Title: Market Analysis Post-US Labor Day: Defensive Stance and Risk Assets Pressure
The markets have shifted into a defensive stance post-US Labor Day, with risk assets facing pressure. According to ING’s FX strategist Francesco Pesole, safe-havens like JPY, CHF, and USD are strong, while high-betas such as AUD, NZD, and NOK are weak.
The recent US ISM Manufacturing report showed a mixed bag, with the headline index rebounding slightly less than expected to 47.2. New orders slumped to the lowest since May 2023, but prices paid were above expectations at 54.0. Despite the contractionary territory of the survey, growth momentum in the second half of the year will rely on services.
Today’s main event is the release of US JOLTS job openings, expected to slow from 8,184k to 8,100k in July. The ratio of unemployed persons per job opening has been on the rise, signaling potential labor market strain. The Fed’s Beige Book release is also on the US calendar for today.
With USD strength in pockets and market expectations of a 50bp cut by the Fed this year, concerns about a US recession may drive a more dovish approach. However, recessionary bets could impact equities and high-beta currencies more than the USD. The yen and Swiss franc are positioned stronger compared to other G10 currencies.
Analysis: The post-US Labor Day market analysis highlights the shift to a defensive stance and pressure on risk assets. Understanding the dynamics of safe-havens and high-betas can help investors navigate market volatility. Keeping an eye on key economic indicators like job openings and the Fed’s Beige Book can provide insights into potential market trends. It is crucial to stay informed and adapt investment strategies to mitigate risks and capitalize on opportunities in the ever-changing financial landscape.