Global Markets Update: Stocks, Commodities, Tariffs, and Fed Outlook

Source: Krish Capital Pty Ltd

Index Update

U.S. stocks hit record highs early Friday but reversed lower after weak August jobs data fueled worries about an economic slowdown. The Dow fell 0.48%, the S&P 500 lost 0.32%, and the Nasdaq slipped 0.03%. Markets remain confident of a 25 bps Fed rate cut this month, with some betting on a larger move depending on upcoming inflation data.

Market Movers

On Friday, the top gainers were Hour Loop, Inc. (+93.12%), followed by Inno Nova Lifestyle, Inc (+64.79%). On the contrary BrilliA Inc (-29.40%), and Indaptus Therapeutics, Inc. (-28.35%) declined the most the same day.

Commodities Update

Oil prices rebounded, with both WTI and Brent rising over 1% after OPEC+ agreed to a smaller-than-usual production hike of 137,000 bpd from October. The move, aimed at balancing Saudi Arabia’s push for market share with caution over weak demand and a potential year-end glut, added support to prices alongside concerns of tighter supply from possible new U.S. sanctions on Russia. Tensions escalated as Russia launched its largest air assault of the war on Ukraine, striking a government building in Kyiv, while U.S. and European leaders prepared to discuss conflict resolution.

Gold surged to a record above $3,600 per ounce, driven by growing expectations of a Fed rate cut following weak U.S. jobs data that showed slower hiring and rising unemployment. Traders now largely expect a 25 bps cut at the upcoming policy meeting, with further clarity awaited from upcoming inflation readings. Strong central bank buying, particularly from China, along with a weaker dollar and global uncertainty, has fueled a 37% rally in gold so far this year.

Macro Updates

Bessent Warns of Treasury Risks if Tariffs Struck Down

U.S. Treasury Secretary Scott Bessent said he is confident President Trump’s tariff plan will be upheld by the Supreme Court but cautioned that losing the case would force the Treasury to refund nearly half of collected tariffs. He warned that delaying a ruling until 2026 could mean up to $1 trillion in tariffs would need to be unwound, causing major financial disruption.

Trump Threatens Tariff Probe After EU Fine on Google

President Donald Trump warned of a tariff investigation against the EU after it fined Google $3.5 billion for breaching digital competition rules, calling the move unfair to U.S. taxpayers. The threat raises the risk of trade tensions and could serve as a fallback if the Supreme Court strikes down the administration’s current tariff authority. The dispute also reflects U.S. opposition to the EU’s digital service tax, which Washington fears could inspire similar measures globally.

Trump Grants Tariff Exemptions for Aligned Trade Partners

President Donald Trump signed an executive order granting tariff exemptions on over 45 industrial export categories for partners that strike framework deals with the U.S. The exemptions, covering key inputs like metals, pharmaceuticals, and medical reagents, aim to secure reciprocal concessions and address supply gaps. Allies such as Japan and the EU will benefit, while countries without agreements, like Switzerland, face steep tariffs on items including gold.

Dollar Steady Ahead of Key Inflation Data

The dollar index held above 97.8 as traders awaited upcoming U.S. inflation reports that could influence the Fed’s rate path. Weaker August payrolls and dovish Fed signals have strengthened expectations of a 25 bps rate cut this month, with some positioning for a deeper move depending on this week’s data.

Bonds Commentary

The 10-year U.S. Treasury yield steadied near 4.1% after a three-day decline, with investors awaiting key inflation data later this week. Yields had fallen to a five-month low after weak August payrolls reinforced signs of a cooling labor market and dovish Fed commentary. Markets are largely expecting a 25 bps rate cut this month, with some positioning for a deeper move depending on upcoming inflation readings.

Futures Update

U.S. stock index futures edged higher as investors balanced hopes for lower interest rates with concerns over a cooling labor market ahead of key inflation data. Wall Street had retreated after weaker-than-expected nonfarm payrolls highlighted a labor slowdown, but the report reinforced expectations of a Fed rate cut at the upcoming policy meeting, with markets largely betting on a 25 basis point reduction and some chance of a deeper cut. Despite recent declines, the S&P 500 remains close to record highs.

Following an unsuccessful attempt to maintain the initial upward momentum, stocks faced selling pressure in early trading on Friday. The S&P 500 edged up by 20.58 points, or 0.32%, closing at 6,481.51. From a technical standpoint, the index found support at important levels and gradually advanced, signaling the potential for additional gains in the near term. Furthermore, the 14-day RSI is approaching the midpoint, indicating a possible upward trend. Key support levels are approximately at 6,433, with resistance expected around 6,590.