Market update - Sep First week.

 Fed Chief Signals Rate Cut at Next Meeting

In a highly anticipated move, Fed Chief Jerome Powell has signaled a potential rate cut in the upcoming meeting. Powell, though cautious in his words, emphasized that inflation appears to be under control, making way for a shift in focus towards the strength of the labor market. This pivot marks a notable change in policy, as future labor market data will now be crucial in determining both the pace and the magnitude of rate cuts.

Crude Oil Outlook: OPEC has confirmed its intention to increase oil output by 188 kbpd starting in October, as previously indicated. This increase is expected to bring the demand-supply balance to neutral by the end of 2024 and could potentially result in a surplus by early 2025. In response, Brent crude prices have sharply corrected to $76 per barrel, driven by this supply outlook and weak global manufacturing PMI data, particularly from China.

Gold Outlook: Gold has continued its upward trend, hitting new highs over the past two weeks. This rally has been fueled by substantial purchases from global central banks during the first half of 2024. The bullish outlook for gold is expected to persist, supported by falling U.S. bond yields, increased risk aversion ahead of the U.S. presidential election, and a weakening U.S. dollar (DXY).