Current Economic and Financial News for Sunday, August 31, 2025. Fed Rates, Chinese PMI, European Inflation, Corporate Reports, and Impact on CIS Markets.
At the end of the week, global financial markets demonstrated strong growth. Investors reacted positively to signals from Fed Chairman Jerome Powell regarding a potential easing of U.S. monetary policy in the near future. During the annual symposium in Jackson Hole, Powell indicated that the cycle of interest rate hikes is nearing completion, and the regulator may consider a rate decrease if inflation continues to slow. These dovish statements sparked a rally in risk assets: U.S. stock indices set new highs (with the Dow Jones reaching a record), Treasury yields fell, and the dollar weakened significantly.
Against this backdrop, optimism prevails at the start of the new week, although investors are anticipating a series of key macroeconomic reports ahead. On Sunday, August 31, market attention is focused on data from China and the overall sentiment as September begins. China is set to release fresh PMI indices, which will reflect the state of the world's second-largest economy. However, trading activity may be subdued due to the extended holiday weekend in the U.S. for Labor Day: American markets will be closed tomorrow. Low liquidity in the absence of U.S. players could either smooth out fluctuations or lead to sharp local movements in response to unexpected news. For CIS investors, it is important to consider these factors when assessing the situation and preparing for the new trading week.
Macroeconomic Calendar (MSK)
- 04:30 — China: Official PMI indices (manufacturing and non-manufacturing) for August.
- 04:45 (Mon) — China: Caixin manufacturing PMI for August.
Asia: Weak Activity in China and Caution in Japan
- China: Preliminary data indicates that China's manufacturing PMI remains below the critical level of 50 points (around 49 in August), suggesting a continued decline in activity within the manufacturing sector. Official statistics also report a slowdown in growth in the services sector. Weak domestic demand and recent signs of deflation (with July's CPI in China showing 0% y/y growth, and producer prices decreasing) confirm the vulnerability of the world's second-largest economy. These trends heighten expectations for additional stimulus from the Chinese authorities — markets are anticipating new support measures, including potential rate cuts by the People's Bank of China and fiscal programs to revive the industry.
- Japan: The macroeconomic picture in Japan remains mixed. Core inflation in Tokyo has slowed to approximately 2.5% year-on-year (down from 2.9% previously), bringing it closer to the target level, allowing the Bank of Japan to maintain its ultra-easy policy. However, other indicators signal lukewarm growth: industrial production in Japan fell by 1.6% m/m, retail sales grew only by +0.3%, despite record-low unemployment (2.3%). After a strong summer rally, Japanese investors have taken a pause — profit taking is observed, and the strengthening yen (with the exchange rate dropping to approximately 146 ¥ per dollar) exerts additional pressure on exporters. On Monday, no major releases are expected in the region, so the dynamics of Asian markets will be shaped by external factors and Chinese news.
Europe: Weak Industrial Sector and Inflation Expectations
- Eurozone: The European industrial sector continues to face challenges. PMI indices for manufacturing in the Eurozone are significantly below the 50-point threshold (preliminary data suggests around 43.0 in August), reflecting a decline in orders and a reduction in output. The final PMI data, which will be released on Monday, is likely to confirm this trend. The ongoing weakness in the manufacturing sphere raises concerns about potential stagnation in the Eurozone economy in the second half of the year.
- Inflation: Meanwhile, inflation in Europe is slowing down, gradually approaching the target of 2%. Preliminary data on consumer price index (CPI) for August for the Eurozone will be released on Tuesday, with consensus forecasts suggesting a further decline in annual inflation to approximately 2.0%. Disinflation, along with signs of economic cooling, may prompt the ECB to pause its tightening cycle, and perhaps even consider a rate cut this autumn. Some ECB representatives have already softened their rhetoric, noting that “the process of reducing inflation is gaining momentum.” Such signals help keep European bond yields from rising and sustain cautious optimism in European stock markets.
U.S.: Holiday and Focus on Labor Market
- U.S. Markets: The American stock market concluded the previous week on a positive note. The S&P 500 jumped approximately +1.6% on Friday, and the Dow Jones set a historic maximum following Powell's speech. Investors viewed Powell's signals as an indication of an imminent course change in monetary policy — the market is now pricing in a high probability of the first rate cut within the next few months. This has led to a surge in demand for growth stocks: the technology-heavy Nasdaq and other interest rate-sensitive segments led the rally. At the same time, the yield on 10-year U.S. Treasury bonds decreased, while the dollar weakened against the euro and yen, reflecting a reassessment of expectations toward a softer policy.
- Outlook: On Monday, U.S. markets are closed (Labor Day), which will reduce global trading volumes. Meanwhile, important economic indicators from the U.S. are on the horizon, which will set the tone for the rest of the week. The key event is the labor market report for August, which will be released on Friday (Non-Farm Payrolls). Hiring rates are expected to continue slowing, signaling an economic cool-down while keeping unemployment low. Additionally, on Tuesday, the ISM and S&P Global business activity indices for the manufacturing sector will be released (due to the holiday, they have been moved to September 2). These data will show whether the decline in U.S. manufacturing persists (with PMI indices below 50 for several months) and will either support the basis for a Fed course change. However, if the indicators unexpectedly exceed forecasts, discussions about possible resumption of tightening may return, although the baseline scenario now involves maintaining a pause or even initiating a rate cut at upcoming meetings.
