The Pulse: Today’s economic news September 13, 2024

1. Performance of U.S. Stock Market:
   U.S. equity markets ended in the green, driven by fresh prints of inflation data, which reinforced market expectations of a 25-basis point Federal Reserve rate cut amid mounting speculations of a cut to counter tame inflation. U.S. stocks appeared to be on a buying spree as investors bought into names such as Microsoft (+0.9%) and Alphabet (+2.3%) in tech and Philip Morris (+2.3%) and Coca-Cola (+0.7%) in consumer staples.

However, sighs of relief were accompanied by skepticism due to high-valuation concerns. Analysts cautioned that any weak earnings reports could spark the second leg of a sell-off (Nasdaq, Acuity Knowledge Partners).

2. Global Markets:
   U.S. stocks outperformed the global equity markets on Wednesday, buoyed by fresh consumer and producer price reports and volatility in bond markets. European equities scaled record highs, driven by inflation-induced ECB rate cut expectations and accelerated money creation by central banks.

The rally extended to Asian equities, with the Hang Seng Index surging by 4% as tech stocks, particularly in the Chinese sector, attracted a buying spree due to steep valuation discounts. However, global equities remain fragile, as history has documented September as the worst month for global equities. Market jitters are amplified by geopolitical shocks and tepid economic data, which endanger the hoped-for stretch of midsummer market calm (Acuity Knowledge Partners).

3. Commodity Markets:
   Industrial metals raced ahead with a good tailwind. Aluminum and zinc were up 6% and 8%, followed by nickel, up 5.2%, amid supply concerns. Meanwhile, gold prices continued to climb, breaching all records, driven by the anticipation of a U.S. rate cut and ongoing geopolitical tensions.

Interestingly, crude oil prices continued to slide despite supply constraints from the Middle East. With Chinese consumption slowing down, demand dampened, and the surging supply from shale oil in the U.S. added to the pressure. Geopolitical threats, however, remain a factor (Acuity Knowledge Partners).

4. U.S.-China Trade Relations:
   The U.S. administration wasted no time hiking tariffs on Chinese goods, explicitly targeting electric vehicles with 100% tariff hikes. The second wave of heightened tariffs focused on Chinese medical goods but excluded critical supplies like infant feeding syringes, allowing room for maneuvering trade imbalances with China.

These tariff hikes reflect the U.S.'s hard stance in the ongoing trade war with China, which could lead to further economic consequences (Acuity Knowledge Partners).

Sources: https://www.thestar.com.my/business/business-news/2024/09/13/us-locks-in-steep-china-tariff-hikes-many-to-start-sept-27

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