Market News by OnEquity

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Dollar is calm ahead of ISM release and labor market data
The U.S. dollar is calm on Tuesday as investors await key economic data, including Friday’s payrolls report, which could set the stage for a rate cut by the Federal Reserve later this month.

Dollar focuses on labor market​

The U.S. ISM manufacturing survey, due later in the session, is the first major indicator in a week full of U.S. data, and is likely to show that the country’s manufacturing sector is still in contraction territory.

However, it is the labor market that will be in the spotlight this week, as Fed policymakers are on the lookout for confirmation that it is time to begin easing monetary policy, with particular focus after Fed Chairman Jerome Powell last month backed an imminent start to interest rate cuts in a nod to labor market concerns.

Friday’s nonfarm payrolls release will be the key data of the week, especially since last month’s jobs report missed estimates, prompting a sharp sell-off in equity markets on fears of a recession.

Job openings are released on Wednesday, and jobless claims on Thursday.

Markets are currently estimating about a 69% chance of a 25 basis point cut when the Fed holds its scheduled meeting on September 17-18, with a 31% chance of a 50 basis point cut, as indicated by CME’s FedWatch tool.

Euro nears two-week lows​

In Europe, EUR/USD was down about 0.1% to 1.1061 not far from the two-week low of 1.1042 it touched last session, after data indicated that eurozone manufacturing activity remained in the contraction zone during August.

The European Central Bank cut interest rates in June and looks likely to do so again later this year, especially after eurozone inflation fell to 2.2% in August, the lowest level in more than three years.

Traders are also paying attention to the uncertain political situation in Germany, after Alternative for Germany became the first far-right party to win a state legislative election in Germany since World War II.

GBP/USD lost about 0.2% to 1.3129, with the UK calendar very quiet this week.

Sterling had a strong August, and has gained nearly more than 2% over the past month, supported by estimates that the Bank of England will keep interest rates high for much longer than in the U.S. and eurozone.

The yen rebounds​

Turning to Asia, the USD/JPY persisted 0.6% to 146.03, retreating from a two-week high of 147.16 reached on Monday, after data showed that Japanese factory activity contracted again in August, according to a private sector survey.

USD/CNY traded flat at 7.1161 while AUD/USD was down 0.6% at 0.6750 ahead of the Australian gross domestic product report due on Wednesday.

 

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U.S. stock markets fall in cautious mood ahead of Friday’s jobs report
U.S. stocks futures fell on Tuesday, with investors returning from the long weekend cautiously ahead of the release of key labor market data.

Attention focuses on the labor market​

Investors are returning from the Labor Day holiday to a crucial week for U.S. markets, with high expectations for upcoming labor market data, most notably Friday’s nonfarm payrolls release.

Last month’s jobs report missed estimates, leading to a sharp drop in risk assets.

The weak labor numbers have sparked discussions regarding their cause, with Hurricane Beryl being a considerable factor. Although the Bureau of Labor Statistics (BLS) reported that the hurricane, which hit the state of Texas during the July employment report survey week, had no discernible impact on the employment data, the household survey showed a different impact.

It indicated that 436,000 people were unable to work as a result of adverse weather conditions, setting a record for the month of July. In addition, 2490,000 people were declared temporarily laid off during the same period.

The increase in unemployment has been largely attributed to these temporary layoffs. Market participants are anxious to determine whether the July data was actually affected by these transitory factors.

The Federal Reserve, which closely follows the labor market, will use this upcoming report to determine the size of the interest rate cut at its next meeting, with the options of a 25 basis point or 50 basis point reduction.

Ahead of Friday’s report, today’s session will see the release of U.S. ISM manufacturing survey data, which is the first relevant indicator of a big week for U.S. data.

Additionally, job openings are released on Wednesday and jobless claims on Thursday.

Markets are estimating a 69% chance of a 25 basis point cut when the Fed meets next on September 17-18, with a 31% chance of a 50 basis point cut, according to CME’s FedWatch tool.

S&P 500 expects a difficult month​

Over the past 10 years, the S&P 500 has lost about an average of 2.3% in September, according to FactSet data, the worst month for this index over that time period.

Moreover, the S&P 500 has suffered losses in the past four Septembers, with a 9.3% drop in 2022.

In individual stocks, Tesla (TSLA) shares rose pre-market after Reuters reported that the electric vehicle maker is set to produce a new six-seat version of its Model Y vehicle, with the aim of marketing it in China by the end of 2025.

Crude oil prices fall on demand fears​

Crude oil prices traded lower on Tuesday as traders digested sluggish economic growth in China, the world’s largest crude importer.

