As China’s markets prepare for a seven-day closure in early October due to a public holiday, investors are cautiously optimistic that the economic outlook for the world’s second-largest economy is beginning to stabilize. This follows recent stimulus measures aimed at boosting growth, combined with monetary easing policies from central banks in Europe and the U.S., where rate cuts are now underway to support economic expansion.
Hopes for a stronger Chinese recovery have buoyed commodity-linked currencies, with both the Australian and New Zealand dollars seeing gains. Meanwhile, the yen has pared its previous session’s advance, reflecting a tempered response to recent market dynamics.
However, geopolitical risks continue to loom large. Tensions in the Middle East are at risk of further escalation after Israel’s airstrike in Beirut, which resulted in the death of Hezbollah leader Hassan Nasrallah. The development has raised concerns about Iran’s potential response, with global markets bracing for heightened volatility.
In the energy sector, oil prices edged higher on Monday, as traders await signals on how geopolitical tensions might impact the supply chain, particularly with regard to Iranian crude.
The week ahead promises to be pivotal for markets, as traders turn their attention to key data releases in the Eurozone, including inflation figures and manufacturing activity. These indicators will provide crucial insight into the health of the Eurozone economy, especially as the European Central Bank (ECB) embarks on a gradual easing path.
All eyes will be on the U.S. jobs report scheduled for Friday, which will play a critical role in shaping expectations for future Federal Reserve monetary policy. With the Fed already cutting rates, the labor market data will offer clues about the pace and magnitude of additional rate cuts into year-end, and how they might impact broader economic growth prospects. Investors remain on edge, balancing the prospects of central bank support against ongoing geopolitical uncertainties and mixed economic signals.