00:00Fiona Sincotta is the Citi Index Analyst. Always great to have you on Global Business Europe, Fiona.
00:05So look, September has historically been the worst performing month for the S&P, for the Dow Jones, the Nasdaq.
00:12But Asian markets are flirting with fresh highs. What's going on?
00:18Yeah, we're looking at some optimism over there.
00:20I mean, as you pointed out, you know, historically, seasonality is not favorable as far as the S&P 500,
00:27as far as U.S. stocks are concerned. But we seem to be seeing a lot of optimism towards Asian shares.
00:34We've seen encouraging developments as far as the AI tech trade has been over in China.
00:40But we're also starting to see some encouraging data from China,
00:45which really does stand apart from, you know, what we've seen in the U.S. recently,
00:49where there have been a few concerns over the tech trade.
00:51And it does feel like potentially that all time high that we saw in the S&P 500 last week
00:56may be a top, at least for the time being.
00:59OK, so we're seeing some encouraging data, but I'm looking at some of the tech shares.
01:04So Samsung, for example, they dropped as the U.S. is making it harder now to produce chips in China,
01:10even though Chinese companies can still operate there and Asian companies can.
01:14Is there more uncertainty ahead, do you think, for the semiconductor sector?
01:17Yeah, I think the semiconductor sector is an area that we are a little bit cautious about for the time being.
01:24It does still feel like there is uncertainty surrounding the outlook as far as Trump trade policies are concerned.
01:33Obviously, I mean, we've had, you know, these latest developments today where there are news or reports of that appeal in the U.S.
01:40that Trump's trade tariffs are indeed illegal.
01:43But I don't think that's going to actually change the outlook.
01:46Trump will find a way to push these or to keep these tariffs in place.
01:51And that does mean that there is lingering uncertainty for the sector.
01:55So what would you say that investors are prioritizing in terms of hedging strategies?
02:00Yeah, I mean, that's obviously a key, a key concern, particularly across the month of September.
02:10But I think what we're looking at here is actually sort of more geographical hedging strategies rather than necessarily heading strategies against particular sectors.
02:21So, you know, I think the idea that the U.S. could be running into potentially a difficult month this month, especially if we see sort of that non-farm payroll jobs report data on Friday, it's weak.
02:34And if there are concerns as far as what the Fed will be doing with interest rates.
02:39So I think we are seeing that sort of hedge away.
02:42We've obviously got Europe.
02:43Defense stocks are a big play as well.
02:46And then we've also got China, which seems to be, you know, really attracting invested capital flows at the moment.
02:54You mentioned that the Fed.
02:55So looking ahead, Fiona, what do you see shaping market dynamics?
03:01Will it be central bank policies?
03:03Will it be trade deals?
03:04I think this month is very much a focus on central banks.
03:10I mean, the market is pricing in that 87 percent probability that the Fed is going to cut rates by 25 basis points mid-September.
03:18It's also pricing in another rate cut before the end of the year.
03:22Now, we've seen that U.S. inflation data was high, ticked up to 2.7 percent.
03:29But we also know that the U.S. jobs market could be showing signs of weakness.
03:33So I think if we get this weaker data print on Friday showing that there is, you know, concerns over the U.S. jobs market,
03:42then that would support expectations of rate cuts.
03:45If we get a data print that's too weak, however, that could have really raised concerns about the health of the U.S. economy.
03:52And I think that would actually have a detrimental effect.
03:54And it could increase a rotation out of U.S. and towards other geographical alternatives.
04:01Uncertainty is still very much the name of the game.
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