China’s purchasing managers’ index registered a six-month low in August, according to data released over the weekend, signaling a possible weakening in demand from the world’s largest crude importer.

These concerns have overshadowed Monday’s shutdown of oil exports at major ports in OPEC member Libya as production was cut across the territory.

 

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Spot Bitcoin ETFs Record Highest Outflows in 4 Months
Spot Bitcoin ETFs have garnered the financial market’s attention in recent months. However, recently released data indicates that these funds experienced net outflows of $287 million on Tuesday, the largest on record in the past four months. This huge exodus of capital raises questions about the health of the cryptocurrency market and investor confidence in the digital asset par excellence.

Context and Relevance of Bitcoin Cash ETFs​

Spot Bitcoin ETFs have gained popularity as a secure and regulated way for investors to access the leading cryptocurrency without needing to own it directly. This type of product has helped bring Bitcoin to a wider audience, comprising both institutional and retail investors.

Recent Exit Data: $287 Million in a Single Day​

Last Tuesday was a critical day for U.S. spot Bitcoin ETFs. According to SoSoValue data, the net outflow of $287.78 million was the highest in four months and was a stark contrast to recent capital inflow trends. This huge fund movement underscores a possible reassessment of investor sentiment towards the cryptocurrency market, particularly at a time when Bitcoin is struggling to retain key support levels.

Bitcoin Plunges Towards USD 55,000​

Bitcoin (BTC) sank in price below USD $57,000 on Tuesday, after starting the day above USD $59,000 and before correcting further towards the USD $55,000 area in the afternoon. The star digital currency lost the day’s initial gains following the release of a report anticipating possible rate hikes in Japan.

Bank of Japan Governor Kazuo Ueda signaled that the central bank could continue to raise interest rates if the economy and inflation develop as expected, Bloomberg reported on Tuesday. While Bitcoin remained in the $59,000 range, the news was accompanied by a sharp pullback in the cryptocurrency market. Ethereum-based spot ETFs, meanwhile, met a similar fate, collectively recording a net capital outflow of USD 47.4 million on Tuesday, according to the same data source.

At the time of publishing this article, BTC was changing hands around $56,500, down 4.5% over the past 24 hours and a loss of 5.7% for the week, according to data from CoinMarketCap. Ether (ETH) is moving around $2,400, with similar percentage losses over the same period amid a 4% daily drop in total cryptocurrency market capitalization.

 

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Dollar Dips on Gains, Fears Ahead of Upcoming Jobs Data
The U.S. dollar retreated on Wednesday in the wake of the latest reports on U.S. economic activity, which stoked concerns about a possible sharp economic slowdown, a so-called hard landing, ahead of the jobs report due on Friday.

Dollar Traders Uneasy Ahead of Jobs Report​

On Tuesday, the ISM report on U.S. economic activity came in lower than expected, increasing uncertainty about a possible economic slowdown in the world’s largest economy. The data triggered a sharp sell-off on Wall Street, adding to traders’ concerns ahead of Friday’s release of crucial monthly payrolls data.

As a result, the dollar, a traditional safe-haven currency, rallied to a two-week high against the euro. The move was due to concerns about the implications of the data for Federal Reserve policymakers, who meet at the end of the month.

Markets expect a possible 25 basis point cut at the next Fed meeting, scheduled for September 17-18. However, weak labor market data could significantly increase the likelihood of a more aggressive 50 basis point cut, which could have a negative impact on the dollar.

Euro Moves Away from Two-Week Lows​

EUR/USD rose 0.1% to 1.1056 after falling 0.2% on Tuesday and touching its lowest level in two weeks amid a massive sell-off in risk assets.

Data released earlier in the session showed that eurozone manufacturing activity remained in contraction territory in August, while activity in the services sector also disappointed early Wednesday, although it remained in expansion territory.

“We continue to expect EUR/USD to hold above 1.1000 until Friday’s US services ISM and payrolls data are released. If our forecasts for a weaker payrolls data are confirmed, we could see the pair bounce above 1.110 towards the end of the week,” analysts at ING (INGA) said in a note.

GBP/USD was up 0.1% at 1.3125, following a 0.2% decline overnight.

Sterling posted a solid August, up more than 2%, helped by expectations that the Bank of England will keep interest rates higher for longer relative to the U.S. and eurozone.

The Yen Appreciated Due to Its Safe-Haven Status​

In Asia, USD/JPY eased 0.6% to 145.20, with the Japanese yen recovering as a safe haven after the sharp fall on Wall Street and considerable losses on Asian bourses.

Meanwhile, the USD/CNY pair posted a 0.1% devaluation to 7.1138 in reaction to slowing growth in China’s services sector in August, a private sector survey released on Wednesday showed.

