MARKET WRAPS
Watch For:
EU GDP; Germany industrial production; trading updates from Ashmore Group, Standard Life
Opening Call:
European stock futures edged lower. Asian stock benchmarks were mixed; the dollar edged higher; oil futures rose; while gold fell.
Equities:
Stock futures point to a slightly lower open in European markets at the start of the week.
Focus is on U.S. inflation data at the end of the week following a stronger-than-expected U.S. jobs report last Friday. Investors are anxious over whether the Federal Reserve will lift rates on Sept. 16.
"[Friday's] strong jobs report is the good news nobody asked for," said Peter Graf, chief investment officer at Amova Asset Management Americas. "It takes away the Fed's most credible excuse for not raising rates in September."
U.S. markets are closed Monday in observance of the Labor Day holiday.
Forex:
The U.S. dollar index could "test resistance at 99.40 late in the week if market pricing for a September rate hike from the Fed increases as we expect," CBA said.
U.S. CPI data, due this Friday, is a "crucial input" into the Fed's September decision, CBA said. "Market pricing for a September hike is currently a coin toss near 50%."
Bonds:
The AfD scored a historic victory at a regional election in Germany on Sunday but was just short of the majority needed to form the country's first far-right government since World War II, according to preliminary results.
Now the ball is with Chancellor Friedrich Merz and his center-right Christian Democratic Union. The path he takes could decide his fate and that of his government.
"The next days and weeks will bring lots of speculation about what the win of the AfD will mean for the German economy," said ING's Carsten Brzeski, noting that there could be a symbolic impact on foreign investors.
"What seems to be a bit clearer is the fact that the AfD is shaking up an increasingly fragmented political landscape in Germany."
Energy:
Oil rose early Monday amid an escalation in the U.S.-Iran conflict. The U.S. military said it struck three Iranian oil tankers on Saturday after Iran launched ballistic missiles toward two Navy warships, as the battle to assert control over the Strait of Hormuz intensifies.
"The specter of oil flows returning to normal in the Middle East faded amid renewed attacks between the U.S. and Iran," ANZ said.
Metals:
Gold fell in Asia, and faces near-term headwinds including the risk of a sticky U.S. inflation reading this week, said Peter A. Grant, vice president and senior metals strategist at Zaner Metals.
Stronger-than-expected economic data, such as last Friday's robust U.S. jobs report, also uphold risk-on sentiment and lower immediate safe-haven demand for gold, he added. Copper edged lower in Asian trading amid profit-taking. The metal has risen in recent sessions as supply side issues continue, ANZ said.
Top producer Chile posted its weakest second-quarter output in at least 19 years. The country cut its full-year production forecast for a second straight quarter and now expects a 2.6% decline, ANZ said. Iron ore prices advanced in Asia, thanks to a temporary decline in port arrivals, preholiday restocking by steel mills and elevated freight costs, said Huatai Futures. However, gains are likely to be capped by ample seaborne supply and weak mill profitability.
China's iron-ore arrivals are sharply lower, while global shipments remain elevated, showing near-term supply is tighter but may recover into the next cycle, Huatai Futures said.
TODAY'S TOP HEADLINES
OPEC, Allies Agree to Keep Oil Output Steady in October
Key members of the Organization of the Petroleum Exporting Countries and its allies agreed to hold oil production steady in October after six straight monthly increases, as the focus shifts to setting output quotas for next year.
Sunday's decision comes as the war between the U.S. and Iran continues to severely disrupt global oil flows, limiting the ability of the broader group, OPEC+, to bring additional barrels to consumers and influence market balances.
Is the U.S. losing its safe-haven status? Why global central banks are pulling gold out of New York.
The U.S.'s status as a financial safe haven has begun to clash with President Trump's growing barrage of economic and military threats to advance his agenda.
The Netherlands' central bank cited "geopolitical unrest" this week in its decision to move gold out of New York. Norway's $2.4 trillion oil fund also floated a plan to cut its Treasury holdings and reduce its overall government-bond holdings to 50% from 70%, according to a spokesperson for the fund.
Trump Envoys Visit Ukraine in New Push for Peace Talks
President Trump's envoys achieved one thing with their first trip to Ukraine's capital on Sunday as they tried to jump-start peace talks between Russia and Ukraine: a brief pause in Russia's deadly bombing campaign against Kyiv.
Ukraine and Russia held off on strikes on each other's capitals as the U.S. envoys, Jared Kushner and Steve Witkoff, visited first Moscow then Kyiv this weekend.
After Far-Right Election Breakthrough, Germany's Merz Faces Painful Dilemma
BERLIN-Germany's Alternative for Germany scored a historic victory at a regional election on Sunday but was just short of the majority needed to form the country's first far-right government since World War II, according to preliminary results.
The result, if confirmed, will face other parties on the right and the left with a stark choice: keep banding together to keep the AfD out of power despite deep political differences-a decades-old strategy known as the firewall-or let the AfD form a minority government for the first time.
U.S. Strikes Three Iranian Ships After Missiles Fired at American Aircraft Carrier
The U.S. military said it struck three Iranian oil tankers on Saturday after Iran launched ballistic missiles toward two Navy warships, including an aircraft carrier, as the fight to assert control over the Strait of Hormuz intensifies.
"A U.S. aircraft carrier and guided-missile destroyer successfully evaded multiple unprovoked Iranian attacks," said U.S. Central Command, which oversees American forces in the Middle East.
Amazon Cargo Plane Overshoots Runway in Miami, Killing Five People
An Amazon.com cargo plane overshot the runway at Miami International Airport and crashed into nearby vehicles, killing at least five people and injuring five more.
The plane swiped several vehicles and trapped people inside who had to be extricated, Miami-Dade Fire Rescue Chief Raied "Ray" Jadallah said at a news briefing Sunday afternoon. Of the five injured, three were in critical condition, authorities said.
Volkswagen's Peace Deal With Unions Sets Up Fresh Battles to Come
Volkswagen's warring stakeholders put aside their differences this week to approve a landmark turnaround plan. But the deal sets the state for new battles likely to test the fragile peace.
The German automaker said late Thursday that its powerful unions and state shareholder, which together have a majority of seats on its supervisory board, had signed off on plans to double job cuts to 100,000, halve its model portfolio and trim its sprawling portfolio of businesses.
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Expected Major Events for Monday 05:45/SWI: Aug Unemployment
06:00/NOR: Jul Industrial Production Index
06:00/ROM: 2Q GDP
06:00/UK: Aug Lloyds House Price Index
06:00/GER: Jul Industrial Production Index
06:30/HUN: Jul Preliminary Industrial Production
07:00/SPN: 2Q Housing Price Index
07:00/AUT: Aug Wholesale Price Index
07:00/SWI: Aug SNB foreign currency reserves
07:00/CZE: Jul Industry, Construction
07:00/CZE: Jul External trade
08:00/BUL: 2Q GDP - preliminary data
09:00/GRE: 2Q Provisional GDP
09:00/GRE: Jul External Trade (provisional data)
09:00/EU: 2Q GDP and Main Aggregates Estimate
09:00/EU: 2Q Employment
09:00/LUX: 2Q GDP
15:59/UKR: 2Q GDP
23:01/UK: Aug BRC-KPMG Retail Sales Monitor
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