New York stocks surged after Fed Governor Christopher Waller indicated he could support holding interest rates steady in September if August inflation data confirms a slowdown.
The S&P 500 climbed 1.06% and the Nasdaq Composite rose 1.40%, while the dollar index fell 0.59% and gold gained 1.96%.
Despite the rally, the US ISM Non-Manufacturing PMI showed robust demand and rising input costs, suggesting persistent service sector inflation.
Geopolitical tensions also escalated with US airstrikes in Iran, pushing WTI crude to a six-week high of $91.30 and posing an ongoing inflation risk.
Central banks across Europe and Asia signaled varied approaches to inflation, with the Bank of England advocating for prompt rate hikes while the ECB nears the end of its tightening cycle.
Global Markets
Detail
S&P 500
Closed higher at 7,747.71 on Fed official's dovish comments.
+1.06%
Nasdaq
Led market gains, closing at 26,584.05, after rate hike probabilities shifted.
+1.40%
STOXX 600
European equities also saw broad-based gains, closing at 649.11.
+0.49%
Nikkei 225
Closed at 64,214.26 before Waller's remarks, awaiting today's open.
-0.17%
CSI 300
Chinese stocks showed slight gains, closing at 4,552.58, before the US rally.
+0.10%
KOSPI
Korean market closed at 6,579.48 prior to the overnight US surge.
+0.26%
Hang Seng
Hong Kong index declined to 25,213.31 before the US market reaction.
-0.39%
Dollar Index (DXY)
Weakened to 98.99 as safe-haven demand eased.
-0.59%
USD/JPY
Yen showed mixed movement, trading at 155.82, despite broader dollar weakness.
+0.01%
EUR/USD
Euro remained relatively stable against the dollar, trading at 1.16.
-0.01%
USD/KRW
Korean Won strengthened slightly against the dollar, trading at 1,355.97.
-0.19%
USD/CNY
Chinese Yuan also saw minor strengthening, trading at 6.72.
-0.01%
US 10-year
Treasury yields dipped to 4.772% on reduced rate hike fears.
-0.8bp
US 2-year
Short-term yields fell more significantly to 4.340%.
-3.1bp
Japan 10-year
Japanese bond yields declined to 2.948%.
-5.4bp
Germany 10-year
German bund yields also saw a decrease to 3.353%.
-2.0bp
Korea 10-year
Korean bond yields dropped to 4.363%.
-4.1bp
US HY Spread
High-yield credit spreads widened slightly to 266bp.
+1.0bp
WTI
Crude oil prices rose to $91.30, a 6-week high.
+0.32%
Gold
Safe-haven asset surged to $4,477.58 despite risk-on sentiment.
+1.96%
Copper
Industrial metal prices also moved higher to $6.66.
+1.08%
VIX
Volatility index dropped to 14.31, signaling easing market anxiety.
-5.79%
Canada's Service Sector Contracts
Canada's services PMI hit 46.8 in August, the lowest since February, indicating economic contraction.
PMI 46.8
Canada's Trade Surplus Shrinks
Canada's July trade surplus sharply fell to C$769M from C$4.2B in June, with energy and metal exports down 2.3%.
C$769M
US 10-Year Treasury Yields
US 10-year Treasury yields reached 4.74%, reflecting market pricing of a 60% chance for a Fed September hike.
4.74%
Brent Crude Rises
Brent crude oil rose to $97 per barrel, exacerbating concerns about a potential economic slowdown.
$97/barrel
Japanese Yen Surges
The Japanese Yen surged 2% in two days, marking its largest gain since early August and signaling renewed intervention by Japanese authorities.
+2%
United States
Fed Official Hints at Rate PauseHike Odds ~50%
Fed Governor Waller indicated he would support holding rates steady in September if August inflation data shows progress.
This caused market bets for a September hike to drop from 62% to around 50%.
Market Reaction to Fed CommentsS&P +1.06%
The dollar weakened 0.7%, the Yen strengthened 2%, and gold rose 2.3% to $4,488.54/oz.
US stocks rallied, with the Dow up 1.18%, S&P 500 up 1.06%, and Nasdaq up 1.40%.
US Services Sector Activity StrongPMI 55.4
US ISM Non-Manufacturing PMI rose to 55.4 in August (from 54.1), with new orders hitting a 3.5-year high due to strong demand.