The Caixin/S&P Global Services Purchasing Managers’ Index fell from 52.1 in July to 51.6 in August.

 

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U.S. stock markets trade higher on the back of a strong weekly sell-off
U.S. stocks rose on Monday, giving signs of a rebound on Wall Street after stocks ended last session lower following an August jobs report that left market traders uncertain about possible interest rate cuts by the Federal Reserve. .

According to a report released by analysts at Vital Knowledge, they do not believe the rate hike was motivated by any specific news released since Friday’s close, but rather by some downside buying driven largely by oversold conditions and anticipation of monetary support.

The major Wall Street averages fell on Friday just after the August payrolls numbers signaled a continued slowdown in the U.S. labor market, which is quite possibly an assurance that the Federal Reserve will sharply reduce borrowing costs at its next two-day meeting on September 17-18.

For the week, the benchmark S&P 500 index and the 30-stock Dow Jones Industrial Average posted their biggest weekly declines since March of last year, while the tech-heavy NASDAQ Composite index posted its most notable drop since January 2022.

Possible Fed rate cut in the spotlight​

Investor bets that the Fed will cut rates by 25 basis points stand at 73% in Monday trading, according to CME Group’s FedWatch tool.

Meanwhile, the probability of a 59 basis point cut stands at 27% after briefly topping 50% in immediate response to the jobs data.

The odds highlight the uncertainty surrounding how the Fed will react to the jobs report.

On Friday, Fed Governor Christopher Waller mentioned that “the time has come” for the Fed to lower rates, although he remained open about the depth and pace of cuts.

Boeing shares rise ahead of market open after reaching tentative agreement with union​

Boeing (BA) shares rose Monday in premarket trading after reaching a tentative agreement on a 25% wage hike for its main union, which is likely to avert a damaging strike that is a threat because it could increase pressure on the aircraft maker.

In addition to the wage increase, the proposed four-year agreement includes a commitment to build a new aircraft in the U.S. Pacific Northwest, improved retirement benefits and increased union involvement in aircraft quality.

The leadership of the union, which represents about 30,000 workers, has recommended that its members support the agreement. However, if it is refused and two-thirds vote in favor of the strike, the workers could organize a work stoppage at midnight on Friday.

A labor action would likely increase scrutiny on Boeing’s new CEO, Kelly Ortberg, who is currently on a mission to improve the company’s finances and rebuild its reputation after January’s dangerous mid-flight gate-plug rupture.

On the other hand, shares of cryptocurrency-linked stocks posted positive numbers ahead of the market open. Bitcoin, the most important cryptocurrency in the market increased its share price on Monday, managing to extend its upward momentum for the third day in a row.

Oil prices rise​

Oil prices held on to Monday’s gains as traders watched the effect of a possible hurricane on the U.S. Gulf Coast and the market’s response to last week’s nonfarm payrolls report.

The U.S. National Hurricane Center indicated over the weekend that a weather system in the Gulf of Mexico is expected to develop into a hurricane before hitting the northwest U.S. Gulf Coast, an area critical to U.S. refining capacity.

On the other hand, the possibility of lower interest rates also helped crude oil. Theoretically, lower financing costs could stimulate economic activity and boost demand for oil.

 

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Market Highlights for the Week: Inflation, Earnings, ECB
This week will feature five key economic events that investors and analysts will be watching closely. From inflation reports to monetary policy decisions, each of these events could have a considerable effect on financial markets.

U.S. Inflation​

The main event will be the August consumer price index (CPI) report, which will be released on Wednesday. Economists estimate a year-over-year increase of 2.6%. The Federal Reserve’s inflation target is around 2%, so this data will be decisive in deciding whether to cut interest rates at its next meeting in September.

This report will be the last major economic data before the Federal Open Market Committee (FOMC) meeting, which means that it could be decisive for the FOMC to opt for a quarter or half percentage point cut in the federal funds rate.

European Central Bank monetary policy decision​

On Thursday, the European Central Bank (ECB) will announce its monetary policy decision. Markets anticipate that the ECB will cut its policy rate by a quarter of a percentage point, leaving it at 3.5%. This cut is explained by the slowdown in the pace of GDP growth in the euro zone, which has prompted the ECB to take stronger measures to stimulate the economy.

This will be the ECB’s second rate cut so far this year, following the start of its rate-cutting cycle in June. The ECB’s actions could affect European and global financial markets as investors adjust their portfolios in line with interest rate movements.

Oracle and GameStop results​

Earnings reports will also play a crucial role this week. Oracle will release its fiscal first quarter 2025 results on Monday. Buyers will be watching to see how the company handles competition in the cloud sector and how it has affected the growth of its infrastructure-as-a-service offering. GameStop, meanwhile, will release its financial results on Tuesday.

