US stocks mostly declined as participants digested data and hawkish Fed speak ahead of the Jackson Hole Symposium - Newsquawk Asia-Pac Market Open

US stocks ultimately closed lower after a choppy session amid cautiousness ahead of Jackson Hole and after hawkish commentary, although the Russell 2000 outperformed, while sectors were predominantly lower with underperformance in Consumer Staples and Consumer Discretionary after retailer earnings in which Walmart missed on EPS and Coty (COTY) tumbled post-earnings. The highlights of the day were the US data releases and Fed speak, including a strong S&P Global Flash PMI report for the US which was accompanied by hawkish commentary within the report, while comments from Fed officials including Hammack, Schmid and to some extent Bostic, were hawkish on inflation and mostly pointed to a lack of urgency to cut rates.
USD was boosted after strong S&P Global Flash PMIs and hawkish commentary as Manufacturing PMI surprisingly rose into expansionary territory, while Services fell, albeit not as much as expected. Within the release, it said, "The resulting rise in selling prices for goods and services suggests that CPI will rise further above the Fed’s 2% target in the coming months. Indeed, combined with the upturn in business activity and hiring, the rise in prices signaled by the survey puts the PMI data more into rate hiking, rather than cutting territory according to the historical relationship between these economic indicators and FOMC policy changes". Furthermore, there were hawkish comments from Fed officials Hammack and Schmid at Jackson Hole ahead of Fed Chair Powell's speech at 10:00EDT on Friday.
Looking ahead, highlights include Japanese CPI, Malaysian CPI, Fed's Jackson Hole Symposium, Comments from Fed's Goolsbee, Supply from Australia.

More Newsquawk in 2 steps:

1. Subscribe to the free premarket movers reports

2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days

LOOKING AHEAD

Highlights include Japanese CPI, Malaysian CPI, Fed's Jackson Hole Symposium, Comments from Fed's Goolsbee, Supply from Australia.
Click for the Newsquawk Week Ahead.

US TRADE

US stocks ultimately closed lower after a choppy session amid cautiousness ahead of Jackson Hole and after hawkish commentary, although the Russell 2000 outperformed, while sectors were predominantly lower with underperformance in Consumer Staples and Consumer Discretionary after retailer earnings in which Walmart missed on EPS and Coty (COTY) tumbled post-earnings. The highlights of the day were the US data releases and Fed speak, including a strong S&P Global Flash PMI report for the US which was accompanied by hawkish commentary within the report, while comments from Fed officials including Hammack, Schmid and to some extent Bostic, were hawkish on inflation and mostly pointed to a lack of urgency to cut rates.
SPX -0.40% at 6,370, NDX -0.46% at 23,143, DJI -0.34% at 44,786, RUT +0.21% at 2,274.
Click here for a detailed summary.

TARIFFS/TRADE

EU and US reached an agreement on the joint statement outlining the previously agreed EU-US trade deal with the sides to consider steps to ensure secure supply chains, including tariff rate-quota solutions, and will commit to address “unjustified digital trade barriers,” with the EU agreeing not to adopt network usage fees. They will consider cooperation on ring-fencing domestic steel and aluminium markets from overcapacity, while they will negotiate rules of origin to ensure the trade agreement benefits predominantly both partners. Furthermore, EU companies are to invest an additional USD 600bln across US strategic sectors through 2028, while the EU intends to procure USD 750bln in US LNG, oil and nuclear energy products, plus at least USD 40bln of US AI chips.
EU's Sefcovic said joint statement with the US on a framework trade deal marks a first step and could grow over time to cover more sectors, while the EU proposal this month would mean lowered US car tariffs down to 15% retroactively from August 1st. Sefcovic said the EU's firm intention is to present the legislative proposal this month and they kept the digital sector out of the current trade talks with the US. Furthermore, he said they did not succeed in getting the wine and spirits sector in the current US framework trade agreement yet.
US tariffs on the EU could increase wholesale wine and spirit prices by over 80 cents per gallon, while the levies could raise USD 987mln in federal revenue once lost sales are taken into account, according to Reuters citing trade group analysis.
US Trade Adviser Navarro said no deal is more important than with the EU. It was also reported that Navarro sees a doubling of India tariffs taking place on August 27th, while he said India doesn't want to recognise its role in the bloodshed and they're a laundromat for the Kremlin.
Canadian PM Carney spoke with US President Trump and the two discussed trade challenges and opportunities, while they agreed to reconvene shortly, according to Bloomberg.

NOTABLE HEADLINES

Fed's Schmid (voter) said officials will be watching August and September inflation data, while he added that policy is modestly restrictive and appropriate. Schmid said inflation is closer to 3% than it is to 2% and has more work to do, as well as noted they need to push inflation down to 2% and the last mile of inflation is pretty hard. Schmid said there is a lot of data between now and September 17th meeting and thinks the Fed is in a really good spot, while he is not in a hurry to cut interest rates. It was also reported that Schmid told Yahoo Finance that the risks of inflation are higher relative to the jobs situation.
Fed's Hammack (2026 voter) said both sides of the Fed mandate are under pressure and it is important to maintain modestly restrictive policy to lower inflation, according to Yahoo Finance. Hammack stated it is just now that tariff impacts are starting to affect the economy and the full tariff impact won't be clear until next year, while she added the Fed needs to stay 'laser focused' on too high inflation. Furthermore, she said she walks into every meeting with an open mind and there is a lot of data between now and September, as well as noted that if the meeting were tomorrow, she does not see a case for reducing interest rates.
Fed's Bostic (2027 voter) said the world is very much in a transitional period and Fed policy has been positioned to return inflation to 2%, while he added that inflation remains well above target and the unemployment rate has been consistent with full employment for some time. Bostic said between 50k-75k is now closer to the jobs market monthly replacement rate and large revisions to data may be more frequent, as well as commented that when the Fed moves on policy, the direction should be consistent and he is still eyeing one rate cut in 2025, but the forecast is in flux.
DoJ official urged Fed Chair Powell to remove Fed Governor Cook, according to Bloomberg.
Former Fed official Bullard said he has spoken with Treasury Secretary Bessent about the Fed Chair job, while he added rates are high right now and the Fed can cut 100bps into 2026.
US President Trump's administration said it is reviewing all 55mln people with US visas for potential deportable violations, according to AP.

