After experiencing a panic crash in early August, multiple markets including the United States, Europe, Japan, and South Korea have shown a clear rebound this week, with some stock indices almost regaining lost ground. Looking ahead to future performance, industry institutions predict that Japan's GDP performance in the second quarter exceeded expectations and is expected to boost related asset performance, while the latest inflation data from the United States will further support expectations of a September interest rate cut.
Next week, the heavyweight event that the global financial community is paying attention to - the upcoming Jackson Hole Global Central Bank Annual Meeting, at which Federal Reserve Chairman Powell will provide the latest clues on monetary policy. In addition, next week the Federal Reserve will release the minutes of its August monetary policy meeting, as well as the latest inflation data for economies such as Europe and Japan, which are also worth paying attention to.
According to CCTV News, on the 18th local time, the Institute of Volcanology and Seismology of the Far East Branch of the Russian Academy of Sciences stated that shortly before the earthquake, the Hiverruch volcano on the Kamchatka Peninsula began to erupt, with volcanic ash reaching a height of nearly 9 kilometers.
Overseas stock markets collectively welcome rebound
Gold prices hit a new historical high
Looking back at the performance of overseas markets this week, Wind data shows that as of Friday's close, the US Dow Jones Industrial Average, Nasdaq, and S&P 500 index have risen 2.94%, 5.29%, and 3.93% respectively for the week; In terms of European stock markets, the FTSE 100 index in the UK, the CAC40 index in France, and the DAX index in Germany rose 1.75%, 2.48%, and 3.38% respectively for the week; In terms of the Asia Pacific stock market, the Japanese and Korean stock markets, which were hit the hardest this time, saw the Nikkei 225 index rise 8.67% for the week and the Korean Composite Index rise 4.20% for the week.
The unexpected interest rate hike by the Bank of Japan and the lower than expected non farm payroll data in the United States have triggered the severe fluctuations in global asset prices. However, based on the important macro data released last week, the month on month and year on year growth rate of Japan's nominal GDP in the second quarter far exceeded market expectations, indicating that its fundamentals still have bright spots, which is seen by institutions as a potential boost to Japan's related assets in the future. The year-on-year growth rate of CPI data released by the United States in July fell below 3%, indicating that its inflation slowdown process continues, providing data support for the market's eagerly anticipated September interest rate cut.
China International Capital Corporation (CICC) believes that the Federal Reserve does not want to cause a recession by cutting interest rates too late, nor does it want to be too proactive in cutting interest rates to trigger a rebound in inflation. Overall, it is still relatively restrained. The July CPI data will support the Federal Reserve to cut interest rates by 25 basis points in September, but not by 50 basis points. The benchmark scenario is that the Federal Reserve will cut interest rates by 25 basis points each in September and December. Currently, the market's pricing for interest rate cuts may be too aggressive, and there is a possibility of further adjustment.
Compared to the rebound in the stock market, the performance of gold prices this week has been more impressive. According to Wind data, both London spot gold prices and COMEX gold futures prices hit historic highs on August 16th and simultaneously reached the $2500 per ounce mark. The former rose more than 3% for the week, while the latter rose nearly 3% for the week, with a cumulative increase of over 21% for the year, far outperforming the three major US stock indices.
However, from the perspective of industry institutions, there is still a possibility and space for further upward movement in the sustained high gold price in the future. Guangfa Securities predicts that there will be two sources of support for gold prices in 2024: firstly, as expectations of US interest rate cuts gradually materialize in the second half of the year, the downward trend in the real interest rate of 10-year US Treasury bonds is expected to support gold prices to some extent; secondly, the geopolitical situation may also become a factor contributing to the temporary rise in gold prices; In the medium to long term, there is still potential room for an increase in global gold reserves to support gold prices.
Global heavyweight central bank annual meeting opens
Powell's speech becomes the focus
For next week's overseas markets, the most noteworthy is the Jackson Hole Global Central Bank Annual Meeting, which will open on August 22 local time. The keynote speech by Federal Reserve Chairman Powell at the meeting is seen as providing the latest clues to monetary policy, and it is also one of the most noteworthy topics before the Federal Reserve's September interest rate meeting.
In July 2023, the Federal Reserve raised its benchmark interest rate to the range of 5.25% -5.50%. At the 2023 Jackson Hole Global Central Bank Annual Meeting held a month later, Powell stated that the Federal Reserve is prepared to further raise interest rates in appropriate circumstances. However, as the Federal Reserve continues to maintain the aforementioned high interest rates, US inflation continues to cool down, falling back to the "2" mark after more than four years by July 2024. Therefore, Powell's speech at this year's meeting may be significantly different from last year.
Before Powell's speech, on the early morning of August 22nd Beijing time, another important document from the Federal Reserve - the minutes of the Federal Reserve's August monetary policy meeting - was also worth paying attention to.
Based on the previously released minutes of the July meeting, Federal Reserve officials believe that reducing borrowing costs is inappropriate until "more information gives them more confidence" that inflation is moving towards the 2% target. Some officials emphasize the need for patience in allowing high interest rates to continue suppressing demand, while others point out that if inflation remains high or rises further, interest rates "may need to be raised".
Judging from the important economic indicators to be disclosed next week, the latest inflation data released by multiple overseas economies are also worth investors' attention. On August 20th Beijing time, the July CPI of the European Union and the Eurozone, as well as the July CPI of Canada, will be released on the same day; On August 23rd, Japan's July CPI will be released, and on that day, Bank of Japan Governor Kazuo Ueda will also attend a parliamentary hearing.
The eruption of Mount Sivoluchi in Russia
According to CCTV News, on the 18th local time, the Institute of Volcanology and Seismology of the Far East Branch of the Russian Academy of Sciences stated that shortly before the earthquake, the Hiverruch volcano on the Kamchatka Peninsula began to erupt, with volcanic ash reaching a height of nearly 9 kilometers.
According to the official measurement of China Earthquake Networks Center, at 3:10 on August 18, a magnitude 7.0 earthquake occurred in the open sea on the east coast of Kamchatka (52.80 degrees north latitude and 160.15 degrees east longitude), with the focal depth of 50 kilometers.
Russia has a phone call with the Director General of the International Atomic Energy Agency
Discuss the situation around two nuclear power plants
According to CCTV News, on the 17th local time, the President of the Russian State Atomic Energy Corporation, Likhachev, had a phone call with the Director General of the International Atomic Energy Agency, Grossi, to discuss the surrounding situation of the Kursk Nuclear Power Plant and Zaporizhzhia Nuclear Power Plant.
During the call, Likhachev stated that the situation around the two nuclear power plants is still deteriorating.
In addition, Likhachev also invited Grossi to visit the Kursk nuclear power plant and the city of Kurchatov.
Russian Foreign Ministry spokesperson Zakharova said on the same day that there were reports indicating that Ukraine had begun preparing to attack the Kursk nuclear power plant.