3 markets to watch next week (15.08.2024)

Financial markets saw an intense end to last week, driven by the meeting between Trump and Putin. The situation in Ukraine will remain a key factor this week, but market attention will also turn to other significant events. Investors are primarily looking toward the Fed, as Jerome Powell is scheduled to deliver a speech at the Jackson Hole Economic Symposium this Friday. Furthermore, a series of important macroeconomic data releases are expected, including preliminary PMI indices and inflation figures from the Eurozone and Japan. Given this backdrop, the markets to watch this week are the US500, GOLD, and USDJPY.

US500

Over 90% of S&P 500 companies have now reported their quarterly earnings. Corporate profits have surprised on the upside, although it is worth noting that expectations were relatively low. US index futures, including the US500, hit historical highs last week. Amid rising geopolitical uncertainty linked to the war in Ukraine, tariffs, and monetary policy, investors are questioning whether current high valuations are justified. As a result, investors will be focused on Powell's address at the Jackson Hole symposium this Friday. Following the strong surprise in PPI inflation, he is theoretically expected to temper expectations that a September rate cut is 100% certain, as several important macroeconomic readings are still ahead before the September meeting that could alter the interest rate outlook.

GOLD

Gold has been in a consolidation phase since reaching historical highs in September, awaiting a catalyst to break either the key resistance around $3440 or the support level at $3300. The ongoing uncertainty surrounding Ukraine remains a significant factor, making all monetary policy-related developments crucial for gold. From a data perspective, the preliminary August PMI indices, set to be published on Thursday, will be important as they could impact the dollar's valuation and, consequently, gold prices.

USDJPY

Last week, U.S. Treasury Secretary Scott Bessent caused the yen to strengthen by suggesting he sees a chance for an imminent interest rate hike by the Bank of Japan. At the same time, he frequently commented on U.S. interest rates, stating they should be significantly lower. In the context of the BoJ's decision, Friday's inflation data will be critical. If inflation comes in higher (and it is already clearly above the target), the probability of rate hikes will increase significantly. Naturally, from the dollar's perspective, Powell's speech at the Jackson Hole Economic Symposium will be key.