Stocks Edge Higher, Commodities Rally, and Fed Rate-Cut Bets Strengthen

Source: Krish Capital Pty Ltd

Index Update

Oracle shares jumped 28% in after-hours trading after reporting a massive 1,529% surge in multicloud database revenue and strong demand for AI servers, alongside a bullish cloud outlook. U.S. stocks closed higher Tuesday, with the Nasdaq up 0.37% to a record, the Dow rising 0.43%, and the S&P 500 gaining 0.27%. Downward revisions to U.S. jobs data further strengthened expectations for a Federal Reserve rate cut next week, with debate now focused on its size.

Market Movers

On Tuesday, the top gainers were QMMM Holdings Limited (+1,736.73%), followed by Epsium Enterprise Limited (+411.49%). On the contrary Sui Group Holdings Limited. (-30.81%), and Fangdd Network Group Ltd. (-30.37%) declined the most the same day.

Commodities Update

Oil prices extended their rally on Wednesday, with Brent climbing above $67 and WTI surpassing $63 per barrel for a third straight session. The gains were fueled by mounting Middle East tensions after Israel struck Hamas leadership in Doha, Qatar, and signaled further action in Gaza. Limited OPEC+ output hikes for October also supported prices, while U.S. crude inventories continued to build, rising by 1.3 million barrels last week.

Gold hovered near record highs at around $3,640 per ounce, supported by expectations of Federal Reserve rate cuts amid softer U.S. labor market data. Investors are awaiting key inflation figures later this week for further policy clues. Heightened geopolitical risks—including U.S. calls for the EU to impose steep tariffs on Chinese and Indian goods to pressure Russia—added to the safe-haven appeal.

Macro Updates

U.S. Mortgage Rates Hit 11-Month Low, Driving Strongest Loan Demand Since 2022

U.S. mortgage rates fell sharply in the week ending September 5th, with the average 30-year fixed rate dropping to 6.49%—the lowest since October 2024—amid plunging Treasury yields and expectations of Fed rate cuts. The drop spurred a 9.2% jump in overall mortgage applications, fully reversing three weeks of declines.

Refinance applications surged 12.2% to their highest level in a year, while purchase applications rose 6.6%, marking the strongest combined borrower demand since 2022. The data highlight how weaker labor market conditions and lower yields are stimulating renewed activity in the housing market.

U.S. Producer Price Growth Seen Slowing Sharply in August

U.S. producer prices are expected to rise just 0.3% month-over-month in August 2025, down from July’s 0.9% surge—the strongest since June 2022—while core PPI is also projected to increase 0.3%. On an annual basis, headline PPI is forecast to hold at 3.3%, near February highs, with core inflation easing slightly to 3.5% from 3.7%. Investors will be watching for any tariff-driven cost pressures, though the data suggest such effects remain limited so far.

Dollar Steady as Softer Jobs Data Fuels Fed Rate-Cut Bets

The dollar index hovered around 97.8 on Wednesday as traders awaited key U.S. inflation data. A major downward revision to job gains, along with last week’s weak August report, strengthened expectations for a 25-basis-point Federal Reserve rate cut next week, with some betting on a 50-point move. Markets are now pricing in a total of 66 basis points of easing this year.

Bonds Commentary

U.S. 10-year Treasury yields hovered around 4.08% on Wednesday after hitting a five-month low earlier in the week, as investors awaited key inflation data. A major downward revision to job gains, alongside last week’s weak August jobs report, reinforced expectations of a Federal Reserve rate cut next week—most likely 25 basis points, though some traders see a 50-point move—with markets now pricing in 66 bps of easing for the year.

Futures Update

U.S. stock futures were mixed on Wednesday, holding near record highs as investors assessed Oracle’s earnings and awaited the week’s first key inflation data. Dow Jones futures slipped 75 points (0.2%), while S&P 500 futures added 15 points (0.2%) and Nasdaq 100 futures advanced 38 points (0.2%).