Stocks experienced notable volatility during Monday’s regular trading hours, with all three major indices posting modest gains by the day’s end. The S&P 500 index increased by 0.4%, while the Nasdaq Composite advanced by 0.45%. The Dow Jones Industrial Average, composed of 30 stocks, rose by 0.13%. These positive results halted the previous four days of losses, indicating a potential improvement in market sentiment. Investors remain vigilant regarding further developments and news that could influence the markets.
This morning, futures point to a negative start for major U.S. stock indices: Dow Jones Industrial Average (DOW FUTURES) is showing a 0.29% contraction, Standard & Poor’s 500 (S&P 500 FUTURES) is registering a 0.32% decrease, and Nasdaq 100 (NASDAQ 100 FUTURES) is indicating a 0.38% decline. These numbers reflect cautious investor sentiment influenced by various economic and geopolitical factors. However, markets are known for their volatility, and conditions may evolve during the day based on unexpected news and developments.
Stocks are currently in a bearish trend that may characterize the close of September, historically a challenging month for stock markets. The recent Federal Reserve meeting further solidified investor sentiment, anticipating higher interest rates maintained for an extended period and fewer rate cuts expected in 2024 than previous forecasts. Meanwhile, attention is focused on Washington, where lawmakers seek to avoid a potential government shutdown, slated for October 1 if Congress fails to reach a spending bill agreement. Investors will closely monitor political and financial developments in this context.
All of this has triggered an increase in yields of ten-year Treasury bonds. The yield on 10-year Treasury bonds has risen by more than ten basis points to 4.542%, reaching the highest level since 2007 when it reached 4.57%. Additionally, the market has faced a rally in crude oil prices and a strengthening dollar during a traditionally weak trading period. These factors have contributed to a complex and volatile environment for investors during the month.
Furthermore, investors are closely following budget developments in Washington.
Today, on Tuesday, September 26, Asian markets are experiencing a significant loss in value. The Japanese Nikkei is down by 0.9%, the Hong Kong Hang Seng has lost 1%, and the Shanghai stock market is down by 0.3%. Meanwhile, the price of U.S. WTI crude oil has stabilized below $90 per barrel, reaching $89.34.
Over the weekend, lawmakers showed little progress in reaching an agreement to fund the U.S. government for the remainder of the fiscal year, creating uncertainty in the market.
The oil market has witnessed a significant rally, with an increase of approximately 30%, pushing crude oil prices above $90 per barrel compared to the lows earlier this year. This substantial price increase exerts new pressure on energy costs, jeopardizing expectations of a possible interest rate cut. At the same time, this rapid rise in oil prices threatens the finances of energy-importing countries, as it increases import costs and could create fiscal imbalances.
The Bank of Japan (BoJ) recently maintained negative interest rates at -0.1%. This move is significant, considering many other central banks worldwide have begun raising interest rates. The BoJ also confirmed its commitment to its yield curve control policy, indicating no intention to end the massive fiscal stimulus in place. This decision impacted the Japanese yen, which weakened slightly against the U.S. dollar. However, traders remained cautious in their bets against the yen, as the BoJ closely monitors the impact of currency movements on the Japanese economy.
Meanwhile, inflation in Japan saw a slight decrease in August 2023, dropping to 3.2% from the previous month’s 3.3%. Although it declined, this figure remains relatively high in recent months. Meanwhile, core inflation, which excludes fresh food, remained stable at 3.1%, staying above the market’s 3.0% threshold. It is important to note that core inflation has remained above the Bank of Japan’s 2% target for the 17th consecutive month. These data indicate that inflation remains a challenge for the Japanese economy, and the Bank of Japan may continue to closely monitor the situation and take appropriate measures to achieve its monetary policy objectives.
Market Data for Monday, September 25, 2023:
DOW Jones +0.13% at 34,006.88
S&P 500 +0.40% at 4,337.44
NASDAQ Composite +0.45% at 13,271.32