Global Markets Update: Rate Cut Hopes, Commodity Weakness, and Trade Developments

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Index Update: US stock futures rose about 0.3% on Wednesday, extending gains after the S&P 500 and Nasdaq 100 hit record highs, supported by expectations of a September Fed rate cut. Softer CPI data eased inflation fears tied to tariffs, reinforcing dovish bets, while sentiment was boosted by President Trump’s 90-day tariff pause on Chinese goods. In premarket moves, Cava fell 25% on weak Q2 revenue and a lowered full-year forecast, while CoreWeave dropped 10% despite strong revenue growth on mixed results.

Market Movers: On Tuesday, the top gainers were 180 Life Sciences Corp. (+206.59%), followed by X4 Pharmaceuticals, Inc. (+81.69%). On the contrary NanoVibronix, Inc. (-90.38%) Spirit Aviation Holdings, Inc. (-40.68%) declined the most the same day.

Commodities Update: WTI crude fell to $62.7 per barrel and Brent to $65.8, both hitting over two-month lows, after the IEA projected a growing oil surplus this year and next, with inventories set to reach a 46-month high by June 2026. The US government echoed this view, while US oil production is expected to peak this year before declining. A slight rise in US stockpiles and anticipation of official data added to pressure, while geopolitical focus shifted to the upcoming US–Russia summit in Alaska, where talks on ending the Ukraine war could influence sanctions on Russian oil. Gold prices climbed toward $3,360 per ounce as softer-than-expected US CPI data strengthened expectations for a 25 bps Fed rate cut in September, boosting demand for bullion. Headline inflation slowed to 2.7% while core inflation ticked up to 3.1%, easing tariff-driven inflation fears. Traders are awaiting PPI, jobless claims, and retail sales data, as well as clarity on the tariff status of gold imports amid conflicting US policy signals. Broader sentiment was also supported by the US extending its China tariff truce by 90 days.

Macro Update: US mortgage applications jumped 10.9% in early August, the biggest rise in two months, driven by a 10 bps drop in 30-year fixed rates to 6.67%, the lowest in four months, according to the MBA. Refinance applications surged 23%, extending prior gains, while purchase applications rose 1.4%. The average loan size increased to $366,400, and ARM applications climbed 25% to their highest since 2022, making up nearly 10% of all applications.

U.S. and China to Resume Trade Talks Amid Extended Tariff Truce

U.S. Treasury Secretary Scott Bessent said trade officials from the U.S. and China will meet again within two to three months to discuss future economic relations, following the extension of a 90-day tariff truce that averted steep duties. He added that any tariff reductions would depend on sustained progress over several months to a year in curbing fentanyl flows from China.

Dollar Commentary: The 10-year US Treasury yield hovered near 4.29% as softer-than-expected inflation data boosted expectations of a September Fed rate cut, with markets pricing in a 94% chance of a 25 bps reduction and another cut likely by year-end. Headline inflation stayed at 2.7% versus the 2.8% forecast, while core inflation rose to 3.1%. Uncertainty was heightened by reports that President Trump is considering legal action against Fed Chair Jerome Powell, raising concerns over the Fed’s independence.

Futures Update: U.S. stock futures advanced, signaling continued gains for Wall Street after inflation data pushed the S&P 500 and Nasdaq Composite to record highs. The muted inflation figures reinforced expectations of an interest rate cut at the Federal Reserve’s next meeting, as policymakers are expected to focus on aiding a weakening labor market despite inflation remaining above target. Cisco Systems is set to report earnings with attention on its 2026 outlook, while Perplexity AI made a $34.5 billion offer to acquire Google’s Chrome browser.

After ending Monday's session on a lower note, stocks experienced a strong rebound during trading on Tuesday. The S&P 500 surged by 72.29 points, or 1.13%, closing at 6,445.75. From a technical perspective, the index found support at its key moving averages and gradually moved higher, suggesting the potential for a near-term uptrend. The 14-day RSI remains above the midpoint, indicating sustained bullish momentum. Support levels are further reinforced by other important moving averages below the current price, with key support around 6,344 and resistance approximately at 6,520.