By Ahmad Assiri, Research Strategist at Pepperstone
Global markets navigated the session with a cautious yet constructive tone digesting a combination of weaker-than-expected US labor revisions and fleeting geopolitical headlines that briefly lifted oil and gold prices before fading.
The broader narrative is increasingly anchored on expectations that the Fed will deliver a rate cut at next week’s meeting. That conviction is now deeply embedded in pricing, the debate has shifted toward the pace and magnitude of easing. This week’s inflation data, today’s Producer Price Index PPI and tomorrow’s Consumer Price Index CPI, will be the catalysts for near-term policy expectations.
In US equities, the Nasdaq advanced 0.5% and the S&P 500 rose 0.2%, both reflecting a tentative but constructive session. Technology again led the charge, though gains were narrow, highlighting fragility beneath the surface.
The treasury market was influenced by the revision from the Bureau of Labor Statistics, a net reduction of 911,000 jobs between April last year and March 2025, away larger than economists had anticipated. This recalibration underscores that the US labor market’s perceived resilience was overstated and that underlying weakness is deeper than headline prints suggested. This revision strengthens the case for a Fed cut, though while a 25bp move is fully priced in next week’s FOMC meeting, investors are hesitant to extend bets on a 50bp cut ahead of inflation data.
For the inflation releases, consensus looks for annual PPI at 3.3% unchanged from prior, signaling persistent but it seems contained producer-side pressures. CPI for August is expected at 2.9% versus 2.7% previously, with core inflation higher at 3.1%. In line readings would reinforce expectations for gradual Fed easing, yet also highlight that inflation remains uncomfortably high, potentially tempering the pace of cuts beyond September.
Commodities were lively. Gold extended its run to a new ATH, printing $3,674 oz on fast money flows tied to the surprise Israeli strike in Qatar. The move proved fleeting, however, with prices retracing toward $3,630 oz, a pullback best read as a test of sentiment rather than a loss of confidence. An early sign of buyer fatigue appears present after the parabolic rally, this manifested in lower renewed dip-buying in early trade, even with action price sitting a whole 1% away from ATH, hinting that consolidation may be needed before momentum can resume. Oil also reacted to the strike, spiking briefly on escalation risks but quickly retraced as markets judged the probability of escalation to be limited. This reflects oil’s sensitivity to geopolitical shocks but also reinforces that underlying demand dynamics remain the dominant driver.
In sum, markets are caught between short-term drivers favoring Fed easing, most notably the labor market revisions, and lingering structural risks tied to economic data. Equities are edging higher and gold remains the truest barometer of global anxiety, even as momentum shows signs of strain.