With its shares up 6.83% the previous week, analysts are confident that the company will continue to showsigns of recovery from its period of financial turmoil. Both Oracle and GameStop will have a major impact on the performance of their respective stocks and the technology and video game sectors.

U.S. Producer Price Index (PPI) report​

On Thursday, the U.S. Bureau of Labor Statistics will release the Producer Price Index (PPI) for August. The PPI is expected to rise 1.7% year-over-year, while the core PPI, which does not take into account food and energy prices, will rise 2.4%. These figures will be critical in assessing inflationary pressure in the economy from the production side and could influence the Federal Reserve’s monetary policy.

University of Michigan Consumer Confidence Index​

On Friday, the University of Michigan will release its September consumer confidence index. The reading is expectedto be 68, similar to August.

Inflation expectations for the year ahead, which settled at 2.8% in August, will also be closely watched, as these figures reflect consumers’ hopes for the direction of the economy. Such an index is seen as a key barometer of overall U.S. consumer economic sentiment and could have an impact on household spending decisions and, consequently, the country’s economic growth.

 

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Giant Japanese Power Company Explores Bitcoin Mining with Renewable Energy
A subsidiary of TEPCO, Japan’s leading electricity provider, is using waste solar energy for Bitcoin mining. Tokyo Electric Power Company (TEPCO) is entering the Bitcoin mining sector. Through its subsidiary, Japan’s largest electricity supplier has begun using excess renewable energy for Bitcoin mining. Agile Energy X, a wholly-owned subsidiary of TEPCO, is conducting experiments using surplus solar power to operate Bitcoin mining equipment, as reported by a local media outlet citing its CEO.

The company has installed mining equipment near solar farms in Japan’s Gunma and Tochigi prefectures to utilize energy that would otherwise be wasted. The initiative helps reduce the waste of green energy from solar and wind farms thatare forced to reduce their output to avoid overloading Japan’s grid. Kenji Tateiwa, founder and CEO, believes that the success of the project could encourage more investment in clean energy linked to Bitcoin mining.

Bitcoin mining will encourage green energy. According to the local newspaper, production control techniques in Japan led to the waste of 1,920 gigawatt-hours of energy in 2023, which is equivalent to the annual electricity consumption of 450,000 households. Agile Energy X has run simulations indicating that if renewables supplied half of Japan’s electricity, up to 240,000 gigawatt-hours could be wasted annually.

Bitcoin Mining Could Generate $2.5 Billion Annually​

Tateiwa stressed that the benefits of this activity could contribute to corporate profits, while incentivizing more companies in the country to replicate the effort in pursuit of sustainability. “Green energy producers have to operate their businesses under the assumption that some of the energy they generate is wasted,” Tateiwa said. “If bitcoins were to provide a new source of revenue to similar energy producers, who are exposed to excessive investments, that would bring in more green energy.”

Other countries, companies in the energy sector have applied similar approaches to obtain resources with which to mine bitcoins. In El Salvador, for example, geothermal energy from its volcanoes is being used to generate cryptocurrencies, while in Argentina, surplus waste gas from the oil industry is being used. The United States, especially Texas, is another country where renewable energy is used to balance the grid.

One example is the project of Marathon Digital Holdings, the world’s largest Bitcoin mining company, which has embarked on a new project that will heat an entire city in Finland with recycled heat generated from Bitcoin mining. TEPCO’s approach to the cryptocurrency industry is not new.

Agile Energy’s efforts are in response to a more general shift in Bitcoin mining toward green energy. A report by Coinshares noted that Bitcoin miners use renewable energy in remote areas and actively seek the cheapest energy. Data shows that 56% of miners now use renewable energy for their operations. Daniel Batten, an environmental analyst specializing in Bitcoin, noted that BTC’s sustainable energy mix has increased by 6% year-over-year, more than any other industry.

 

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Dollar Stabilizes in Anticipation of Fed Rate Cuts
The US dollar remained stable on Monday, as investors waited for the Federal Reserve’s next interest rate decision, expected by the end of September. Meanwhile, the Japanese yen, a safe-haven currency, fell slightly, losing some of its recent gains amid uncertainty over the size of the Fed’s expected rate cut.

Last week’s U.S. employment report did not clearly indicate whether the Fed would opt for a standard 25 basis point cut or a more aggressive 50 basis point cut at its next policy meeting. While employment growth in August was lower than expected, the unemployment rate declined and wages continued to rise, pointing more to a slow cooling rather than a rapid slowdown in the labor market.

