Market developments
Equities: U.S. stocks suffered their worst week of 2024, led lower by tech and the August jobs report which showed tepid hiring. This fueled concerns about the labour market’s health and boosted expectations of a jumbo-sized interest rate cut by the Federal Reserve in September. Additional downward pressure came from a negative earnings release from Broadcom on Friday, along with weaker than expected monthly semiconductor sales data and subpoenas issues by the DOJ to Nvidia earlier this week.
Fixed income: The world’s largest bond market experienced a rally following comments from Federal Reserve Governor Christopher Waller, who indicated that the central bank should initiate interest rate cuts this month. Waller’s remarks were a result of disappointing jobs data that suggested a weakening labour market, reinforcing speculation about a significant rate cut at the upcoming Federal Open Market Committee (FOMC) meeting. Canada and Europe also saw yields move lower and bond prices climb higher this week.
Commodities: Despite the support from potential Fed actions, oil prices have erased their gains for 2024 due to fears of a global economic slowdown. In response to these market conditions, OPEC+ announced on Thursday that it would extend voluntary oil production cuts of 2.2 million barrels per day for two additional months, now set to phase out starting December 1, 2024.