Trade overview: current reports, trends, indices, stock prices, bonds, foreign exchange and commodities and analyst recommendations
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The trading week in Asia began this morning with price drops led by the Nikkei index which is down 1%, this is the fifth day in a row, Shanghai and Hang Seng down 1% and 1.8% respectively and Kospi down 1%.
Wall Street futures are up by 0.2% this morning.
On Wall Street, investors are hoping for a better week than the previous one. Trading closed last Friday in bright red amid disappointing employment data in the US. The Dow Jones fell 1%, the S&P 500 fell 1.7% and the Nasdaq fell 2.6%. In a weekly summary, the S&P 500 index recorded its worst week since March 2023 with a decrease of 4.2%, the Nasdaq fell by about 6% and closed its worst weekly performance since 2022 and the Dow Jones fell by about 3%. Nvidia led the decline in chip shares and shed 12% last week, which is about 300 billion dollars of its value.
stock Mobileye On Friday, it weakened by 8.5% to a price of $11.5, the lowest since its IPO at the end of 2022. The declines came amid reports that Intel, the controlling owner of Mobilay which owns 88% of the capital, is seeking to sell holdings in Mobilay due to its liquidity needs.
The investment bank Jefferies began surveying Maniyat’s shares last week solaredge With a “hold” recommendation and a target price of $27, which is 38.5% higher than the current price, which is a low price for several years. Jefferies believes that the stabilization of the rate of cash burn may indicate an opportunity.
Alex Zebzinski, Meitav’s chief economist, claims that the risk in the US stock market is high and even recommends reducing exposure to stocks to medium exposure, “The maximum decline of the S&P 500 around each of the recessionary periods that have existed in the US since the early 1960s ranges from 14% in the recession in 1960 and up to a 57% decline in the recession that started in 2007. On average, stocks fell by 32%. Therefore, the declines that resumed in the American stock market last week are still not approaching the recession threshold.”
But the problem with the American stock market, according to Zabrzynski, is that the market is not cheap and, on the other hand, investors are too optimistic, he points to a worrying indicator: “Shiller’s earnings multiple” currently stands at about 35 compared to an average of 26.6 over the past twenty years, “only twice in almost For the past 150 years, the American stock market has been more expensive than it is today.” The Shiller multiplier takes the value of the S&P 500 index and divides it by the cumulative average profit going back 10 years (the profit multiplier). In doing so, he normalizes fluctuations related to business cycles. This multiplier increased by 15% in the last year.
On the other hand, Zabrzynski points out, “The analysts’ expectations for the profitability of the companies in the S&P500 index in 2025 are at a high level, the investors are also quite ‘bullish.’ Less optimistic than today.”
Today will be the annual launch event of dark As part of it, the company is expected to launch the new iPhone 16 models that will come with Apple intelligence technology and other products. Investors are mainly waiting to hear about Apple’s new developments in the field of artificial intelligence.
At the end of the reporting season, the software companies Oracle and Adobe, the video game chain Gamestop, the fashion company Oxford Industries and the construction company Lennar will report this week, and even Manchester United, which is traded on Wall Street, will report this week.
In the American debt market, the yield to maturity on the 10-year government bonds fell last week by about 19 basis points to 3.72% – the lowest level since June 2023. And the two-year yield fell by about 25 basis points to a level of 3.66%.
This means that the American yield curve – which reflects the spread between the bond yields for the various time periods, returned after two and a half years to its “normal” form, where the long-term yields are higher than the short-term bond yields.
In the commodity market, oil prices are up about 1% this morning, American oil is trading at $69 per barrel and Brent oil at $71.
Norbert Ricker, Head of Economics and Next Generation Research at Julius Baer, noted yesterday that “the broad decline in the market has affected oil prices, the general picture is that demand remains partially frozen, production in America is expanding, and the market is expected to go into overstock next year. Our forecast is that oil prices will remain low in the long term.”
“Among the causes of the declines can be found official reports from Libya, which indicate that production may return earlier than expected. Libya, although Libya is not a major producer, it has a significant impact on the market. As usual, the activity of hedge funds in the futures market contributed to exacerbating the declines.”
Macro: In the US, the employment report for the month of August was published in the US on Friday. The report indicated an addition of 142,000 jobs compared to an expected addition of about 160,000. “A slightly weak report, but not too weak,” Azulai wrote, “the report tells what is already clear to everyone, the employment market in the US is weakening, investors hoped or expected an even weaker report, one that would justify a half percent reduction in interest rates this month. The Fed’s dilemma now is to choose between stabilizing the employment market and the risk of the return of inflation, what’s more, it still hasn’t reached the 2% target set by the Fed.”
On Wednesday, the consumer price index will be released in the US, which will likely influence the Fed regarding the expected interest rate cut on September 18. In the Eurozone, an interest rate decision will be made this week.
Most predict that “there is a high probability that the Fed will lower interest rates by 0.5% at its next meeting, and this is because it is already late in responding to the weakening of the economy and the labor market. The inflation story is over. Implied inflation expectations have fallen to the lowest level since 2020, when two-year expectations are already below 1.5% “Oil prices have dropped by about 9% since the beginning of the month, and metal prices have also dropped sharply.”
“The Fed needs to take into account,” points out Zebzinski of Meitav, “that the effect of lowering interest rates on economic activity may be moderate and gradual, as was the effect of the increase in interest rates, despite being the fastest and sharpest since the early 1980s. The central bank should also take into account that today there is almost no Scope for fiscal policy because of the high deficit and because of the upcoming elections and the change of government. The market now assumes that the interest rate will decrease by 2.4% during the next year. In the last three recessions (not including the corona virus), the interest rate has decreased between 3% and 5% during the year since the reductions began.
“In Europe, the ECB is expected to announce this week another interest rate cut of 0.25% to 3.5%. The economic data in Europe is weak. The growth figure for the second quarter was updated from 0.3% to 0.2% with a significant update to a 0.1% decrease in private consumption and an update towards Increase in public consumption”.
JP Morgan estimates that “the upcoming elections in the US may increase volatility in the Chinese stock market”, where they lowered their recommendation for this market from “overweight” to “market weight” as part of the diversification of the bank’s assets in emerging markets and explained that “on the market A growing possibility of another trade war between the US and China could be clouded. The Bank of America also observes that apart from the tensions between the two countries, China’s long-term growth could be harmed by the changes taking place in the world’s supply chains and various local challenges – as reflected in the Chinese market data in recent months.”
References in a similar spirit regarding the Chinese market were recently published by quite a few leading entities, including UBS, Bank of America and Bank Nomura, which lowered growth forecasts regarding the Chinese market, and Bloomberg stated that 51 out of 74 analysts followed by the network currently estimate that the Chinese economy will conclude the year with Growth is lower than 5%.
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