On Sunday night, stock futures remained relatively stable as investors eagerly awaited the Federal Reserve’s highly anticipated policy meeting. This meeting, scheduled for Tuesday and Wednesday, is expected to result in the first rate cut since 2020. The current overnight lending rate stands at 5.25% to 5.5%, and traders are divided on whether the Fed will reduce rates by 25 or 50 basis points, according to the CME Group’s FedWatch tool. This decision is being closely watched, as it could have significant implications for the financial markets.

On Monday, European stocks showed a mixed performance as investors braced for a significant week of interest rate decisions. Mining stocks declined by 0.6%, while the retail sector saw a modest increase of 0.4%. Despite the mixed start to the week, the regional benchmark closed higher on Friday, gaining 1.09% over the week as positive momentum returned to the market. Investors are particularly focused on the upcoming Bank of England meeting on Thursday, with the market divided on whether the central bank will opt to cut rates for the second time in two months.

Markets in mainland China and South Korea are closed in observance of the Mid-Autumn Festival, while Japan’s markets are shut for Respect for the Aged Day. Over the weekend, China released concerning economic data, revealing that August’s factory output, retail sales, and investment figures fell short of expectations. Additionally, the urban jobless rate climbed to a six-month high, and year-on-year home prices experienced their steepest decline in nine years. Meanwhile, Typhoon Bebinca has caused significant disruptions, leading to the cancellation of hundreds of flights in China, with Shanghai bracing for what could be the strongest storm since 1949.Economic Calendar

Economic Calendar

Earnings Calendar

There are no Noteworthy earnings reports before or after the bell on Monday.

News & Technicals’

The Federal Reserve’s highly anticipated two-day meeting, starting on Tuesday, is set to take center stage this week. In addition to the Fed, Brazil’s central bank will hold its policy meeting on Wednesday. Thursday will see decisions from the Bank of England, Norway’s Norges Bank, and South Africa’s Reserve Bank. The week of central bank activity will conclude with the Bank of Japan’s latest rate decision on Friday. This series of meetings is expected to have significant implications for global financial markets.

Pfizer announced that its experimental drug, ponsegromab, has shown promising results in a midstage trial for treating cancer cachexia, a serious condition that leads to appetite and weight loss in cancer patients. The trial revealed that patients taking ponsegromab experienced improvements in body weight, muscle mass, quality of life, and physical function. These positive outcomes suggest that ponsegromab, a monoclonal antibody, could potentially become the first approved treatment specifically for cancer cachexia, offering new hope for patients suffering from this debilitating condition.

Analysts are examining the link between China’s real estate slump and local government financing to understand the country’s persistent consumption slowdown. According to Wenyin Huang, director at S&P Global Ratings, macroeconomic challenges are undermining the revenue-generating capabilities of local governments, particularly through taxes and land sales. Additionally, Morgan Stanley’s chief Asia economists, Chetan Ahya and Robin Xing, noted in a September report that weak investment is resulting in sluggish nominal GDP growth. This, in turn, is pressuring the corporate sector to cut wages and contributing to a sharp rise in debt ratios.

Columbus, Ohio, experienced a significant cyberattack over the summer, attributed to a new wave of ransomware from a group known as Rhysida, which some security experts suspect is linked to Russia or neighboring states. An IT researcher in Columbus, who monitors the dark web and cybercrime, accessed three terabytes of hacked data, taking over eight hours to download. He alerted the media that the breach was far more extensive than the city had disclosed to residents. In response, the city sued the researcher, claiming legal action was necessary to protect sensitive information. This move surprised experts, who warned it could have a chilling effect on hacking disclosures and public transparency.

New record highs look very possible as we wait for the anticipated policy meeting and the FOMC rate decision on Wednesday afternoon.  However, I would not rule whipsaws keeping in mind the corporate buyback blackout, uncertainty over next quarter earnings, possible government shutdown on the 30^th, and of course the last two weeks of September track record of being historically volatile.

Trade Wisely,

Doug