by Andre Janse van Vuuren
Stocks retreated as traders prepared for data releases that will offer insight about the health of the US economy and the Federal Reserve’s interest-rate path.
Europe’s Stoxx 600 slipped 0.2% as mining equities declined on the back of softer commodity prices. US contracts pulled back ahead of Wall Street’s reopening following the Labor Day holiday, while a gauge of Asian stocks was little changed.
In what is historically a poor month for stocks, traders are bracing for fresh bouts of volatility. In the runup to the start of the Fed’s rate-cutting cycle, investors are wary of risks stemming from US election campaigning and rising geopolitical tensions.
The publication of US manufacturing data later Tuesday will mark the start of a busy week of economic reports, culminating with nonfarm payrolls statistics on Friday. A similar series of releases in August induced fears that the US economy was heading for a hard landing, whiplashing markets.
“We do expect higher volatility over coming weeks,” said Mohit Kumar, chief economist for Europe at Jefferies International. Central banks “are data dependent and markets’ expectations of their response function is likely to whipsaw around data releases.”
Markets are currently pricing a start to US policy easing this month, with a roughly one-in-five chance of a 50 basis-point cut, according to data compiled by Bloomberg.
In currencies, the yen rallied after Bank of Japan Governor Kazuo Ueda reiterated that the central bank will continue to raise interest rates if the economy and prices perform as expected.
The dollar extended modest gains of the previous two trading days. Treasury yields were little changed.
Oil fluctuated as traders weighed concerns over China’s dour economic outlook against supply disruptions in Libya.
Corporate Highlights:
Key events this week:
Some of the main moves in markets:
Stocks
Currencies
Cryptocurrencies
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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