Global stock markets are experiencing a mixed start to the week, with U.S. futures showing slight variations after the S&P 500 recorded its third consecutive week of gains. The U.S. dollar has weakened as cooler inflation and retail sales data dampened expectations for a Federal Reserve rate hike, while oil prices nudged higher due to ongoing U.S.-Iran tensions. Corporate news features Kweichow Moutai’s share drop, Harvard’s significant SpaceX stake, and Nvidia’s potential investment in a SoftBank subsidiary for an OpenAI data center.
U.S. stock futures began Monday with a mixed outlook, following a remarkable three-week ascent for the S&P 500, which reached fresh all-time highs last week. While the Dow Jones Industrial Average futures dipped slightly, both S&P 500 and Nasdaq 100 futures registered modest gains, reflecting ongoing investor confidence despite lingering global tensions and concerns surrounding the artificial intelligence sector. Mark Hackett, chief market strategist at Nationwide, observed that investors are increasingly comfortable with the current economic landscape, leaving fewer arguments for bearish sentiment.
Across Asia, markets presented a varied picture. Japan's Nikkei 225 remained flat after disappointing second-quarter GDP figures that missed expectations, showing only 1.1% annualized growth due to weaker domestic demand. Australia's S&P/ASX 200 declined, while Hong Kong's Hang Seng Index and mainland China's CSI 300 posted advances. South Korean markets were closed for a public holiday. European equities, represented by the pan-European Stoxx 600 index, opened higher, primarily driven by strong performances in mining and technology stocks.
The U.S. dollar experienced a decline, trading near its lowest level in over two months. This weakening was largely attributed to a surprise drop in retail sales and softer-than-expected inflation reports last week, which significantly cooled market expectations for an imminent Federal Reserve rate hike. The probability of a September rate increase by the Fed dropped to approximately 30% from about 50% just a week prior.
Meanwhile, the Japanese yen continued its depreciation against the dollar, trading above 159. Analysts suggest that for the yen to strengthen, rate differentials need to narrow, placing increased focus on the Bank of Japan's upcoming policy decisions. Aberdeen Investments highlights the BOJ's September meeting as a crucial opportunity to signal a faster pace of policy normalization and potentially bolster the yen.
Oil prices edged higher amid persistent geopolitical concerns, particularly the unresolved conflict between the U.S. and Iran. Brent crude futures and U.S. West Texas Intermediate crude futures both saw increases in early Asian trade, as market participants weighed the lack of diplomatic breakthrough.
In corporate news, Chinese premium liquor maker Kweichow Moutai saw its shares fall by 4.5% after reporting a modest 1.3% rise in first-half revenue and a 1.95% drop in net profit. Citi analysts, however, identified several positives, including the company's strategic shift from wholesale to direct-to-consumer sales and anticipated benefits from price hikes and a rotation back into China's consumer sector by global investors.
Other notable developments include Harvard Management Company's disclosure of a substantial $2.2 billion stake in Elon Musk's SpaceX, making it the university endowment's largest holding. Additionally, Nvidia is reportedly in discussions to invest up to $3 billion in SB Energy, a SoftBank subsidiary, as part of a deal related to a massive data center project for OpenAI.
Investors are anticipating a lighter week for major catalysts, with attention turning to the Federal Reserve's latest meeting minutes on Wednesday. A slew of retail earnings reports are also expected, including results from Walmart, Home Depot, and Lowe's. On the economic front, the August Empire State manufacturing index and the NAHB Housing Market Index will provide further insights into the U.S. economy.