Other Regions and Indices: Euro Stoxx 50, Nikkei 225, MOEX
- Euro Stoxx 50: The start of the week for the key European index is likely to be relatively calm due to the absence of major corporate reports on August 31. The dynamics of the Euro Stoxx 50 will be shaped by external factors — the markets' reactions to the Chinese PMI and the ramifications of changing expectations regarding Fed rates. A decline in bond yields and a weaker euro due to dovish signals from the U.S. could support shares of export-oriented European companies. Investors are also keeping an eye on Tuesday's publication of Eurozone inflation data: an unexpected CPI result could trigger notable movements in European indices and the EUR exchange rate.
- Nikkei 225: The Japanese index Nikkei enters September following impressive growth over the summer (approximately +3.8% for August). However, last week's rally has somewhat paused — profit taking is occurring amid a stronger yen and mixed macro data. Japan is currently in the season of corporate reporting for April–June: this week, results from several industrial and technology companies, including equipment and auto component manufacturers, are expected. The combination of slowing inflation and the Bank of Japan’s soft policy creates favorable conditions for the equity market, but the strengthening yen and signs of economic slowdown limit the potential for further growth. Without new data on August 31, Tokyo traders will be guided by the overall global sentiment and movements in U.S. futures.
- MOEX: The Russian MOEX index enters a period of peak corporate reporting for the first half of the year. Traditionally, many large Russian companies disclose financial results for the first six months at the end of August or the start of September. Investors on the Moscow market are looking forward to reports from several giants: in the coming days, consolidated results from Rosneft and Lukoil for the first half of 2025 are expected, which will clarify the state of the oil and gas sector amidst price restrictions and redirecting of exports. Operational indicators from several energy and consumer companies will also be published. The reaction to these reports will locally influence the corresponding stocks and sector indices. External factors — oil prices around $67 per barrel of Brent and the ruble exchange rate around 80 per dollar — continue to impact market sentiment and risk assessment in Russian assets.
What Investors Should Focus On
- Fed Policy: Soft signals from the U.S. have eased tensions in the markets, but further dynamics in inflation and employment will determine whether investor optimism is warranted. Upcoming publication of NFP and other data will potentially lead to sharp price movements if the statistics significantly deviate from expectations.
- Chinese Factor: Business activity and price indicators (PMI, CPI) signal weakness in the Chinese economy. Increasing deflationary risks in the world's second largest economy could dampen global risk appetite. Conversely, expected stimuli from Beijing (monetary and fiscal) could improve sentiment in emerging markets and support commodities.
- Europe and ECB: Ongoing disinflation in the Eurozone amid weak growth increases the likelihood of a softer ECB policy. Investors should closely monitor CPI data on September 2 — this will influence the euro exchange rate, European bond yields, and consequently, stock valuations in Europe. Surprises in the statistics could adjust expectations for ECB rates.
- Corporate Reports: Although the main earnings season is over, individual corporate news can still impact the markets. Focus is on company forecasts for the second half of the year: positive comments (for instance, from equipment manufacturers or consumer brands) could support those respective sectors, while cautious forecasts, especially from technology firms or major players with exposure to China, may heighten selectivity among investors.
- Liquidity and Risks: The holiday weekend in the U.S. implies reduced trading volumes at the start of the week. In a thin market, unusual price spikes are possible, so investors should exercise caution. It is advisable to avoid excessive short-term bets and use the trading pause to reassess positions and hedge risks ahead of the eventful first week of September.
Global Markets: Bitcoin and Oil Rise, Dollar Weakens
Indices and Futures:
- Shanghai Composite: 3,670.0 (+0.4%)
- Hang Seng Futures: 25,100 (+0.8%)
- Nikkei 225 Futures: 42,600 (+0.1%)
- Euro Stoxx 50 Futures: 5,375 (+0.3%)
- S&P 500 Futures: 6,450 (0.0%)
Cryptocurrencies:
- BTC/USD: $123,000 (+2.0%)
Commodities:
- Brent Oil: $67.00/barrel (+1.0%)
- Natural Gas: $3.05/MMBtu (+0.5%)
- Gold: $3,430.00/ounce (+0.3%)
- Silver: $38.00/ounce (+0.2%)
- Copper: $4.48/pound (+0.5%)
- Aluminum: $2,590/ton (+0.1%)
- Nickel: $1,320/ton (+0.3%)
Yields:
- US 10Y T-Note Futures: +0.20% (112.50)
Currency Market:
- US Dollar Index: 97.80 (–0.3%)
- USDCNY: 7.17
- USD/RUB: 79.5
Main Currency Pairs:
- EUR/USD: +0.5% (1.1700)
- GBP/USD: +0.3% (1.3500)
- USD/JPY: –1.0% (146.00)
- USD/CAD: –0.3% (1.3700)
