Weekly Recap: Mixed Economic Signals and Market Declines in Early September

In early September 2024, global economic data reflected mixed trends across various sectors. Switzerland’s inflation remained steady, while US manufacturing continued its contraction. Australia saw modest GDP growth, and the Bank of Canada cut rates amid softening inflation. US job openings dropped, signaling a weakening labor market, while ADP data showed slowed private sector hiring. Commodities saw declines, with crude oil down 7.6% and gold dropping 0.25%. Major US stock indices, including the S&P 500 and NASDAQ, recorded significant losses.

09:30 am – Switzerland: CPI m/m (CHF)
In August 2024, the Consumer Price Index (CPI) remained steady at 107.5 points, unchanged from the previous month. Year-over-year inflation was +1.1%. The stable index was due to offsetting trends: increases in housing rentals and clothing prices were balanced by decreases in costs for private transport hire, air travel, heating oil, international holidays, and hotel accommodations.

The USDCHF saw a daily decrease of 0.4%.

17:00 – USA: ISM Manufacturing PMI (USD)
In August 2024, the US manufacturing sector contracted for the fifth consecutive month, with the Manufacturing PMI registering at 47.2%, indicating ongoing weakness. Key indicators such as new orders, production, and employment all remained in contraction territory, while supplier deliveries slowed and inventories grew. Prices continued to rise, and both exports and imports contracted. Despite these challenges, some industries, including Food, Beverage & Tobacco Products, and Computer & Electronic Products, experienced growth. Overall, the manufacturing sector’s contraction has been slower compared to previous months.

The EURUSD exchange rate decreased by 0.25%

04:30 am – Australia: GDP q/q (AUD)
In the June quarter of 2024, the Australian economy grew by 0.2%, marking the 11th consecutive quarter of growth. GDP increased by 1.5% over the 2023-24 fiscal year, reflecting weak growth driven by subdued household demand and falling terms of trade (-3.0%). The household saving ratio remained low at 0.6%. Government consumption and net trade supported growth, while household consumption and private investment were weak. Despite growth in compensation of employees, mining profits fell due to declining commodity prices, contributing to a 0.6% drop in gross operating surplus.

The AUDUSD exchange rate saw an increase of 0.18%.

16:45 – Canada: Overnight Rate (CAD)
The Bank of Canada, led by Governor Tiff Macklem, reduced the policy interest rate by 25 basis points to 4.25%, marking the third consecutive cut since June. The decision reflects easing inflation and the need for stronger economic growth to stabilize inflation at 2%. While inflation is pulled down by economic weakness, shelter and service price pressures remain elevated.

The USDCAD declined by 0.33%.

17:00 – USA: JOLTS Job Openings (USD)
US job openings dropped to their lowest point since April 2021, reaching 7.67 million, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). This represents a decline of 237,000 from June and falls short of economists’ expectations of 8.1 million. The ratio of job openings to available workers also fell to under 1.1, indicating a weakening labor market. Layoffs increased by 202,000 to 1.76 million, while hires rose by 273,000, reflecting mixed signals about labor market conditions.

The EURUSD increased by 0.35%.

15:15 – USA: ADP Nonfarm Employment Change (USD)
In August 2024, the ADP National Employment Report showed a 99,000 job increase in the private sector, indicating a slowdown in hiring. Wage growth remained steady, with annual pay rising by 4.8% for job-stayers and 7.3% for job-changers. Job gains were notable in goods-producing and service-providing sectors, led by construction and education/health services. However, manufacturing and professional/business services declined. The South experienced the largest job increases. The report indicates a cooling labor market after strong growth, prompting a focus on wage trends and economic performance as the Federal Reserve plans its next moves.

The US Dollar Index declined by 0.21%.

15:30 – USA: Unemployment Claims (USD)
In the week ending August 31, seasonally adjusted initial unemployment claims in the US fell by 5,000 to 227,000, while the previous week’s claims were revised up to 232,000. The four-week moving average dropped by 1,750 to 230,000. The insured unemployment rate remained unchanged at 1.2%, with a slight decrease in insured unemployment figures to 1.838 million. Unadjusted initial claims totaled 189,389, down 3,352 from the prior week. The highest insured unemployment rates were recorded in states like New Jersey, Rhode Island, and Puerto Rico.

The EURUSD exchange rate saw a daily increase of 0.26%.

17:00 – USA: ISM Services PMI (USD)
In August 2024, the Services PMI registered at 51.5%, indicating continued growth in the services sector for the second consecutive month. Key components, including business activity, new orders, and employment, showed moderate expansion, while supplier deliveries remained in contraction territory.