Currency markets saw limited movement in early Asian trading, stabilizing after some fluctuations following the release of Friday’s nonfarm payrolls data. The yen was down 0.26% to 142.65 against the dollar, partly retreating after last week’s 2.73% rise on increased market caution.

The yen’s movement was not significantly influenced by Japanese economic data released on Monday, which showed that the country’s growth in the April-June period was slightly lower than initially expected, mainly due to reduced business and personal spending.

The euro rose 0.03% to $1.1089, and the British pound advanced 0.06% to $1.3138. The dollar index, which compares the greenback to a basket of currencies, was virtually unchanged at 101.21.

A global macro strategist at Convera stated, “With mixed signals from the labor market, it is unlikely the Fed will commit to a 25 or 50 basis point cut just yet.” Fed leaders have signaled a willingness to initiate a series of rate cuts, with the next meeting scheduled for September 17-18, as they recognize a slowdown in the labor market that could worsen without a change in policy.

Market futures currently point to a 35% chance that the Fed will cut rates by 50 basis points next week. The next major economic indicator that could shape market expectations will be Wednesday’s U.S. inflation report.

Macquarie’s chief economist anticipates a 25 basis point cut in September, with similar reductions likely in November and December, unless economic data indicate the need for larger cuts.

In the currency market, the Australian dollar rose 0.07% to $0.6675, recovering slightly from Friday’s more than 1% drop and a three-week low. The New Zealand dollar was flat at $0.6175, near its two-week low on Friday.

 

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U.S. stock markets moderate after previous session’s rally
U.S. stock futures hovered around flat levels on Tuesday as investors looked ahead to the next inflation report and possible interest rate cuts by the Federal Reserve.

The major averages rose on Monday, with traders looking for opportunities after last week’s sell-off, supported in part by a weaker-than-expected August jobs report and weak manufacturing data.

Markets are trying to gauge the Fed’s monetary policy estimates in the wake of the figures, with a cut in borrowing costs at the Fed’s September 17-18 meeting. However, it is not yet clear whether policymakers will make a 25 or 50 basis point reduction. The situation may well become clearer on Wednesday, when the latest U.S. consumer price index, a vital gauge of inflation, will be released.

Apple stocks are down on Tuesday ahead of the market open.​

Apple (AAPL) shares were down Tuesday in pre-market trading after the tech giant unveiled the latest news on its new iPhone 16 and the European Union’s top court ruled in favor of the company after a two-year legal battle with its Irish taxes.

The Cupertino-based group announced on Monday this week a series of enhancements for its iPhone 16, including improvements to its Siri voice assistant and a series of smart camera customizations focused on professional video editing that will be unveiled over time. Apple hopes that the iPhone 16, which will go on sale this September 20 and whose pre-orders can be made from Friday, will serve to revitalize the low sales of the device.

Analysts said the new iPhones and AI features largely lived up to expectations raised by Apple’s earlier disclosure of its plans to boost AI, known as Apple Intelligence.

Separately, the European Union’s Court of Justice ruled that Apple has to repay nearly €13 billion in back taxes, reversing a past decision that had ruled in the company’s favor.

The European Union’s top court cited that two entities overseen by Apple – Apple Sales International (ASI) and Apple Operations Europe (AOE) – had illegally received state aid from Ireland in the form of tax breaks between the years 1991 and 2014.

Oracle stocks soar​

Oracle stocks rose sharply ahead of the opening bell after the group showed better-than-estimated fiscal first-quarter results, supported by strong demand for its cloud business.

The Texas-based cloud services company also reported that it signed a strategic alliance with Amazon (AMZN) Web Services that would give customers the ability to access Oracle Autonomous Database and Oracle Exdata Database within AWS.

The announcement comes after Oracle earlier reported that it had struck new partnerships with OpenAI, creator of Microsoft (MSFT)-backed ChatGPT, along with Google (GOOGL) Cloud in a bid to expand the reach of its artificial intelligence infrastructure.

In a conference call following the earnings call, CEO Safra Catz said Oracle’s database is thriving and added that the cloud deals it has struck with Microsoft, Goole and AWS make it easier for customers to run their Oracle databases in the cloud.

Oracle posted adjusted earnings per stock of $1.39 on revenue of $1.3 billion for the three months ended Aug. 31.

Oil prices fall​

Oil prices fell slightly in European markets on Tuesday as concerns about weak domestic demand in China outweighed the potential impact of Tropical Storm Francine on U.S. oil production.

Several oil companies, including Exxon Mobil (XOM), Shell (SHEL) and Chevron (CVX), are halting production and refining activities in the Gulf of Mexico because of Tropical Storm Francine. According to the National Hurricane Center, the storm is expected to intensify in the coming days.

