Wall Street retreats as jobs data reshapes Fed outlook
US nonfarm payrolls rose by 162,000 in August, well above expectations, while July was revised higher. Unemployment held steady at 4.1%, while labour force participation ticked up to 61.6% and the broader U-6 measure of underutilisation eased to 7.7%. Wage growth cooled to 3.1% year on year, its slowest pace since 2021.
Odds of a Fed rate hike this month moved to around 60%. The two year Treasury yield jumped to around 4.37%, while the ten year yield was broadly unchanged near 4.78%.
Equities moved lower in response. The Dow Jones fell 0.5%, the S&P 500 slipped 0.4% and the Nasdaq eased 0.3%. Technology stocks remained relatively resilient and helped limit the broader market decline.
European and Asian markets end the week under pressure
European equities also came under pressure into the weekend. The STOXX 600 fell around 0.9% for the week and the Euro STOXX 50 dropped roughly 1.6%, weighed down by rising oil prices, higher bond yields and growing expectations that the European Central Bank could also move on rates. Shares did claw back some ground on Friday itself, helped by a 5.9% jump in Volkswagen after it struck a turnaround agreement, which lifted the wider autos sector by 1.1%. For the week as a whole, the STOXX 600 still finished 0.8% lower, with Middle East tensions, higher oil prices, inflation concerns and expectations of tighter monetary policy overshadowing the late rebound.
Asian markets were mostly firmer on Friday, helped by resilient economic expectations. The US dollar firmed against most major currencies into the weekend.
Global market snapshot
Asia-Pacific extends its tech rally
Asian equities rose broadly on Monday, led by a sharp rebound in technology and semiconductor stocks as renewed AI optimism lifted the sector. South Korea’s KOSPI surged 3.4% and Japan’s Nikkei gained 1.9%, while China’s CSI 300 edged higher. Hong Kong’s Hang Seng fell 1.2%. Higher oil prices and Fed rate-hike concerns remained key risks.
US futures point to a mixed open
US stock futures were mixed on Sunday evening, with Nasdaq 100 futures edging higher while Dow futures fell and S&P 500 futures were broadly flat. Markets continued to digest stronger-than-expected jobs data, which lifted expectations of a Fed rate hike this month. Attention now turns to this week’s US inflation data for further clues on monetary policy.
Europe steadies after Volkswagen’s boost
The STOXX 600 ended Friday’s session up 0.1%, with the autos sector gaining 1.1% as Volkswagen surged 5.9% on its turnaround agreement, and easing oil prices further supporting sentiment later in the day. For the week overall the index still finished 0.8% lower, pressured by Middle East tensions, higher oil prices, inflation concerns and expectations of tighter monetary policy.
Dollar holds firm, euro stays on the back foot
The US dollar held above the 99 level, supported by the stronger than expected jobs data, which lifted expectations of a September Fed rate hike to around 60%. Safe haven demand tied to Middle East tensions also supported the currency.
EUR/USD was trading around 1.1614, keeping the euro under pressure ahead of this week’s US inflation release.
Oil extends its advance on Strait of Hormuz risk
Oil prices extended last week’s sharp gains as escalating US-Iranian tensions raised fears of prolonged disruptions through the Strait of Hormuz. Brent rose 0.5% to $96.77, while WTI gained 0.5% to $91.94. OPEC+ has also paused its planned October production increase, adding a further layer of support to prices amid heightened concerns over global energy supplies.
Japan’s record intervention drains reserves
Japan’s foreign reserves fell by a record $79.6 billion in August to $1.208 trillion, as Tokyo funded its largest ever currency intervention by drawing down foreign securities, mainly US Treasuries. Authorities spent ¥15.4 trillion supporting the yen, while markets increasingly expect the Bank of Japan to raise rates at its September meeting.
Companies in focus
Nvidia chief executive Jensen Huang said artificial general intelligence has arrived, citing OpenAI’s GPT-6 Astra as a major milestone in AI development. Astra reportedly achieved exceptional results across mathematics, cybersecurity and software engineering, having been trained on more than 100,000 Nvidia Grace Blackwell systems. OpenAI is also bringing another 400,000 GPUs online.
Anthropic is preparing to appoint Morgan Stanley and Goldman Sachs to key roles on its potential IPO, with filings possibly coming as soon as next week. Morgan Stanley is expected to take the lead-left role, while Goldman Sachs could act as stabilisation agent. JPMorgan, Citigroup and Barclays may also receive significant mandates.
Foxconn, a major Nvidia server maker and Apple supplier, reported record August revenue of T$921.8 billion, up 52% year on year, and said third quarter performance should exceed market expectations on the back of AI related demand and seasonal ICT strength. The company flagged volatile global political and economic conditions as an ongoing risk to monitor.
China is set to issue CNY300 billion of special treasury bonds to strengthen the core Tier 1 capital of eight major state owned financial institutions, part of an effort to bolster balance sheets, support lending and economic growth, and mitigate financial risks, as the country’s banks contend with record low margins. The immediate market reaction remained relatively muted.
Volkswagen’s supervisory board unanimously approved its Future Plan 2030, which doubles planned job cuts to 100,000 and will reduce the number of model variants by around 75% by 2035, as the group tries to cut costs and improve profitability against weak European demand, tariffs and Chinese competition. Plant closure decisions remain unresolved, with a European production plan due by June 2027.
Norway’s $2.3 trillion sovereign wealth fund plans to cut government bonds in its benchmark index from 70% to 50%, with US Treasuries taking the largest reduction, a shift that could see Treasury exposure fall by close to $80 billion as allocations to US non-government debt and Japanese government bonds rise, to improve diversification and returns.
Citigroup has pushed back its forecast for the Fed to resume rate cuts to June 2027 following the stronger than expected employment data, and now expects three quarter point cuts across that year. Markets have raised expectations of a September hike, while upcoming inflation data will be crucial in determining whether the Fed keeps rates higher for longer.
Apple’s 9 September iPhone launch could pressure shares as investors assess pricing, demand and margin implications. KeyBanc has maintained an Underweight rating and $250 price target, expecting higher prices alongside lower iPhone 18 volumes, and sees the introduction of Pro, Pro Max and a foldable model, pointing to a pattern of historically weaker Apple shares around launch events.
Goldman Sachs upgraded Vodafone to Buy from Sell, raising its price target to 155p from 85p, citing improving UK mobile market conditions, cost cutting and accelerating returns. The bank expects stronger free cash flow and shareholder returns across European telecoms, while also flagging BT, Deutsche Telekom and Telefónica as preferred names. Cellnex was downgraded to Sell in the same note.
AlphaValue downgraded Deutsche Boerse to Reduce from Add, arguing the stock’s strong rally has largely priced in its short- to medium-term growth prospects even as the broker stays constructive on the group’s diversified infrastructure, structural growth and operating leverage, while expecting EBITDA growth to fall slightly below management guidance.
Morgan Stanley upgraded Accor to Overweight and named it a top pick, raising its price target to €55 from €51 on expectations of improving RevPAR, unit growth and cash returns from 2027 to offset near-term Middle East weakness, with buybacks and dividends potentially exceeding €1 billion over the next year.
Separately, US data show prescriptions of GLP-1 weight loss medicines among children aged 8 to 11 with obesity have risen more than 300-fold since 2019, reaching 9.3% by June, even though use in this age group remains off-label. Most recipients had severe obesity and related conditions, and researchers point to the need for long term safety monitoring and emerging access disparities as adoption accelerates.
Events to watch
The coming week centres on US inflation data and the path to the Fed’s rate decision, alongside consumer sentiment and housing figures. The European Central Bank will announce its own rate decision, Germany reports industrial production, and the UK publishes monthly GDP. China releases trade and inflation data, Japan reports producer prices and wage growth, and Taiwan’s trade figures should offer a further read on the strength of AI related demand across the region.
This information is being provided solely for information purposes and should not be deemed or construed as investment advice, tax, legal, or any other ancillary regulatory advice. CCIS does not accept liability for actions, proceedings, costs, demands, expenses, damages, and losses suffered by persons as a result of information, views, or opinions appearing in this document. The financial instruments discussed are intended for retail clients however, they may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein. The value of the investment may go down as well as up and may be affected by changes in currency. Where investments are denominated in a currency other than the investor’s base or reporting currency, changes in foreign exchange rates may adversely affect the value and/or returns of the investment. Any performance figures quoted refer to the past and past performance is not a guarantee nor a reliable guide to future performance. Calamatta Cuschieri Investment Services Ltd (C13729) is licensed by the MFSA to carry out investment services business in terms of the Investment Services Act (Cap. 370). The company is a subsidiary of Calamatta Cuschieri Moneybase plc and is registered at Level 0, Ewropa Business Centre, Dun Karm Street, Birkirkara BKR 9034, Malta.
