Financial market research and analysis

MARKETS

The Dow Jones ended roughly flat on Tuesday, pressured by a fall in financials and a u-turn in Apple after the tech giant launched a new services bundle and hardware.

The S&P 500 was up 0.52% while the Nasdaq added 1.21%. Apple rose 0.2% but had been up more than 1% in early trade. Other big tech stocks managed to hold gains. Financials declined by more than 1%, led by a fall in Wall Street banks ahead of the Fed's two-day meeting, which kicks off today. JP Morgan fell 3% after lowering guidance on net interest income in the wake of falling interest rates.

European equities were slightly up. Oil prices shrugged off concern about weaker demand to end the day up nearly 3%.

Overnight, most Asian shares rose, extending a rally driven by upbeat U.S and Chinese data. The dollar, bond yields and Gold held steady ahead of the Fed meeting.

DAY AHEAD

For this day ahead I’ll be focused on potentially the biggest software IPO ever – Snowflake as well as the Federal Reserve rate decision and UK CPI data.

A late increase to its expected price range means Snowflake will be the biggest software IPO ever – valued at $2.9 billion – and possibly more if the price runs higher amid demand on the day. An uncharacteristic 570 million investment in a) software and b) an IPO from Warren Buffet has caught a lot of people’s attention on this one.
More so than the company’s business model- which is basically data management via the cloud. 

There’s actually a big data piece that could even sway the dollar more than the Fed, and that’s US retail sales, which are expected to have grown 1% in August in a slight loss of momentum from the 1.2% in July.

Jay Powell already announced the Big Kahuna at Jackson Hole on average inflation targeting – basically letting the job market run hot and forgetting about the inflationary implications until later - so no change is expected to policy this time around. The Focus will be on economic projections – rates will be forecast at rock bottom for years – so the main point of interest will be the economy and employment. The Fed guesstimated a 9.3% unemployment rate at the end of the year – and its 8.4% now – so presumably we can expect some upward revisions there.

The UK consumer price index is expected to show zero year-over-year in August in a big drop from the 1% rise in July. Given expectations for zero, it would only take a 10th of a percentage point to see the UK re-enter a period of deflation.