Declining Stocks as Traders Prepare for September Volatility – Europe Market Wrap

Global markets began September on the back foot as investors braced for what is traditionally the most difficult month for stocks.

Europe’s Stoxx 600 dipped 0.4% from its record high on Friday, with the automobile and consumer goods sectors notably impacted. This decline came after data revealed a fourth consecutive month of contraction in Chinese manufacturing output, as well as a worsening collapse in the country’s residential property market.

Over the last four years, September has been a particularly bad month for stocks, despite the fact that the Dollar normally performs well. The Volatility Index, or VIX, has climbed every September since 2021.

The trend may continue, particularly with the impending US jobs report on Friday, which will provide guidance on how quickly or slowly the Fed may lower rates, and as the US election campaign gets underway. Traders expect the US easing cycle to begin this month, with a 25% possibility of a 50 basis-point decrease.

In commodities, oil prices remained stable as traders weighed an expected production boost from OPEC+ next month against Libya’s current decreased output, while remaining wary of Chinese economic headwinds.