Counting on more rate cuts By Reuters

A look at the day ahead in European and global markets from Wayne Cole.

It was a quiet positive start to the week for markets, with China’s central bank cutting its 14-day repo rate by 10 bps, days after disappointing markets by not cutting long-term rates.

Analysts warned the move only touched on an already delivered cut in 7-day repo rates, but shares enjoyed everything and added 0.6%.

Japan is on holiday, but futures are trading 740 points above the cash close. Wall Street and European futures were all up between 0.2 percent and 0.6 percent.

The dollar and euro extended gains on the yen following dovish comments from the head of the Bank of Japan on Friday.

The S&P is up 1 percent so far in September, historically the weakest month for stocks, and has gained 19 percent year-to-date to hit all-time highs.(.N)

More than 20 billion shares changed hands on Friday in US stock markets, the busiest session since January 2021. Analysts at Bank of America noted that the S&P rises an average of 21% when there is no recession in the 12 months since the start of Fed tapering.

Markets were still basking in the afterglow of the Federal Reserve’s half-point rate cut, with futures implying a 50 percent chance of another big move in November.

At least nine Fed policymakers are speaking this week, including prepared remarks from Chairman Jerome Powell, two governors and New York Fed President John Williams.

Much will depend on what the Fed’s preferred inflation gauge, core personal consumption expenditures (PCE), shows on Friday. Analysts expect a 0.2% month-on-month rise, taking the annual pace to 2.7%, while the main index will slow to just 2.3%.

Next week also includes surveys on global manufacturing, US consumer confidence and durable goods.

The Swiss National Bank meets on Thursday and markets are fully priced in for a quarter-point cut to 1.0%, with a 41% chance of it drying up by 50 basis points.

Sweden’s central bank meets on Wednesday and is also expected to cut by 25 basis points, again with some chance of a hike.

One bank not relaxing is the Reserve Bank of Australia (RBA), which meets on Tuesday and is seen as almost certain to keep rates at 4.35% as inflation proves stubborn.

Investors were also keeping an eye on negotiations to avoid a US government shutdown just days before the current $1.2 trillion fund runs out on September 30. The Republican Speaker of the US House of Representatives, Mike Johnson, proposed a three-month temporary funding bill on Sunday. but now they have to go to the vote.

Key developments that could influence markets on Monday:

– September flash PMI for Europe and US, Chicago Fed activity index

– Appearances by European Central Bank Board Member Piero Cipollone and ECB Board Member Frank Elderson

– Speeches by Fed Bank of Atlanta President Raphael Bostic, Fed Bank of Chicago President Austan Goolsbee, and Fed Bank of Minneapolis President Neel Kashkari

(By Wayne Cole; Editing by Edmund Klamann)