While U.S. markets will be closed on Monday, September 1 in observance of the Labor Day holiday, elsewhere around the world markets kick off their first trading day of September. The month of September, so you know, has a strong tendency to be the most volatile and weakest month of the year for stocks. Given the recent pickup in volatility in global markets, there will be plenty to keep one’s eyes on during Monday’s U.S. Labor Day — of course, if the beach, sports, sweet smells of the grill, or other fun things aren’t getting in the way. For what it’s worth, I do hope that all of you stay away from the global markets on Monday and rest up because September/October is rarely a snoozy period in the markets.
In emerging markets, last week’s interest rate hikes (50 bps each) in Brazil and Indonesia in efforts to stem rising inflation is something that could continue to move those markets along with their currencies. Then there is India, where the rupee continues its slide. Last week India’s central bank announced plans to sell dollars to its domestic oil producers to slow down the decline in the currency. So, those are a couple of Asia-Pacific issues to keep an eye on.
From a trading perspective, the U.S.-listed ticker to watch when trading opens again on Tuesday is the iShares Emerging Markets (EEM) exchange traded fund, which remains lower by almost fifteen percent year to date after it topped on January 2. The EEM recently developed a higher low versus its June lows, but in the grander picture the chart remains weak and not something to get overly excited on.
On the geopolitical front and as it pertains to what might move U.S. markets when they re-open on Tuesday, the ongoing situation in Syria is front and center. It’s not unusual that just in time for September, a geopolitical situation such as the one in Syria is flaring up. Some reports on Friday morning discussed possible military action in Syria as early as mid week , which makes it important to keep a close eye on the situation throughout the long weekend.
Last but not least, European equities recently snapped some important support lines and the benchmark German Dax 30 Index continues to act heavy. For my part, should I glance at the screens on Monday, the Dax will be where I will get my measure for global equities from.