However, the mood has been dampened by a string of weak economic data from China, which has fueled fears about tepid growth in the world’s top oil importer.

 

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0.5% rate cut could create more stress for bitcoin, analysts warn
Contrary to what many analysts believe, the rate cut by the Federal Reserve could bring panic and concerns to the market, which would generate more caution in the market, generating disadvantages for Bitcoin and other assets that are considered as investments.

Everything seems to be ready for the U.S. Federal Reserve to start the long-awaited interest rate cut, so the attention of both enthusiasts and analysts will be focused on September 18, the day on which the members of the Federal Open Market Committee (FOMC) will make the determination for the U.S. economy.

Although many analysts agree that the measure could translate into something very positive for the markets in general, including cryptocurrencies, a report by CoinDesk anticipates that it could also generate and end up in another not so positive scenario, which would invite investors to be very cautious with the capital available for risky assets.

The flip side of the coin behind the potential rate cut​

According to the report, the Fed is likely to start cutting interest rates on September 18, and although it is certain that the first cut will be made on that date, it remains to be seen how deep the reduction will be. Most of the readings indicate that it could be 0.25%, although others anticipate that, if heavy measures are needed, it could be 0.5% if the situation requires it.

Whatever the case, as opposed to the scenario that the measures applied on the economy are being relaxed, the reading regarding the rate cut could generate greater economic fears, because it is interpreted as an effort by the United States in its struggle not to be left behind against the economic slowdown and the risks of recession. Should this scenario gain more traction, investors may be much more cautious with the available cash, and focus on safer assets.

In analysis presented by CoinDesk, 10x Research firm founder Markus Thielen noted that “a 50 basis point cut by the Fed could signal deeper concerns for markets, the Fed’s primary focus will be on mitigating economic risks rather than managing market reactions.”

Against this reading, market trader Craig Shapiro ruled out that the Fed’s first cut will be 0.5%, as the idea is not to cause market panic. He believes the agency will implement the reduction gradually under the needs of the economy, looking for the best scenario for financial traders, but what risk assets require.

“We are back in this zone. Risk assets will correct until the Fed capitulates and gives you what you want. We need to find the strike price of the Fed put option, but given the current state of the economy and with risk asset prices (equities, credit spreads, etc.) still so elevated while economic data continues to grow slowly, I fear significantly lower levels,”Shapiro said.

Bitcoin still not rising​

The analysts cited by CoinDesk’s analysts come amidst the Bitcoin’s decline over the past week, when it reached lows near USD $52,800 per unit.

The setbacks observed in the last seven days have been affected by fears of a possible economic recession in the US and the Federal Reserve’s obligation to implement certain measures to stimulate activity in the financial markets.

Added to this is the unknown of the U.S. presidential race, which pits former President and Republican candidate Donald Trump against Vice President and Democratic Representative Kamala Harris. Although the scenario seems very close at the moment, analysts believe that the cryptocurrency sector can tip the balance towards one of the contenders.

 

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U.S. stocks fall after heated Harris-Trump debate; CPI data in focus
U.S. stocks fell on Wednesday as investors analyzed the outcome of a heated debate between U.S. presidential candidates Donald Trump and Kamala Harris and awaited the release of new U.S. inflation data, which could affect the Federal Reserve’s next monetary policy meeting decision.

The benchmarkS&P 500 index along with the tech-heavy NASDAQ Composite advanced last session, the first time the averages have posted two straight days of gains since mid-August.

However, the 30-stock Dow Jones Industrial Average retreated, and bank stocks fell just after JP Morgan Chase (JPM) indicated that analysts’ consensus estimates for its earnings next year were fairly optimistic. Earlier this week, Goldman Sachs CEO David Solomon also mentioned that the investment bank’s trading revenue would decline by 10% in the current quarter.

Trump-Harris debate yields few political details​

The Republican candidate for the U.S. presidency, Donald Trump, and his opponent, Democrat Kamala Harris, engaged in a heated debate on Tuesday, in which different topics such as immigration and the economy were discussed.

Ahead of the much-anticipated debate, which came at a time when Trump and Harris are tied in national polls, investors were left with few details on how each candidate would address such momentous issues as tariffs, taxes and regulation.

During his time on the campaign trail, Trump has made promises to drastically cut corporate taxes and take a stronger stance on tariffs. Harris, by contrast, has promised to increase corporate taxes. Analysts have predicted that while Trump’s plan could serve to tax corporate profits, it could also fuel inflation. But they have also indicated that Harris’ proposal could instead undercut corporate profits.

