Markets await fundamental news package, financial and international reviews

Market reviews

• Today’s U.S. ISM manufacturing survey is the first major indicator in a big week for U.S. data. Investors and the Federal Reserve are looking for reassurance that the path to interest rate cuts is clear and are eager to assess how quickly to do so. Traders recently cut expectations for a 50 basis point cut this month, and the dollar has steadied after a two-month selloff.
Economists are forecasting the ISM index to come in at 47.5, an improvement from the previous month but still in negative territory below 50. The labor market is expected to add 160,000 jobs and the unemployment rate to fall to 4.2%.

• Low-level surprises are likely to push the dollar back to test recent lows, although in Asia, caution and short-covering helped the dollar extend its recent rebound. Asian currencies were particularly strong on expectations of a US rate cut, giving regional economies more room to ease policy and boost growth.

 • Asian data showed Australian government spending rose in the June quarter, prompting National Australia Bank to raise its gross domestic product forecast for Wednesday. Inflation in South Korea slowed to a three-and-a-half-year low, paving the way for an imminent rate cut.

• Cathay Pacific has announced flight cancellations while it checks its Airbus A350 fleet after a Rolls Royce engine component failed.

• In Japan, a senior finance ministry official has denied speculation that retail giant Seven & i Holdings is seeking national security clearance to fend off a takeover attempt by Canada's Alimentation Couche-Tard.

• Blackstone (BX) is preparing a deal to buy Australian data center operator AirTrunk for $13.6 billion in what could be the largest digital infrastructure deal this year.

• Billionaire Steven Cohen's hedge fund Point72 is aggressively buying shares of Navitas Semiconductor (NVTS), a company that specializes in gallium nitride (GaN) semiconductors. Navitas develops innovative fast-charging and energy-efficiency solutions for a variety of industries, including mobile devices, data centers, and electric vehicles.

• Brazil's government considers taxing big tech companies if revenues are missed
Brazil's Finance Ministry said Monday that if revenues are missed, it will submit to Congress in the second half of this year proposals to tax big tech companies and impose a global minimum tax of 15% on multinationals to reach a fiscal target by 2025.

• Semiconductor group calls on EU to appoint 'chip envoy', provide more support - Reuters Europe's main computer chip group ESIA on Monday called on the European Commission to speed up aid, develop an updated "Chip Act 2.0" support package and appoint an envoy to champion the sector's interests.

• HP will continue its $4 billion lawsuit against the recently deceased Mike Lynch. The US company is seeking compensation for its acquisition of British tech company Autonomy amid allegations that co-founder Mike Lynch orchestrated a fraud to inflate the company's value.

• ASML supplier VDL denies job cuts. Industrial equipment maker VDL, a key supplier to leading computer chipmaker ASML, on Monday denied reports it was cutting jobs due to weak demand in semiconductor markets, Business News Radio reported, citing an internal memo.

• Starlink tells Brazilian regulator it won't comply with court order to block X. Musk-controlled satellite internet provider Starlink has told Brazil's telecoms regulator Anatel it won't comply with a court order to block social media platform X in the country until its local accounts are unfrozen.

• Volkswagen is considering historic plant closures in Germany as part of a cost-cutting drive, underscoring the pressure Europe's leading carmaker faces from cheap Chinese competition.

• Tesla's electric vehicle sales in China rose 3 percent year on year in August, Reuters reported, data from the China Passenger Car Association (CPCA) showed on Monday. Other local EV rivals including Leapmotor and Li Auto also reported higher sales figures.

• Tricky September leaves traders on edge September has traditionally been a terrible month for traders and risks being even more challenging to navigate in 2024 given lingering questions about an expected interest rate cut. 

• The dollar's weakness is bringing relief to policymakers around the world. The dollar fell more than 2% against other major currencies in August, its biggest monthly drop this year and providing some relief to economies that have been suffering under the weight of a strong dollar.

• Turkey and Shell have signed a 10-year LNG supply deal with the option of rerouting supplies to Europe, the latest step in Ankara's bid to become a regional hub for the fuel.

• Hedge funds are betting against banks, insurance and real estate, says Goldman Sachs. Huawei Technologies is set to launch new products at an event just hours after Apple debuts the iPhone 16, setting the stage for a clash between the two tech giants.

• Safran is buying Preligens for €220 million. Preligens, which specializes in artificial intelligence for the aerospace and defense industries, will be renamed Safran.AI and will become part of Safran's Electronics & Defense business. It develops sophisticated algorithms and software for analysis and automatic target detection and identification.

• Harris opposes sale of US Steel to Nippon during Pennsylvania event with Biden
"US Steel must remain American-owned and American-operated, and I will always support American steelworkers."

• China buys more chips than South Korea, Taiwan and the US combined - Nikkei. Beijing spent a record $25 billion on chip-making tools in the first six months of 2024.

Key events that could impact markets on Tuesday:
Economy: U.S. ISM Manufacturing PMI

International views

• German manufacturing slump accelerates - PMI The slump in Germany's manufacturing sector, which accounts for about a fifth of Europe's largest economy, continued to gain momentum in August, a survey showed on Monday.

• Poland and other countries bordering Ukraine have a "duty" to shoot down Russian missiles before they enter their airspace, Polish Foreign Minister Radoslaw Sikorski said, without being swayed by NATO concerns that such decisions could drag the alliance into war.

• The Democratic Convention did not help Harris significantly overtake Trump. The US vice president is now ahead of the former president by only a few points. Trump said he had “every right” to interfere in the 2020 presidential election.

• Turkey wants to become a member of BRICS - the country has officially applied for membership. The country announced its search for other "historical paths" as an alternative to the European Union (which the country was invited to join in 1999, but was never accepted) back in February of this year, but has only now decided on this.

• A nationwide referendum on the construction of a nuclear power plant in Kazakhstan will take place on October 6 - Tokayev. Tokayev linked the appeal to nuclear energy with the growth of the "global energy deficit" and Kazakhstan's urgent need for "reliable and clean energy sources."

• Will Berlin's policy change after the unsuccessful elections in the east of Germany and how will Sahra Wagenknecht use her "golden share". The success of the far-right in the east of Germany is not a surprise, but a continuation of the trend of recent years, notes DW observer Roman Goncharenko. "Alternative for Germany" won the elections, traditionally demanding a sharp tightening of the rules for accepting refugees and migrants, as well as an end to military aid to Ukraine. Despite the high result, the AfD has virtually no chance of forming a state government: all parties refused to enter into a coalition with it.

• Israel has asked Russia for help in freeing hostages from the Gaza Strip. Efforts by the United States, Qatar and Egypt to reach a truce with Hamas are progressing slowly, the Israeli prime minister's office told Bloomberg.

• China warns Japan of retaliation over possible new chip restrictions. China has threatened Japan with harsh economic measures in retaliation if Tokyo further restricts the sale and maintenance of chip-making equipment to Chinese firms, complicating U.S. efforts to cut off the world's second-largest economy from advanced technology. South Korea is seeking more flexibility and incentives from the U.S. to encourage Seoul to comply.

• The United States has seized the Venezuelan president's jet, citing sanctions violations. The plane, officials say, was illegally purchased for $13 million through a shell company and smuggled out of the United States in violation of sanctions and export control laws.