Weekly: Inflation in focus as September Fed meeting approach

Last Week's Recap

The US Market - Three major indexes hit record highs

• U.S. stocks opened the shortened week with steep losses but rebounded to fresh records Friday, lifted by hopes that softer labor data would clear the path for Fed easing. Still, gains faded late as the weak jobs picture tempered earlier optimism.

• For the week, the S&P 500 rose 0.33% and the Nasdaq gained 1.14%, while the Dow slipped 0.32%.

• August’s jobs report showed a sharp slowdown, with just 22,000 positions added versus expectations for 75,000. Unemployment climbed to 4.3%, the highest since 2021, while weekly jobless claims rose to 237,000.

• Markets now see a September rate cut as assured, with odds climbing for a second move in October and as much as 75 basis points of easing by year-end.

The US Sectors & Stocks - GOOGL & AVGO surged

• Sectors: Communication Services led with a 4% weekly gain, powered by Alphabet’s surge. Financials slipped on concerns a slowing economy could hit loan growth, while Industrials and Energy also lagged on demand worries.

• Alphabet (GOOGL): Jumped over 10% to record highs after a favorable ruling in the DOJ antitrust case allowed Google to keep its Chrome browser.

• Broadcom (AVGO): Surged nearly 10% on a beat-and-raise Q3 report. AI chip revenue grew 63% YoY to $5.2B, with Q4 AI sales guided up 66%. The firm confirmed major new orders, reportedly from OpenAI. Meanwhile, Nvidia and AMD slipped.

• Tesla (TSLA): Rose 5% as the board floated a $1 trillion pay package for Musk tied to ambitious performance targets, alongside potential investment in his xAI venture.

• Credo Technology (CRDO): Surged 14% after crushing Q1 expectations with EPS up 1,200% and revenue up 274%. Strong guidance for Q2 lifted sentiment.

• Figma (FIG): Sank 20% as its Q2 results were in line, guidance for slower growth spooked investors; analysts cut price targets.

• Salesforce (CRM): Reported beats on Q2 earnings and revenue but guided lower for Q3 amid AI product investments. Shares fell.

• Lululemon (LULU): Plunged 19% after cutting full-year revenue guidance again, despite an earnings beat. The company cut its full-year guidance for the second time in three months.

• Macy’s (M): Soared 30% after posting earnings and revenue well above expectations, noting its best comp sales growth in 12 quarters and raising outlook.

Hong Kong Market - HSI rose 1.4%

• Hong Kong stocks rebounded Friday, ending a three-day slide, as weak U.S. jobs data strengthened Fed rate-cut bets and mainland equities recovered from their steepest selloff since the bull run began. The Hang Seng Index (HSI) gained 1.4% for the week.

• Foreign investors bought US$900M of Chinese onshore stocks in August, down from US$2.7B in July, Morgan Stanley said. Passive global funds saw US$1.4B of inflows, while active funds posted US$500M in net outflows.

• Alibaba (9988.HK) surged 14% on strong earnings and major AI investments, lifting sentiment across tech names.

Singapore Market - STI topped 4,300 points

• The Straits Times Index (STI) rose 0.9% last week, breaking above 4,300 for the first time, supported by expectations of a Fed rate cut in September.

• Economists upgraded Singapore’s 2024 GDP growth forecast to 2.4% (from 1.7%) after a stronger-than-expected first half. The government now projects 2025 growth of 1.5–2.5%.

• Retail sales grew 4.8% YoY in July, beating estimates. Meanwhile, the PMI edged up to 50 in August, signaling a return to expansion.

• Reuters reported DBS is exploring the purchase of Temasek’s 29.1% stake in Alliance Bank Malaysia, valued around US$460M.

Australian Market - ASX 200 ended a month-long rally

• The ASX 200 fell 1.1% for the week, snapping a month-long rally as global growth concerns and volatile commodity prices weighed.

• Gold miners outperformed alongside rising spot prices: Regis Resources (ASX: RRL) and Vault Minerals (ASX: VAU) each rose 12%, while Genesis Minerals (ASX: GMD) jumped nearly 19%.

The Week Ahead

Macro Factors - Inflation in focus

• Attention turns to U.S. inflation this week: the producer price index (PPI) on Wednesday and the consumer price index (CPI) on Thursday. The reports will provide the final read before the Fed’s September meeting, where a rate cut is widely expected.

• Economists expect that CPI mark an uptick in inflation from July, seeing August CPI rising 0.3% MoM and 2.9% YoY. On a "core" basis, stripping out the more volatile costs of food and gas, which can be impacted by commodities prices, up 0.3% and 3.1%—matching July’s pace.

• However, August PPI is expected to cool, rising 0.3% MoM versus July’s sharp 0.9% gain.

• Beyond data, markets will watch Apple’s new product launch, along with IPO debuts from Klarna (NYSE) and Gemini (Nasdaq).