Stock Market Update

Equity futures point to a modestly higher opening this morning after Friday's broad-based advance pushed the S&P 500 and Nasdaq Composite to new record highs, securing decent week-to-date gains across the major averages.

The market eagerly anticipates the September FOMC meeting, which kicks off on Wednesday. A 25-basis point rate cut has been fully priced in for some time now, so barring a surprise 50-basis-point rate cut, much of the focus will center around members' updated economic projections and the updated dot plot.

Last week's spike in initial jobless claims solidified the market's expectation of 75-basis points in rate cuts before the end of the year, though several voting FOMC members have echoed concerns about the current inflation rate. 

In other Fed news, the Senate is set to vote on Stephen Miran's Fed Governor nomination, with confirmation giving him the green light to sit as a voting participant in this week's meeting. 

On the trade front, negotiations between the U.S. and China continue in Madrid. Reuters reports that the U.S. has threatened a TikTok ban if the company does not move to U.S. ownership, though a deal is reportedly near.

In corporate news:

• BlackRock (BLK 1,123.41, -10.77, -1.0%) is planning to invest up to $678 million in British data centers. 
• NVIDIA (NVDA 175.28, -2.54, -1.4%) has been found to be in violation of China's anti-monopoly law, according to Reuters.
• Tesla (TSLA 428.87, +33.30, +8.4%) shares are higher in the pre-market after CNBC reported CEO Elon Musk purchased around $1 billion in shares on Friday. Bloomberg reports that the company's production factory in Germany has upwardly revised its production plans for the third and fourth quarters. 
• UnitedHealth (UNH 353.0, +0.49, +0.1%) is reportedly hiring Trump allies as the company faces government investigations, according to The Wall Street Journal. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region began the week on a mixed note while Japan's Nikkei was closed for a holiday. Japan's Nikkei: HOLIDAY, Hong Kong's Hang Seng: +0.2%, China's Shanghai Composite: -0.3%, India's Sensex: -0.2%, South Korea's Kospi: +0.4%, Australia's ASX All Ordinaries: -0.1%.

In news:

• China reported underwhelming growth figures for August with Industrial Production growth (5.2% yr/yr) decelerating to its slowest pace of the year.
• China's National Bureau of Statistics described the external environment as "very severe." China launched two investigations into U.S. trade policy ahead of tomorrow's planned meeting in Spain, according to Reuters

In economic data:

• China's August House Prices -2.5% yr/yr (last -2.8%). August Retail Sales 3.4% yr/yr (expected 3.8%; last 3.7%), August Industrial Production 5.2% yr/yr (expected 5.7%; last 5.7%); 6.2% YTD (last 6.3%). August Fixed Asset Investment 0.5% yr/yr (expected 1.5%; last 1.6%), and August Unemployment Rate 5.3% (expected 5.2%; last 5.2%)
• South Korea's August trade surplus $6.51 bln, as expected (last surplus of $9.08 bln). August Imports -4.1% yr/yr (expected -4.0%; last 3.3%) and Exports 1.2% yr/yr (expected 1.3%; last 4.3%)
• Hong Kong's Q2 Industrial Production 0.8% yr/yr (last 0.7%) and Q2 PPI 4.0% yr/yr (last 4.8%)
• India's August WPI Inflation 0.52% yr/yr (expected 0.30%; last -0.58%). August trade deficit $26.49 bln (last deficit of $27.35 bln)

Major European indices trade on a mostly higher note. STOXX Europe 600: +0.5%, Germany's DAX: +0.5%, U.K.'s FTSE 100: UNCH, France's CAC 40: +1.2%, Italy's FTSE MIB: +1.1%, Spain's IBEX 35: +0.7%.

In news:

• European Central Bank policymaker Kazimir said that rates are in a good place and there is no need to react to "tiny deviations" from target.
• Italy's finance ministry expects 0.6% growth in 2025, followed by 0.8% growth in 2026.
• There was some ratings action in the region, as Fitch lowered France's credit rating to A+ from AA- and revised the outlook to Stable from Negative due to high debt, a weak fiscal standing, and ongoing political uncertainty.
• Separately, Fitch raised Portugal's rating to A from A- and revised the outlook to Stable from Positive while Standard & Poor's raised Spain's rating to A+ from A with a Stable outlook.

In economic data:

• Eurozone's July trade surplus EUR12.4 bln (expected EUR11.7 bln; last EUR8.0 bln)
• Germany's August WPI -0.6% m/m (expected 0.2%; last -0.1%); 0.7% yr/yr (last 0.5%)
• Italy's July trade surplus EUR7.908 bln (expected surplus of EUR5.500 bln; last surplus of EUR5.384 bln)