17:00 – USA: EIA Crude Oil Stocks Change (USD)
In the week ending August 30, 2024, US crude oil refinery inputs averaged 16.9 million barrels per day, with refineries at 93.3% capacity. Crude oil imports fell to 5.8 million barrels per day, and crude inventories dropped by 6.9 million barrels. Gasoline production increased, while motor gasoline inventories rose by 0.8 million barrels. Distillate fuel inventories decreased by 0.4 million barrels. Total commercial petroleum inventories declined by 8.0 million barrels, with total products supplied down 1.6% from last year.

Even though there was a 2.2% intraday spike, the day ended with no overall change.

15:30 – Canada: Employment Change (CAD)
In August, employment saw a modest increase of 22,000 jobs (+0.1%), while the employment rate dipped to 60.8% and the unemployment rate rose to 6.6%.

15:30 – USA: Nonfarm Payrolls (USD)
In August, nonfarm payrolls grew by 142,000, with the unemployment rate holding at 4.2%. Job gains were led by construction (+34,000) and health care (+31,000) while manufacturing employment declined (-24,000). Average hourly earnings increased by 0.4% to $35.21, and the average workweek rose to 34.3 hours. Revisions lowered June and July job growth by a combined 86,000.

The EURUSD declined by 0.25%.

17:00 – Canada: Ivey PMI (CAD)
The Ivey Purchasing Manager’s Index (seasonally adjusted) for August came in at 48.2, missing analysts’ expectations, indicating that purchases were less compared to the previous month.

The USDCAD ticked higher by 0.5%.

Crude Oil
US Crude Oil refinery inputs rose to 16.9 million barrels per day, with refineries at 93.3% capacity. Crude imports dropped, while gasoline and distillate production increased. Crude inventories fell by 6.9 million barrels, and total petroleum inventories dropped by 8 million barrels.

Crude Oil closed the week with more than 7.6% decline.

Gold
Gold fell as mixed US jobs data sparked debate on the Fed’s upcoming rate cut. Payrolls rose by 142,000, and unemployment dropped to 4.2%. Traders worry a small rate cut may not support further gold gains, which have risen over 20% this year amid expectations of easing and strong demand.

The precious metal Gold (XAUUSD) concluded the week on Friday with a 0.25% weekly decline.

Stock Market
• S&P 500 declined by 4.4%
• DJIA was down by 3.1%
• NASDAQ 100 declined by 6%
Top Gainers
• Wheeler Real Estate Investment Trust, Inc. (WHLR) 876.19%
• Ryde Group Ltd (RYDE) 140.03%
• Conifer Holdings, Inc. (CNFR) 125.11%
Top Losers
• BAIYU Holdings, Inc. (BYU) -32.67%
• Planet Labs PBC (PL) -28.23%
• Autozi Internet Technology (Global) Ltd. (AZI) -28.18%

Wednesday, September 4: HPE (Hewlett Packard Enterprise Company)
Thursday, September 5: AVGO (Broadcom Inc.)
Thursday, September 5: DOCU (DocuSign Inc.)

Hewlett Packard Enterprise (HPE) reported disappointing margins in its AI server business, with adjusted gross margins of 31.8%, below the 33.4% expected by analysts. Despite a 39% increase in AI server revenue, investors are concerned about the lower profitability due to expensive chips. HPE’s stock dropped 3% in extended trading, though the company saw a 10% increase in overall revenue, marking its best year-over-year sales gain since 2023.

HPE saw a weekly decline of 9.5%.

Broadcom Inc. (AVGO) reported Q3 2024 revenue of $13.1 billion, up 47% year-over-year, driven by strong performance in AI semiconductor solutions and VMware. The company posted a GAAP net loss of $1.9 billion, largely due to a one-time tax charge, but a non-GAAP net income of $6.1 billion. Adjusted EBITDA reached $8.2 billion, 63% of revenue. Broadcom also announced a quarterly dividend of $0.53 per share and projected Q4 revenue of approximately $14 billion, reflecting a 51% increase from the prior year.

AVGO declined by 15.86% compared to the previous week.

DocuSign (DOCU) reported strong fiscal quarter results with a 7% year-over-year revenue increase to $736 million and subscription revenue at $717.4 million. The company’s GAAP net income was $4.34 per basic share, while non-GAAP net income was $0.97 per diluted share.

DOCU ticked lower by 0.03% from the previous week.

In conclusion, early September 2024 saw mixed global economic data, with steady inflation in Switzerland, a contracting US manufacturing sector, and modest GDP growth in Australia. The Bank of Canada cut rates and US job openings declined, signaling a weakening labor market. Commodities and major stock indices experienced declines, reflecting broader market uncertainty.