US hard landing fears send stocks lower, despite Fed signalling a September rate cut

Macroeconomic/ geopolitical developments

• Global stock markets plummeted on Friday due to heightened fears of a potential U.S. recession, triggered by a disappointing jobs report, alongside weak manufacturing data.
• A surprising rise in the U.S. unemployment rate to 4.3% and slowing job growth, combined with other signs of economic cooling and potential impacts from Hurricane Beryl, have rattled financial markets and sparked concerns about a looming recession.

• Federal Reserve Chair Jerome Powell signaled a potential interest rate cut in September if economic conditions align with expectations, as the Fed held rates steady and softened its inflation stance, raising the likelihood of rate reductions amid shifting market concerns.

• Microsoft, Amazon, Apple, and Meta reported mixed quarterly earnings, with Microsoft and Apple surpassing expectations but facing challenges in cloud and China revenue, Amazon missing revenue forecasts amid retail competition, and Meta exceeding estimates with strong digital ad growth from AI investments.
• The Bank of England has reduced interest rates by a quarter of a percentage point to 5 percent, the first cut in over four years, aiming to boost economic growth while cautioning against rapid further reductions amidst stable inflation.

Global financial market developments

• US and global equity averages undid rebound efforts to push notably lower.
• US and European bonds moved to significantly lower yields.
• The US Dollar Index plunged lower.
• Gold futures rallied erratically.
• Oil futures pushed notably lower to multi week lows.

Key this week

Central Bank Watch: A light week for central banks, we get the Bank of Japan Monetary Policy Meeting Minutes on Monday and the Reserve Bank of Australia Interest Rate Decision and Monetary Policy Statement on Tuesday.

Macro Data Watch: A quiet week for macroeconomic data, the key macro releases this upcoming week are the global Composite and Service PMI data on Monday.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued