Market Movements: Global Consolidation and Key Economic Updates

Global markets began the week with a day of consolidation following a strong performance the previous week. Key economic events include potential rate cuts by the Federal Reserve and Riksbank, the annual re-analysis of U.S. payrolls, and the Democratic convention. Analysts anticipate continued growth for the U.S. economy.

Markets started the week with a period of consolidation after enjoying their best week of the year, driven by expectations of stable growth for the U.S. economy. Analysts predict it will sustain a growth rate between 2% and 3%.

S&P 500 and Nasdaq futures are up by about 0.2%, while Japan's Nikkei is stable, having surged almost 9% in the previous week. The euro remains above $1.1000 and sterling reached its highest level in a month at $1.2953. Fed members Mary Daly and Austan Goolsbee hinted at possible easing in September, with upcoming minutes expected to reinforce a dovish outlook.

Futures markets are fully pricing in a quarter-point rate cut and a 26% chance of a 50 basis-point cut, contingent on the forthcoming U.S. payrolls report. Goldman Sachs cautioned that the annual payroll re-analysis might show a significant downward revision, though they argue it may exaggerate labor market weakness.

Federal Reserve Chair Jerome Powell's speech at the Jackson Hole conference on Friday is anticipated to be dovish but not advocating for a half-point easing. Markets also expect a rate cut from the Riksbank on Tuesday, though the size—25 or 50 basis points—remains debated.

Japan's consumer price report could spark discussions of a Bank of Japan rate hike, despite recent market trends suggesting otherwise. The current market pricing reflects minimal expectations for an October rate hike, although some analysts foresee a 25 basis-point rise to 0.5%.

The U.S. political landscape sees the Democratic convention beginning on Monday, with Vice President Kamala Harris gaining favor over Donald Trump in betting markets since Joe Biden's withdrawal. Significant events include a two-day Riksbank policy meeting and speeches by Finland's central bank governor Olli Rehn and Federal Reserve Governor Christopher Waller.

(With inputs from agencies.)