As the curtain closes on a tumultuous quarter, global markets are bracing for a dramatic finale. China’s stock market has staged a remarkable comeback, surging over 8% in a single day, its best performance in 16 years. This phenomenal rebound has erased both year-to-date and 12-month losses, leaving investors wondering if Beijing’s aggressive stimulus measures have finally paid off.
Meanwhile, Japan’s Nikkei index plummeted nearly 5% as investors reacted nervously to the new prime minister, Shigeru Ishiba, and his call for an October election. The yen also took a hit, sparking concerns about Ishiba’s stance on monetary policy.
In Europe, inflation numbers from Germany fell short of targets, adding to similar trends in France and Spain. A manufacturing slump and troubles in the auto sector further darkened the mood. The euro managed to edge higher against a weaker dollar, but European stock benchmarks still lost nearly 1%.
As the spotlight shifts to the US, Federal Reserve Chair Jerome Powell is set to take the stage in Nashville, providing much-needed guidance on the Fed’s easing cycle. August’s soothing inflation numbers will likely provide a welcome backdrop for his remarks. With the labor market, earnings season, and election season looming, investors will be watching closely for signs of direction.
In the meantime, China’s central bank has instructed banks to lower mortgage rates for existing home loans, further fueling the country’s stock market boom. The yuan, however, took a step back amid reports of dollar buying by state banks.
As the final trading session of the quarter gets underway, all eyes will be on Powell’s speech, as well as key economic indicators, including the Dallas Fed September manufacturing survey and Chicago Sept PMI. With the VIX volatility gauge on the rise and US Treasury yields nudging up, investors are bracing for a wild ride ahead.
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