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5 Things to Watch This Morning

Published 08/31/2015, 06:34 AM
Updated 08/31/2015, 06:34 AM
© Reuters.  5 Things to Watch This Morning: Focus remains on China, Fed rate hike outlook

1. China stocks end brutal August with another daily loss

The Shanghai Composite plunged more than 4% at one point before paring losses to end down 0.8% on Monday, amid reports that Beijing will scale back its market intervention efforts, which resulted in two straight days of 5% rallies in Shanghai last week.

Chinese equity markets ended August with a loss of 12.5%, the third straight monthly decline. Shares are down 38% from their June peaks.

The turmoil in markets intensified when China unexpectedly devalued the yuan on August 11, sparking fears that the economy may be slowing at a faster than expected rate.

2. Wall Street points to weaker open; Dow futures fall 160 points

During early morning hours in New York, the blue-chip Dow futures dropped 159 points, or 0.95%, the S&P 500 futures declined 19 points, or 0.95%, while the Nasdaq 100 futures fell 36 points, or 0.84%.

With one day of trading still to go in August, the Dow and S&P 500 are each poised to log the biggest one-month point loss since October 2008.

Concerns over the health of China's slowing economy and worries that the Federal Reserve will hike rates at its next policy meeting in September dented appetite for riskier assets.

3. Oil futures resume decline after last week's historic rally

Crude oil futures declined on Monday, as traders cashed out of the market after prices scored their biggest two-day percentage gain since 2009 last week.

U.S. crude was down 95 cents, or 2.1%, at $44.27 a barrel while Brent lost $1.32, or 2.64%, to $48.73 a barrel.

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New York-traded oil futures rallied $4.92, or 11.79% last week, while London-traded Brent futures jumped $4.70, or 10.1%. That was the largest weekly percentage gain since March 2009.

4. Jackson Hole fallout

Comments by Federal Reserve Vice Chairman Stanley Fischer over the weekend suggested that the door was still open for a rate hike at the Fed's next meeting due to take place September 16-17.

Fischer said that the case for a rate increase in September was "pretty strong", though it was still too soon to say what the central bank might do.

The comments came during the Fed's annual meeting of top central bankers and economists in Jackson Hole, Wyoming over the weekend.

The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.

5. U.S. data in focus

The only data scheduled for Monday is the Chicago Purchasing Managers’ index, due for release at 9:45AM ET.

Investors already looked ahead to Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.

The consensus forecast is that the data will show jobs growth of 220,000 last month, following an increase of 215,000 in July, while the unemployment rate is forecast to decline to 5.2% from 5.3%.

Monthly jobs gains above 200,000 are seen by economists as consistent with strong employment growth.

A strong U.S. nonfarm payrolls report was likely to add to speculation over when the Federal Reserve will begin to raise interest rates, while a weak number could undermine the argument for an early rate hike.

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Latest comments

Mid September month around 17th will be FED will declare rate change decision. More volatility in EUR USD and market also. In gold and other commodities also will give a good rise. Good another month for trading, but BE CAUTIOUS.
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