The US-China trade row will come back into focus this week as President Donald Trump’s next round of tariffs takes effect and the two sides eye formal talks in September, and investors also await key labour data for the world’s biggest economy.
Meanwhile, federal and local emergency officials are preparing for the expected arrival of Hurricane Dorian on America’s east coast, with forecasters warning of the potential for significant damage.
Here’s what to watch:
New US tariffs on Chinese imports, covering more than $125bn worth of goods, are set to begin on September 1 ahead of hoped-for negotiations next month.
The tariffs, part of the fourth tranche and affecting $300bn in goods, will hit some consumer products including footwear and headphones. Mr Trump has said the rest of the fourth tranche will kick in December 15.
An escalation in the trade spat between Washington and Beijing has unnerved investors in recent weeks. Mr Trump, citing stalled trade negotiations, announced on August 1 that the US would impose tariffs on another $300bn in Chinese goods. China subsequently allowed its currency to fall through a key threshold and later announced its own new levies on $75bn of US imports.
Mr Trump responded by raising tariffs, starting September 1, to a rate of 15 per cent, up from an initial threat of 10 per cent. He also raised existing tariffs on $250bn in Chinese goods to 30 per cent from 25 per cent.
The market breathed a sigh of relief in recent days amid signs of a possible thaw in tensions. Mr Trump said additional discussions occurred on Thursday. The China’s minister of commerce said officials continued to discuss the prospect of face-to-face meetings next month, adding that Beijing would not immediately retaliate in response to the tariff increase.
The main event on the data front will be the US non-farm payrolls report Friday. The jobs market remains one of the bright spots of the US economy, at a time when investors are weighing up the broader domestic fallout from Mr Trump’s trade war with China and what that could mean for the Federal Reserve’s interest rate outlook.
Economists polled by Thomson Reuters estimate that non-farm payrolls expanded by 159,000 jobs in August. US job growth hit 164,000 during the prior month, while the labour force participation rate rose to its highest since March. The unemployment rate stands at 3.7 per cent, and economists expect it to hold steady with the August report.
The market will have a chance to parse key economic data and speeches from Federal Reserve officials, as the next meeting of the Fed’s rate-setting committee nears.
Fresh readings on ISM’s manufacturing and services indices, US international trade and factory orders are on tap.
New York Fed president John Williams, Boston Fed president Eric Rosengren and St Louis Fed president James Bullard are scheduled to give remarks on the economy and inflation.
In other central bank news, rate decisions in Canada, Australia and Sweden are due in coming days.
The US is bracing for its first major storm of hurricane season. Dorian, a Category 3 storm on Friday with maximum sustained winds of 115 miles per hour, could reach Category 4 status by the time it makes landfall early next week along the Florida or Georgia coastlines, according to the most recent forecasts. Category 4 hurricane have winds of 130 to 156 miles per hour.
The National Hurricane Center has warned that Dorian could bring life-threatening storm surge and “devastating” winds to the affected region. Hurricane watches were issued for parts of the Bahamas.
Mr Trump approved an emergency declaration for Florida, freeing up federal resources to assist response efforts. The president said he will remain in Washington due to the storm, cancelling a planned trip to Poland with vice-president Mike Pence travelling there in his stead.
While it was too early to determine the exact path of the storm, Dorian could be one of the biggest storms to hit Florida.
Hurricane Andrew, a Category 5 storm in 1992, brought 165mph winds and an estimated $26bn in damage. More than a dozen people were killed.
Hurricane Charley struck Florida in 2004 as a Category 4 storm. Fifteen people died, and damages were pegged at $14bn.
The strongest hurricane to make landfall in the Florida panhandle, Hurricane Michael, was just last year. It was the first storm to hit the US as a Category 5 since Andrew.
It will be a light week on the earnings front, particularly with Wall Street closed on Monday for the Labour Day holiday.
US tech companies Palo Alto Networks, Slack, CrowdStrike and Zoom Video Communications will publish earnings this week, as will yoga apparel group Lululemon.
Japan’s Pigeon and French aerospace company Safran are among global names due to report financial results.