Market snapshot: key data due as investors bid adieu to August

The Dow Jones closed ahead, eclipsing the previous record highs set earlier in the week, as fresh economic data further allayed the recessionary fears which had plagued the market at the beginning of the month.

The more technology-exposed indices did not fare so well, with NVIDIA Corp (NASDAQ:NVDA) weighing on the overall performance. Its shares slipped by more than 6% despite having beaten expectations following its quarterly update on Wednesday, underlining the ever-increasing bar the company faces in surprising investors. Even so, the stock has risen by more than 140% in this year alone and, while expectations continue to soar, the brief pause for breath is not enough to suggest that the appetite for AI-related stocks is on the wane.

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Economic data provided some relief, with the jobless claims number falling from the previous week, and with an upward revision from 2.8% to 3% on the second-quarter GDP figure, both of which suggest an economy whose growth is slowing, but without nearing recessionary territory. The most closely watched figure of the week comes later today with the release of the Personal Consumption Expenditures index, the Federal Reserve’s preferred gauge of inflation. The number is expected to have edged up to 2.6% in July from 2.5% in June, which should add further comfort to the likelihood of an interest rate cut in September. Prior to that meeting, the final test will be the non-farm payrolls report which comes at the end of a shortened next week, due to Labor Day on Monday.

The new high for the Dow Jones has lifted its year-to-date performance to a positive 9.7%, with the benchmark S&P 500 adding 17.2% and the Nasdaq remaining ahead by 16.7% despite the mild pressure which has been put on the index given the overhang of Nvidia in the last couple of trading days.

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Asian markets were mostly higher overnight and rather more focused on domestic issues. In Japan, the Nikkei rose moderately to leave it around 1.5% lower for the month so far, thus largely recouping the sharp losses of early August. The uptick in the latest reading on inflation consolidates the view that the Bank of Japan is likely to raise interest rates further in the next few months, while more positive news came in the form of industrial production, which rose by 2.8% in July having fallen by 4.2% in June.

Chinese shares moved sharply higher in response to some rare positive news, driven by gains in property stocks. This followed reports that the authorities are considering an option for homeowners to refinance their mortgages at lower rates in an effort to boost the fortunes of what has been a beleaguered sector, particularly this year. It remains to be seen whether the positive momentum will be maintained, however, given other economic obstacles such as high unemployment and tepid consumer demand.

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In the UK, the premier index forged ahead despite the headwinds of a broker downgrade to Rentokil Initial (LSE:RTO), and weakness in those stocks in danger of being confirmed as relegated from the FTSE 100 next week. Burberry Group (LSE:BRBY) is certain to be joining the FTSE 250, while easyJet (LSE:EZJ) is perilously close to falling out of the index once more. However, amid broad buying interest the FTSE rose to bring its cumulative year-to-date performance to a positive 8.7%, and within a whisker of reaching the previous record levels which were achieved in May.

In local economic news, the British Retail Consortium reported a decline of 0.4% in retail footfall for August, a number which was hampered by the riots seen across much of the UK earlier this month. However, the situation improved strongly as the month wore on, given the tailwinds of warmer weather and discounted summer sales. Even so, the number represented a marked improvement from July, helped by an increase of 2.6% in visits to retail parks, as compared to a decline of 0.8% in July. As the UK economy continues to display steady if unexciting progress, and with added interest in the FTSE 250 resulting from a spate of Merger and Acquisition activity, the index has now risen by 7% so far this year.