Ahmad Assiri
US equities opened the week on a softer note, extending the recalibration that followed Fed Chair Jerome Powell’s speech at Jackson Hole. The S&P 500 slipped 0.4%, while the Nasdaq edged 0.2% lower in what was a relatively muted session in terms of trading volumes.
Asia painted a more constructive picture, led by Chinese equities which gained close to 1.5%. This marks a fourth consecutive day of advances, driven largely by the technology sector and supported by expectations of continued policy accommodation. Retail investors also appeared to be chasing momentum adding fuel to the rally.
In fixed income, the US Treasury curve showed mild upward pressure. The 10-year yield rose to around 4.275%, while the 30-year touched 4.891%, a modest rebalancing after last week’s heavier rotation into risk assets.
The dollar regained some stability, with the DXY climbing back toward 98.3 after Powell’s dovish tone weighed on it late last week. EURUSD retreated from 1.1700 level, settling back toward last week’s mid-range levels. Overall, FX price action in the majors stayed orderly, reflecting a market recalibrating after Jackson Hole rather than breaking into new trends.
Brent crude rose 1.5% to approach $68.8 a barrel, underpinned by the weaker dollar and the prospect of easier policy conditions. Gold, meanwhile, held near $3,366 per ounce in sideways trade. The broader backdrop remains supportive, Powell’s effort to downplay inflation risks reassured markets that the Fed’s bias has shifted toward easing rather than tightening, an environment that naturally favors the yellow metal.
In the near term, the risk-reward balance tilts toward gold. Powell’s remarks strengthened investor conviction that rate cuts are drawing closer, even if that optimism runs ahead of incoming economic data. Should upcoming releases fail to validate Powell’s upbeat tone, gold could well find a leg higher.
Two catalysts stand out. The PCE inflation report, expected to near 3%, may signal the Fed’s tolerance for inflation above the 2% target in the short run, a scenario that could weigh on the dollar and set the stage for gold to test the $3,400 level. Second, next week’s nonfarm payrolls will take center stage, additional evidence of labor market softening will likely reinforce easing expectations and support demand for gold.
Equities Spotlight, Nvidia Earnings
This week’s marquee event will be Nvidia’s earnings release on Wednesday after the close. Expectations are for another blockbuster quarter, fueled by surging demand for AI-focused chips. Consensus points to EPS near $1 with annual growth exceeding 45% and revenues around $46 billion, up more than 50% year-on-year.
Sales around the Blackwell chip series and expanding international sales, particularly in Asia and the Middle East, have underpinned investor optimism. That said, caution lingers. Chinese market uncertainties and US government restrictions and in effect ‘sales tax’ on chip to China could impact margins or guidance, injecting volatility into how valuations are reassessed
Looking ahead
Global assets remain tethered to Powell’s Jackson Hole narrative, caught between the pull of dovish policy signals and the push of lingering inflation concerns.
Near-term focus will sharpen around PCE inflation and next week’s US jobs report, both of which will affect the pace of repricing across the dollar, bonds, gold and equities. For now, markets continue to trade in balance but the next data points hold the potential to reset this equilibrium.
Assiri is Research Strategist at Pepperstone