DATA RECAP

US S&P Global Manufacturing PMI Flash (Aug), 53.3 vs. Exp. 49.5 (Prev. 49.8)
US S&P Global Services PMI Flash (Aug), 55.4 vs. Exp. 54.2 (Prev. 55.7)
US S&P Global Composite PMI Flash (Aug), 55.4 (Prev. 55.1)
US Philly Fed Business Index (Aug) -0.3 vs. Exp. 7.0 (Prev. 15.9
US Leading Index Change MM (Jul) -0.1% vs. Exp. -0.1% (Prev. -0.3%)
US Existing Home Sales (Jul) 4.01M vs. Exp. 3.92M (Prev. 3.93M)
US Initial Jobless Claims w/e 235.0k vs. Exp. 225.0k (Prev. 224.0k)
US Continued Jobless Claims w/e 1.972M vs. Exp. 1.96M (Prev. 1.953M, Rev. 1.942M)

FX

USD was boosted after strong S&P Global Flash PMIs and hawkish commentary as Manufacturing PMI surprisingly rose into expansionary territory, while Services fell, albeit not as much as expected. Within the release, it said, "The resulting rise in selling prices for goods and services suggests that CPI will rise further above the Fed’s 2% target in the coming months. Indeed, combined with the upturn in business activity and hiring, the rise in prices signaled by the survey puts the PMI data more into rate hiking, rather than cutting territory according to the historical relationship between these economic indicators and FOMC policy changes". Furthermore, there were hawkish comments from Fed officials Hammack and Schmid at Jackson Hole ahead of Fed Chair Powell's speech at 10:00EDT on Friday.
EUR weakened amid the firmer buck and tested the 1.1600 handle, while it failed to sustain the mild support from European PMI data.
GBP retreated to near the 1.3400 level after fading the initial upside that had been spurred by the stronger-than-expected UK Services and Composite PMI data.
JPY was pressured and returned to the 148.00 handle amid the firmer dollar and widening yield differentials, while attention turns to Japanese CPI data.

FIXED INCOME

T-notes were pressured after strong PMI data and hawkish Fed speak ahead of Powell.

COMMODITIES

Oil prices whipsawed in which prices recovered from an early dip, potentially bolstered amid pessimism regarding a deal being agreed between Russia and Ukraine.
US Trump administration is expected to rule on small refinery biofuel mandate exemptions as soon as Friday, while it may issue supplemental rules on reallocating exempt volumes as early as next week, offering multiple options, according to Reuters sources.
China's CNPC is to begin producing natgas in Peru by late 2026.
World refined copper market was in 36k MT surplus in June 2025, according to ICSG.

GEOPOLITICAL

MIDDLE EAST

Israeli PM Netanyahu said Israel will begin Gaza ceasefire negotiations to end the war and release hostages. It was earlier reported that "The Israeli army will take control of Gaza and the war will end soon", according to Sky News Arabia citing Israeli press on PM Netanyahu.
US President Trump’s administration has asked Israel to reduce "non-urgent" military action in Lebanon to bolster the Lebanese government's decision to start the process of disarming Hezbollah, according to two sources with direct knowledge cited by Axios.
United States imposed sanctions on ships and entities connected to Iran.
UK Foreign Office added 5 new designations under the Iranian sanctions regime.

RUSSIA-UKRAINE

US President Trump posted "It is very hard, if not impossible, to win a war without attacking an invaders country...There is no chance of winning! It is like that with Ukraine and Russia". Trump separately commented that we will know in about two weeks regarding Russia-Ukraine.
Ukrainian President Zelensky said Kyiv wants to have an understanding of security guarantees within 7-10 days, followed by bilateral and trilateral leaders' meetings. Zelensky later commented that Russian overnight attacks show that Moscow is trying to avoid the need for meetings aimed at ending the war.
Russian President Putin’s demand to Ukraine is to give up Donbas, no NATO and no western troops, while Russia could freeze front lines in Zaporizhia and Kherson, according to Reuters sources. Furthermore, Russia won't countenance Western peacekeeping troops in Ukraine and sources close to the Kremlin said if Kyiv refuses a deal, the war will go on.
Russian Foreign Minister Lavrov said Ukraine is showing that it is not interested in a sustainable and long-lasting peace settlement, while Russia supports the ideas set out in the 2022 Istanbul talks on security guarantees for Ukraine. Lavrov said Ukraine directly shows it is not interested in a sustainable and long-standing settlement, as well as stated Ukraine's position indicates that it wants to undermine Trump's efforts to resolve conflicts, and that Russia was always ready for honest talks about security guarantees for Ukraine.
US official noted that defence chiefs from Finland, France, Germany, Italy, UK, Ukraine and US "developed military options to support negotiations for lasting peace in Europe", while the proposed options will be presented to nations' respective national security advisors for review amid continuing diplomatic negotiations.

ASIA-PAC