Input and delivery prices also increased, signaling persistent inflation risks, despite employment indicators showing weakness.
US-Iran Conflict Escalates13 Casualties
US airstrikes killed at least 13 Iranian military personnel, including 3 pilots, intensifying the US-Iran conflict.
The US also tightened economic pressure, blocking oil exports and dollar transactions, while the UAE cut trade ties.
Oil Prices Hit 6-Week HighWTI $93.04
Middle East geopolitical risks pushed Brent crude to $97.29/barrel (+1.7%) and WTI to $93.04 (+2.2%), reaching a 6-week high.
This poses a conflicting variable to rate hold expectations due to potential oil-driven inflation.
Neutral Rate Rise PossibilityR-star 1.65%
Fed Governor Waller noted that US Treasury's safety and liquidity premiums are depleted, reflecting capital competition and fiscal concerns.
The New York Fed's R-star estimate of 1.65% (Q2) suggests rising neutral rates are a structural factor for higher bond yields.
Waller stated that economic growth alone cannot resolve US debt, requiring structural fiscal deficit reduction.
Auto Industry Urges China Car BanLegislative Action
The Alliance for Automotive Innovation (including GM, Ford, Toyota, VW) urged Congress to pass legislation by year-end to ban Chinese car imports.
This aims to strengthen existing Biden administration measures and address the global threat of Chinese vehicles.
Emerging Markets
Wheat Futures Decline-3.6%
Wheat futures (Chicago Wv1) fell 3.6% to $7.46 1/4 per bushel after Russian President Putin cited the possibility of a Ukraine peace deal.
Ukraine's foreign ministry also expressed optimism, easing concerns over Black Sea grain supply disruptions.
Senegal Initiates Bond Payments2048 Bond +2.5c
Senegal confirmed it initiated coupon payments for its 2048 international bond due September 13, despite a planned debt overhaul.
This signals a commitment to servicing international debt, strengthening credit confidence, and caused the bond to rally +2.5 cents.
Bolivia Resists IMF Program$1.9B Program
Bolivian civil society groups and unions continue to resist the government's $1.9 billion IMF austerity program.
Concerns link diesel subsidy cuts and fuel shortages to the loan conditions, stemming from memories of harsh austerity in the 1980s-90s.
Poland's Rates to Remain SteadyHold Until Year-End
Polish Monetary Policy Council member Iwona Duda stated that keeping the policy rate at current levels until at least year-end is the baseline scenario.
This follows Governor Glapinski's hint at a 25bp cut, but other MPC members signal reluctance for further easing.
Hungary's Rate DecisionInflation Outlook
Hungary's central bank announced it would decide on a potential rate hike pause this month based on its September inflation outlook.
This statement was a response to Bloomberg reports suggesting a pause in rate easing.
Egypt's GDP Growth Revised Up5.1%
Egypt's GDP growth for the fiscal year 2025/26 is projected at 5.1%, a 0.7 percentage point increase from 4.4% in the previous year.
This upward revision was announced by the cabinet.
Europe
Bank of England Signals Prompt Rate HikesBoE Rates
Chief Economist Pill argued that swift rate increases could reduce the need for aggressive long-term responses.
Preemptive action on 'second-round effects' (wage and inflation expectations) could limit the scale and duration of future policy.
Stressed the need for clear, prompt, and decisive policy signals to ease market uncertainty amid energy price volatility.
ECB Nears End of Rate Hike CycleECB Hike
A Reuters poll indicates most economists expect next week's hike to be the second and final one, concluding the shortest cycle in 15 years.
The prevailing view is that rising energy prices are unlikely to translate into broad inflationary pressures.
Market forward rates reflect deposit rates around 3% by June next year.
Sweden's Central Bank Sees Economic Growth PotentialRiksbank Outlook
The Riksbank stated that inflation risks are not clear, suggesting potential for economic growth without immediate inflationary pressure.
Governor Thedeen noted no widespread, sustained inflation signals despite higher summer prices than June forecasts.
Slack in the labor market indicates economic growth could proceed without short-term inflationary pressures.
UK & Eurozone Bonds Rebound on Gas Price DropYields Rebound
Long-dated UK gilt yields (20-year, 30-year) returned to last week's levels after reaching post-1998 highs.
Eurozone bonds rebounded after six consecutive days of weakness, with German 10-year Bund yields near 15-year highs.