On the debate stage, Harris questioned Trump’s policy of imposing high tariffs on goods from abroad, arguing that it would effectively tax the middle class. Trump defended it, claiming it would not mean higher prices for Americans, and lambasted Harris for having managed a period of high inflation during Biden’s tenure.

However, analysts at TD Cowen argued that this was “not a debate about economics.”

“There were no substantive discussions on key economic issues, including whether the White House should play a role in setting interest rates or how tariffs might affect inflation and economic growth,” the analysts noted in a note to clients.

Betting favored Harris right after the debate ended, with the odds of the acting vice president winning the vote rising to 56% from 53% before the event, according to data from online forecasting marketplace PredictIt cited by Reuters.

Inflation in focus​

Markets are getting ready to analyze the latest U.S. consumer index, a key measure of inflation.

The figures come against a backdrop in which traders expect the Federal Reserve to cut borrowing costs from 5.25% to 5.5%, its highest level in almost 23 years, at its next two-day meeting on September 17-18. However, uncertainty surrounds the extent of the potential cut.

Pending inflation data, markets currently give a 67% chance of a quarter-point cut and a 33% chance of a half-point reduction, according to CME’s FedWatch tool.

Looking at month-on-month terms, overall U.S. consumer price growth in August is expected to be the same rate as July at 0.2%. On a year-on-year basis, the figure would decelerate to 2.5% from 2.9%.

So-called core consumer prices, which exclude the more volatile items such as food and gasoline, are at 0.2% m-o-m and 3.2% y-o-y, both in line with July.

Oil rises on supply concerns​

Oil prices rose in European trading on Wednesday as traders waited to assess the impact of Hurricane Francine on production in the Gulf of Mexico.

Prices were also supported by industry data, which revealed an unexpected weekly drawdown in U.S. oil inventories.

However, oil markets rebounded from Tuesday’s heavy losses, when disappointing Chinese import data and a cut in demand forecasts from the Organization of the Petroleum Exporting Countries painted a bearish picture for oil markets.

 

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SEC Raises $4.68 Billion from Cryptocurrencies Under 2024 Measures
The U.S. Securities and Exchange Commission has collected a significant $4.68 billion in fines from the cryptocurrency sector in 2024. This record marks an increase of approximately 3,018% compared to the fines collected in 2023.

The SEC states that through fines, it is ensuring transparency, protecting investors, and enforcing compliance across the cryptocurrency industry.

Terraform Labs Contributes to Crypto Fines​

The $4.47 billion fine was levied after the collapse of Terraform’s algorithmic stablecoin, TerraUSD, which caused substantial losses for investors.

In June 2024, Terraform reached a settlement with the SEC, addressing allegations that the company had misled investors regarding the stability and security of its digital assets.

Despite bringing fewer enforcement actions, 11 in 2024 compared to 30 last year, the SEC has secured fines totaling more than 30 times the amount collected in 2023. This considerable increase, from $150.3 million last year to $4.68 billion this year, is the result of a more focused strategy on high-profile cases.

The SEC has also targeted companies such as Telegram and Ripple for unregistered token sales and securities violations.

“This trend indicates a strategic shift by the SEC toward fewer but larger fines, with a focus on making high-impact enforcement actions precedent-setting for the entire industry,” Social Capital Markets said.

Analyzing the data from 2019 to 2024, there is a clear increase in fine amounts. The average fine in 2018 was $3.39 million, which rose to an average of $426 million in 2024, representing an increase of 12,466.37%.

Fines to Discourage the Cryptocurrency Market​

The fines imposed cover a wide range of financial penalties, including forfeiture, disgorgement, penalties, settlement amounts, and pre-judgment interest. These measures are part of the SEC’s comprehensive strategy to penalize and deter illegal activities in the market.

However, the SEC’s aggressive tactics have faced criticism. The crypto community has expressed concerns that such stringent regulations could stifle innovation by imposing measures that some see as overly punitive.

“The U.S. SEC/Gary Gensler is literally acting like ransomware thugs. They threaten so many crypto companies with bogus lawsuits and then settle for a big fine,” said one X user.

Additionally, the SEC’s handling of some cases has faced legal scrutiny. Notably, in a case against D.E.B.T. Box, a federal judge blasted the SEC for its “bad faith conduct” and ordered it to pay $1.8 million in legal fees. The judge also pointed to problems with the agency’s approach to compliance.

 

[OnEquity]

Dollar slips before Fed meeting; euro and pound advance
The U.S. dollar fell on Monday, while both the euro and the pound rose on expectations that the Federal Reserve will begin a cycle of rate cuts later this week.

Is a big Fed rate cut coming?​

The U.S. Federal Reserve completes its latest policy meeting on Wednesday and is expected to begin cutting interest rates from very close to the 5.25%-5.5% range it has held for the past 14 months.

