Stocks point to muted start with nerves rattled

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(Sept 7): Stocks were heading for a cautious start on Monday after the biggest two-day slide for global equities since June left investors on edge. Currencies began the week with little fanfare.

Futures signaled a muted open in Japan and Hong Kong, while U.S. markets are shut Monday for a holiday after the worst week for the Nasdaq since March. The dollar was steady in early foreign-exchange trading, while the euro ticked higher.

“Risk assets remain fragile following Thursday’s tech-led rout and volatility spike,” said Ben Emons, managing director for global macro strategy at Medley Global Advisors. “With stimulus having been key for supporting equities and such lofty valuations, its renewal will be crucial not only for the recovery, but as a driver for equities as job risks mount.”

Traders are on tenterhooks as the week kicks into gear and volatility remains elevated for equities as investors continue to chart the path for the global economy with the pandemic. Federal Reserve Chairman Jerome Powell responded to Friday’s U.S. employment data positively, but reiterated his view that the economic recovery has a long road ahead and that interest rates will remain low for a while. One big event later this week is the European Central Bank’s policy meeting.

Here are some key events coming up:

    The next Brexit negotiating round begins with face-to-face discussions between the U.K. and the EU in London.
    The ECB will probably hold rates on Thursday but indicate that downside risks have intensified, suggesting further easing is possible before year-end.
    U.S. CPI data is due Friday, with consumer prices expected to rise in August for a third straight month.

These are the main moves in markets:

Stocks

    The S&P 500 fell 0.8% on Friday.
    Futures on Japan’s Nikkei 225 added 0.1% late Friday.
    Hang Seng Index futures ended the Friday session little changed.
    Futures on Australia’s S&P/ASX 200 Index lost 0.6%.

Currencies

    The yen was at 106.27 per dollar.
    The euro rose 0.1% to US$1.1846.
    The offshore yuan was at 6.8369 per dollar.
    The pound slipped 0.2% to US$1.3252.

Bonds

    The yield on 10-year Treasuries climbed eight basis points to 0.72% on Friday.

Commodities

    West Texas Intermediate crude ended last week at US$39.77 a barrel, down 3.9%.
    Gold on Friday was at US$1,933.94 an ounce.