A drop in benchmark natural gas prices helped alleviate energy inflation concerns.
Volkswagen (VW) Approves Major Restructuring PlanVW Restructure
The supervisory board unanimously approved a 'Future Plan' that includes potential job cuts of up to 50,000.
The plan aims to enhance competitiveness and prepare the company for the future.
It seeks to improve efficiency, competitiveness, and future positioning across the Volkswagen Group and its brands.
EU Introduces Antitrust Exceptions for Sustainable PracticesEU Antitrust
The EU Competition Commission revised competition law guidelines to allow dominant companies (over 40% market share) to justify competitive restrictions based on sustainability.
This includes criteria like raw material savings, pollution reduction, and increased recycling.
The new rules offer more leeway for competitive restrictions than previous guidelines.
Ireland's Corporate Tax Revenue Surges in August+33% Tax Revenue
August corporate tax receipts rose to €2.8 billion, a 33% increase from €2.1 billion last year, largely from a few US multinationals.
Cumulative tax revenue for the year surpassed the previous year by 6.2% or €3.9 billion (excluding Apple's historical tax payment).
Annual corporate tax income increased by 8.3%, contributing to record tax levels.
Germany's Stade LNG Terminal Set for November OperationLNG Terminal
The Deutsche Energy Terminal operator announced the Energos Force FSRU (floating storage and regasification unit) is expected to arrive in Stade in September.
This is Germany's fifth floating LNG terminal, part of its strategy to diversify energy sources after Russian pipeline cuts in 2022.
Full operation is anticipated in November with the first commissioning cargo.
UK New Car Registrations Up 17.5% in August+17.5% New Cars
NewAutomotive data showed a 17.5% year-on-year increase in new car registrations for August.
Battery Electric Vehicles (BEVs) became the largest fuel type in the UK market.
Suspected Arson at German Defense Firm Amid Infrastructure AttacksGermany Incident
German authorities are investigating a suspected arson incident outside a Munich defense company.
This follows a series of sabotage and disruption events, including a drone attack on an airport last month, with Berlin pointing fingers at Russia.
Past incidents include a DHL parcel fire in July 2024 at Leipzig airport, which later expanded to logistics centers in the UK and Poland, and was attributed to hidden Russian incendiary devices.
China
China Deploys First Policy Financing Funds for Emerging Firms¥460M Fund
The China Development Bank disbursed the first tranche of 460 million yuan (approx. $68.47 million) for 2026 policy-based financing.
Funds are allocated to three projects: batteries, high-grade nickel-chromium materials, and transportation infrastructure.
This initiative aims to drive corporate growth and job creation.
China Unveils 5-Year Plan to Support "Little Giants" SMEsSME Support
Ten central government agencies announced a five-year plan to support "little giants" and emerging small and medium-sized enterprises.
The plan promotes participation in national science and technology projects and utilizes government funds for early-stage capital.
Objectives include achieving technological self-reliance and creating jobs.
S&P Global Ratings Warns of China's Credit Risk AccumulationCredit Risk
S&P Global Ratings' Asia-Pacific head highlighted a trend of lenient credit ratings in China's local bond market, favoring top-rated (AAA and above) issuers.
This allows foreign companies, rated B (speculative grade) globally, to achieve AAA ratings for local Panda bond issuance.
This practice leads to the accumulation of credit risk within the domestic financial market.
Japan
Yen Jumps Over 2% on BOJ Hike BetsYen +2%
The USD/JPY rate fell from 158.96 to 156.17, nearing July highs.
Markets are pricing in a 75% probability of a 25 basis point rate hike by the Bank of Japan in September.
Official yen buying intervention on September 3rd was not confirmed by BOJ account data.
Japan FX Chief Mimura on Alert Over Yen VolatilityFX Alert
Vice Finance Minister Mimura stated he is "not yet reassured" by recent yen movements and is monitoring currency market trends.
He maintained a cautious stance, avoiding specific exchange rate or policy comments.
Asia
RBI Special Dollar Deposit Scheme Attracts $127.23 Billion$127.23B Inflow
India's financial system liquidity surplus expanded to a record 9.70 trillion rupees (approx. $102.7 billion).
The RBI is considering absorption measures like Variable Rate Reverse Repo (VRRR) due to concerns that excess liquidity could fuel inflation.
