This week ahead || Sep 2nd - Sep 6th 2024
Here is your news for the week ahead.
This week in Bidenomics: Maybe things are okay?
Americans seem to be emerging from a prolonged period of pessimism, which could potentially benefit Democratic presidential nominee Kamala Harris as the 2024 election approaches. Various confidence measures, including the University of Michigan sentiment survey, have shown an uptick, reflecting growing optimism about the economy. This shift in sentiment may be influenced by factors such as the easing of inflation, a reversal in stock market turmoil, and expectations of upcoming interest rate cuts by the Federal Reserve.
Harris's rise to the Democratic ticket has also correlated with increased optimism among Democrats and Independents, as seen in recent surveys. While some attribute this to a change in leadership, it highlights how economic perceptions can be influenced by the political landscape. As inflation pressures ease and consumer confidence grows, Harris may find herself in a favorable position going into the final stretch of the election, with improving economic conditions potentially serving as a tailwind for her campaign.
European stocks’ quest to outshine US markets is fading quickly
The initial optimism that European stocks could outshine U.S. markets is fading due to growing concerns about an economic slowdown in Europe. While the Stoxx 600 reached record highs, it has underperformed the S&P 500 in 2024. Investors are favoring undervalued U.S. sectors, driven by the U.S. economy's resilience and expectations of rate cuts by the Federal Reserve.
European stocks initially benefited from a shift away from U.S. tech, but concerns over Europe's economic outlook, particularly in Germany and China, have reversed this trend. Despite a valuation discount in European equities, continued investment hinges on improved economic growth and corporate earnings into 2025.
Top 5 things to watch in markets in the week ahead
This week, markets will focus on Friday's August employment report as the Federal Reserve is expected to begin cutting rates at the September meeting. Other key events include labor market updates and the Bank of Canada’s anticipated third rate cut. Meanwhile, oil prices face pressure from expected increases in OPEC+ supply, and China’s manufacturing data could reveal whether its economy is stabilizing. Market volatility is likely, with September historically being an unstable month for stocks.
Czech finance ministry submits 2025 budget draft to cut deficit by 9%
The Czech Finance Ministry has proposed a 2025 budget draft with a 9% lower deficit, aiming to reduce the fiscal gap to around 2% of GDP while achieving record investments. The draft targets a 230 billion crown deficit, down from 252 billion crowns this year, and includes commitments like maintaining NATO defense spending at 2% of GDP, raising teacher salaries, and increasing investments. The government will review the budget before submitting it to parliament by the end of September, with some coalition members seeking adjustments for housing funds. The proposal continues the government's efforts to consolidate finances following a record deficit in 2021.