A rate cut has been widely indicated by Fed officials as the U.S. consumer price index declined last month to its lowest level not seen since February 2021. However, there is still some degree of uncertainty in the air regarding the size of the cut, and the U.S. currency fell sharply on Friday just after media reports served to once again fuel speculation related to the Fed potentially making a sharp interest rate cut by nearly 50 basis points.

According to CME FedWatch, Fed funds futures indicate a 59% chance of a 50 basis point cut during the September meeting.

U.S. Treasury yields have retreated again Monday during the anticipation of a cut, with benchmark 10-year yields down 30 basis points in about two weeks.

The Fed’s rate decision will be followed by a post-meeting press conference, where Fed Chairman Jerome Powell could give signals on future rate estimates and the economy at home.

Both the euro and the pound soar​

In Europe, EUR/USD rose 0.4% to 1.115, with the single currency in demand despite the European Central Bank cutting interest rates by about 25 points for the second time the previous week.

European Central Bank President Christine Lagarde downgraded estimates of a further cut in funding costs next week, citing that the rate path was not predetermined and that the ECB would decide rates on a meeting-by-meeting basis, without making prior commitments.

ECB Chief Economist Philip Lane and Vice President Luis de Guindos will speak at separate events on Monday.

GBP/USD rose 0.4% to 1.3173 ahead of the latest ECB policy meeting scheduled for Thursday.

The UK central bank is expected to keep its policy rate at 5%, after starting its easing with a 25 basis point reduction during the August meeting.

Yen soars ahead of Bank of Japan meeting​

The yen rose 0.8% against the dollar to 139.76, hitting more than eight-month highs, ahead of this week’s Bank of Japan meeting.

The BOJ’s interest rate decision next Friday is expected to hold its short-term target at 0.25%.

However, BOJ board members have signaled their desire to raise rates, possibly leading to the cancellation of more yen terminated carry trades.

USD/CNY traded flat at 7.0930, with regional trading volume moderated by public holidays in China, Japan and South Korea.

 

[OnEquity]

U.S. stock unchanged, with Fed meeting in focus; rate cut anticipated
U.S. stock index futures were little changed on Monday, as investors dug in ahead of this week’s Federal Reserve meeting, where there is a high likelihood that the Fed will begin a rate-cutting cycle.

Similarly, markets have been cautious after learning of a second attempted assassination attempt against the Republican presidential candidate, Donald Trump, fortunately the former president was unharmed.

Fed meeting approaching and markets appear to be divided on rate cut​

The Federal Reserve is set to meet later this week and is expected to begin cutting interest rates, although market traders are currently divided over the size of the potential cut.

According to CME FedWatch, traders are currently pricing in a 50% chance of a 50 basis point cut and another 50% chance of a 25 basis point cut.

Wednesday’s decision is likely to signal the tone of the Fed’s plans to begin easing monetary policy at a time when it faces some concerns about the cooling economy along with the labor market. Although the latest economic data indicate that inflation is stable.

Likewise, lower rates are expected to support equities in the coming months.

Dow Jones and S&P hit all-time highs​

Wall Street’s major indexes performed positively last week despite the inflation data, as technology stocks were supported and boosted by some big-ticket buying and resurgent buzz around artificial intelligence.

Broader stocks likewise rose, with bets on interest rate cuts spurring buying in sectors that are economically sensitive.

The S&P 500 rose 4% the previous week, while the. Dow Jones Industrial Average rose 2.6%, both indexes near all-time highs.

The NASDAQ Composite index rose by almost 6%, although it remained below the highs reached at the beginning of the year.

Pfizer gains after trial success​

In the corporate sector, Pfizer (PFE) shares rose 0.6% before the markets opened, after the pharmaceutical company reported that its experimental drug to combat a disease that causes cancer patients to lose appetite and weight showed positive results in a mid-stage trial.

Boeing (BA) shares rose 0.3% before the markets opened, after falling more than 3% on Friday, as the 30,000-worker strike extended into its fourth day on Monday, and company and union negotiators are expected to resume labor contract talks on Tuesday.

Crude Oil Prices Rise Ahead of Fed Meeting​

Crude oil prices rose on Monday ahead of this week’s expected Fed rate cut, although lingering demand concerns continued to limit any major hike. The US central bank is likely to begin an easing cycle on Wednesday, and lower rates bode well for economic growth, which in turn could help sustain US fuel demand in the coming months.

That said, Chinese economic data released over the weekend pointed to further economic weakness in the world’s largest oil importer, while Gulf of Mexico crude oil production resumed in the wake of Hurricane Francine, although nearly a fifth of crude production remained offline.