Indian Rupee Hits 10-Week HighRupee +0.5%
The rupee closed at 94.49 per dollar, its highest level since June 25, with a daily gain of 0.5%, the largest since July 27.
The currency opened at 94.30, but dollar demand from importers limited some of the gains.
RBI dollar inflows were a primary driver of the rupee's strength.
Indian Bond Yields Mixed Amid Dollar Inflow and Oil SpikeYields Mixed
10-year bond yields initially fell to 6.9323% in the morning due to dollar inflows but rebounded on inflation concerns from surging oil prices.
The 10-year bond (6.94% coupon, 2036 maturity) closed at 6.9646% (vs 6.9754%), while 5-year yields fell 4 basis points to 6.5216%, indicating relative strength in shorter maturities.
SEBI to Review Derivatives Settlement MethodologySEBI Review
Concerns arose regarding index discrepancies between exchanges, volatile option prices, and potential market manipulation after the introduction of closing auctions on August 3.
The regulator decided to review the overall methodology for derivatives settlement prices, incorporating user feedback.
Latin America
Latin American Stocks Reach Multi-Month HighsLatAm Stocks Up
The MSCI Latin America index rose by 0.6%, maintaining near four-month highs.
Brazil's Bovespa index gained 0.7%, extending its winning streak to 12 consecutive trading days.
The rally was supported by rising oil prices and a weaker dollar.
Chile Central Bank Expected to Hold Rates at 4.5%Chile Rates
A Reuters poll of traders forecasts the central bank will maintain its benchmark interest rate at 4.5% at next week's policy meeting.
The rate is expected to remain frozen at this level for 24 months.
Consumer prices accelerated in August to 0.3% and are projected to rise 0.6% in September, with a 12-month forecast of 3.3%.
Brazil and ECB Explore Pix-Based Cross-Border PaymentsPix Link
Brazil and the European Central Bank are studying a potential link for instant payments based on Brazil's Pix system.
A pilot project could launch by 2028, marking the first major cross-border trial for Pix.
Latin American Currencies Supported by Carry TradeCurrencies Up
JPMorgan expects high-yielding Latin American currencies like the Colombian peso, Brazilian real, and Mexican peso to continue benefiting from carry trades.
A weaker dollar, following US Treasury market support measures last month, has enhanced carry trade profitability.
However, recent currency strength does not necessarily reflect improved economic fundamentals.
Colombia Repeals Mining and Oil Development RestrictionsMining Dereg
Colombia's new right-wing government, under President Abelardo De La Espriella, repealed 10 administrative decrees that restricted mining and oil exploration.
This move is part of an economic stimulus policy, reversing resource exploration limits set by the previous left-wing administration.
Additional administrative decrees are planned to streamline procedures.
Top Gainers
Detail
Robinhood Markets (HOOD)
Financial sector, market capitalization of $112 billion.
+16.57%
Coinbase Global (COIN)
Financial sector, market capitalization of $51 billion.
+10.14%
Palantir Technologies (PLTR)
Information Technology sector, market capitalization of $439 billion.
+7.71%
ServiceNow (NOW)
Information Technology sector, market capitalization of $151 billion.
+6.49%
Principal Financial Group (PFG)
Financial sector, market capitalization of $25 billion.
+6.47%
Axon Enterprise (AXON)
Industrials sector, market capitalization of $44 billion.
+6.15%
Oracle (ORCL)
Information Technology sector, market capitalization of $444 billion.
+5.69%
CrowdStrike Holdings (CRWD)
Information Technology sector, market capitalization of $220 billion.
+5.68%
Tesla (TSLA)
Consumer Discretionary sector, market capitalization of $1,486 billion.
+5.42%
Hewlett Packard Enterprise (HPE)
Information Technology sector, market capitalization of $72 billion.
+5.04%
Companies
Broadcom (AVGO)-2.74%
Q3 revenue of $29.59 billion and adjusted EPS of $3.32 beat estimates, but Q4 revenue guidance of $34.8 billion missed consensus.
Management reaffirmed its AI chip shipment outlook of $350 billion over the next two years and raised FY2026 AI revenue guidance to $58 billion.
Analysts had mixed reactions, with some lowering price targets while others raised them, citing future demand recovery.
