Dow Jones & Nasdaq 100 edge higher on BoJ, Fed focus

Japanese Private Sector PMIs Show Loss of Momentum

Japanese PMIs lost momentum in September, fueling concerns over stagflation and shifting policy expectations. The weaker data rattled yen markets and set the tone for a cautious start to Wednesday’s global trading session.

The S&P Global Services PMI slipped from 53.1 in August to 53 in September, while the Manufacturing PMI fell to 51.1 (August: 52). Notably, manufacturers reported a sixth consecutive drop in new export business, with service providers also facing weaker overseas demand.

Weakening demand led to the slowest job creation rate for two years. However, companies passed rising input costs on to customers, with the pace of charge inflation accelerating in September.

September’s price trends could signal a pickup in consumer prices, supporting an October Bank of Japan rate hike. While price pressures support an October hike, weaker PMIs may temper market bets on an October policy adjustment. Japan’s weaker PMI data followed a softer US Services PMI, raising concerns about stagflation, a combination of rising prices and slowing momentum.

Bank of Japan Governor Kazuo Ueda recently commented that rate hikes would resume if the economy and prices moved in line with projections. Furthermore, the drop in demand for manufactured goods could reflect the effect of US tariffs, another key consideration for policymakers.

The softer PMI data weighed on demand for the Japanese yen, sending USD/JPY up 0.07% to 147.748 in early trading on Wednesday, September 24. Crucially, easing bets on an October BoJ policy adjustment may curb fears of a yen carry trade unwind, bolstering demand for US stock futures.

Aussie Inflation Raises Stagflation Risks

The Australian Monthly CPI Indicator signaled rising price pressures in August, challenging expectations of RBA rate cuts. The annual inflation rate rose from 2.8% in July to 3% in August, reaching the top end of the RBA’s 2-3% target range.

Rising prices could be a common theme, potentially weighing on risk assets.

Markets React: US Stock Futures Steady as Key Data Looms

US stock futures moved in tight ranges in morning trading on Wednesday, September 24. The Dow Jones E-mini rose 30 points, with the S&P 500 E-mini gaining 2 points. The Nasdaq 100 E-mini was flat following overnight losses.

Later Wednesday, Fed speakers could influence risk appetite following Fed Chair Powell’s overnight speech.

Fed Speakers to Drive Market Sentiment

Fed speakers will take center stage today as traders assess the timing of further policy easing. FOMC member support for an October rate cut may lift sentiment. However, a lack of commitment to loosen monetary policy further may weigh on risk appetite.

September’s US PMI data revealed slower hiring, rising input prices, and increased competition, limiting firms’ ability to pass rising costs on to customers. Intensifying margin squeezes could weigh on US stock futures ahead of Friday’s closely watched US Personal Income and Outlays report.

Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500

Despite the overnight losses, US stock futures remained above the 50-day and 200-day Exponential Moving Averages (EMAs), reaffirming a short-term bullish bias.

However, the near-term outlook hinges on Fed policy guidance, US economic data, and the BoJ’s policy stance. For traders, here are the key levels driving market trends.

Dow Jones

• Resistance: September 23 record high of 47,055 and then 47,250.
• Support: 46,500, 46,000, and then the 50-day EMA (45,276).

Nasdaq 100

• Resistance: September 22 record high of 25,027 and 25,250.
• Support: 24,500, 24,000, and the 50-day EMA (23,678).

S&P 500

• Resistance: September 22 record high of 6,757 and then 7,000.
• Support: 6,500 and the 50-day EMA (6,470).

September Outlook: BoJ, the Fed, and Inflation in Focus

Traders should closely monitor Bank of Japan commentary and USD/JPY trends. Later in the session, FOMC members’ speeches could also influence risk appetite. However, Friday’s US Personal Income and Outlays Report will be the main event. A higher Core PCE Price Index could cloud the Fed’s monetary policy outlook, potentially weighing on risk assets.

These key drivers could extend or reverse September’s gains. Follow our live coverage and consult our economic calendar.