Nvidia (NVDA)+1.80%
Announced a $12.93 billion acquisition of Hugging Face to secure its open-source AI ecosystem, with closing aimed for H1 2027.
The deal includes up to $1 billion in stock compensation to retain employees.
Plans to launch RTX Spark AI PCs in October, with Lenovo and Acer as initial manufacturers.
Apple (AAPL)+1.00%
Reports indicate CEO Tim Cook will transition to Chairman, with John Turnus succeeding him as CEO.
Cook's salary will decrease by one-third, but he will maintain influence with $45 million in annual stock awards.
Faces a £2 billion ($2.7 billion) class-action lawsuit in the UK over its App Tracking Transparency rules.
Google (GOOGL)+1.59%
A court rejected the DOJ's demand for a business split in an antitrust ruling, easing regulatory uncertainty.
Launched Gemini 3.8 and Fairwind, a cyber defense program for governments.
The EU antitrust authority is investigating Google's AI search opt-out options for publishers.
Released Kotlin generative AI SDK 1.0 and unveiled WeatherNext 3, a global weather forecasting AI model.
Microsoft (MSFT)
Will reorganize its business into Azure & Infrastructure and Devices & Consumer segments starting FY27.
Decided to separately disclose Azure revenue, guiding for 44-45% growth (constant currency) in Q1 FY27.
Palo Alto Networks (PANW)
Reported to have acquired AI startup Console for $500 million.
T-Mobile (TMUS)+0.38%
CFO Peter Osvaldik will retire in February 2027, with Jessica Uhl appointed as his successor.
Reaffirmed its 2026 financial guidance and capital return policy.
Meta Platforms (META)+3.01%
Reported to be attempting to narrow the technology gap with competitors by unveiling new AI models.
Launched a bill payment feature in WhatsApp in India, allowing direct payments to 22,722 billers.
AbbVie (ABBV)-0.58%
Blood cancer drug Etentamig met key endpoints in Phase 3 CERVINO trial, showing a 74% response rate vs. 45.7% for control.
Completed the acquisition of Apogee Therapeutics, expecting short-term EPS dilution but positive contribution from 2032.
Maintained its Q3 and full-year 2026 adjusted EPS guidance, signaling management confidence.
NextEra Energy (NEE)+1.16%
Merger agreement with Dominion Energy was approved by shareholders with over 670 million votes in favor.
Partnered with Santee Cooper to transition existing systems to Google-based AI tools.
Duke Energy (DUK)+0.70%
Its Florida subsidiary filed a request with regulators for a rate reduction effective January 2027.
Williams Companies (WMB)-1.48%
Completed the acquisition of Momentum Midstream, expanding its asset base in oil and gas infrastructure.
GE Vernova (GEV)+2.16%
Secured a contract to supply turbines for a 96MW wind farm in Scotland.
Announced cooperation on a 1.2GW nuclear power project in Sweden and a power grid maintenance contract in Venezuela.
Boeing (BA)
Confirmed it paid a $3.1 million fine to the FAA for safety violations related to the Alaska Airlines door plug incident.
Amazon (AMZN)+1.54%
Users reported AWS service outages in the US.
Wells Fargo raised its price target.
Aims to handle nearly 90% of its US deliveries through its own network.
Tesla (TSLA)+5.42%
Scheduled to unveil its two-seater autonomous robotaxi, 'Cybercab,' in Texas on Thursday.
France began testing Tesla's Full Self-Driving (FSD) technology, with potential approval by year-end.
Several EU countries have already granted temporary approval for FSD.
Costco (COST)
Reported August net sales of $23.7 billion, up 9.9% YoY, with comparable store sales up 8.4%.
Walmart (WMT)+2.20%
Expanded its restaurant food delivery business through a partnership with Inspire Brands.
Chevron (CVX)-0.22%
Signed new oil and gas business agreements in Ghana and Venezuela.
Multiple brokerages raised their price targets.
ExxonMobil (XOM)-1.18%
Piper Sandler raised its price target.
Palantir Technologies (PLTR)+7.71%
Expanded its strategic collaboration with PwC to scale and market enterprise AI solutions.
Goldman Sachs (GS)+3.34%
Dinesh was appointed Chief Technology Officer (CTO) of Goldman Sachs' Core Engineering division.
Reddit (RDDT)-1.33%
Expanded its MAX Campaigns, an automated ad campaign optimization tool, to all advertisers.