Trump meets Zelenskiy, says Putin wants war to end, mulls trilateral talks
Investing.com - All eyes will be on the U.S. state of Wyoming, where Federal Reserve Chair Jerome Powell is expected to deliver a much-anticipated speech that could sway how investors view the trajectory of U.S. interest rates. Minutes from the Fed’s meeting in July are also due out, along with results from a host of American retail chains. Elsewhere, President Donald Trump and Ukrainian President Volodymyr Zelensky are scheduled to meet on Monday.
1. Powell speech
Traders are now gearing up for the release on Wednesday of minutes from the Fed’s last policy gathering in July, when the central bank chose to keep borrowing costs steady at a range of 4.25% to 4.5%.
Yet the decision was met with the rare dissent of two Fed officials for the first time in decades. Fed Governor Christopher Waller and Fed Vice Chair of Supervision Michelle Bowman both advocated for a rate reduction, arguing that it was necessary to help prop up a softening labor market.
Subsequent data has shown that U.S. jobs growth was significantly weaker than anticipated last month, while the totals for June and May were revised sharply lower. Meanwhile, retail sales rose strongly, following an unexpectedly steep uptick in producer prices.
These figures, coupled with relatively restrained consumer price indicators, have painted a complex picture of an economy a possibly slowing labor market and some tariff-driven -- albeit relatively muted -- inflationary pressures.
All this comes as Trump’s actions have also cast doubt over the reliability of U.S. government data and led some analysts to predict a rush of interest in private-label numbers. Trump sparked these worries after he dismissed the commissioner of the agency charged with collecting the statistics, citing without evidence that the downward revisions in the latest jobs report were designed to hurt him politically. He later nominated the chief economist from the conservative think tank Heritage Foundation to lead the agency.
Stepping into these crosswinds will be Fed Chair Jerome Powell, who will deliver a closely-watched speech at an annual symposium in Jackson Hole, Wyoming on Friday. Powell has long advocated for a more cautious approach to policy actions, but markets -- who are themselves penciling in a rate cut at the Fed’s next meeting in September -- are curious to see if his opinions have shifted after the recent data deluge.
In a note, analysts at ING added that the Fed’s September meeting could also be "explosive," as it may be the latest episode in Powell’s ongoing "tug-of-war" with Trump, who has criticized the Fed leader for not advocating for quick rate cuts to boost the economy.
2. Home Depot, Walmart among earnings ahead
On the earnings front, investors will be keeping tabs on reports from a host of big-box retailers and home improvement chains.
Beginning with Home Depot on Tuesday morning, results will then trickle out in the following days from peers such as Lowe’s, Target, and Walmart.
The figures could present a fresh take on the state of the American consumer heading into the second half of the calendar year.
Despite lingering fears that sweeping U.S. tariffs would lead to economic uncertainty which would persuade some shoppers to rein in expenditures, retail sales in the U.S. held up in July. Still, separate data suggested that consumers’ inflation expectations have risen this month.
Against this backdrop, how executives at major retailers see the operating environment evolving in the coming months will likely be a particular focal point for investors.
3. Palo Alto Networks to report
Elsewhere, cybersecurity firm Palo Alto Networks is expected to headline the slate of July-quarter returns after the closing bell on Monday.
The group is seen posting fiscal fourth-quarter adjusted earnings per share of $0.89 on revenue of $2.5 billion, according to Bloomberg consensus forecasts.
It will be the first report after Palo Alto bought Israeli rival CyberArk Software in a roughly $25 billion deal in July -- the largest such purchase in the company’s history.
While it was viewed as a push by CEO Nikesh Arora to bolster the business by taking advantage of artificial intelligence-fueled demand for digital security solutions, analysts flagged concerns around Palo Alto’s ability to fold a platform of CyberArk’s size into its existing operations.
Palo Alto has completed the acquisitions of at least seven firms in the last two years.
4. Trump-Zelensky meeting
Ukraine’s Volodymyr Zelensky is due to meet with Trump in Washington on Monday in a bid to arrange a peace deal.
But worries remain that Trump could try to use the talks to drive Zelensky into a settlement agreement that has been viewed as favorable to Russia. Zelensky has already appeared to dismiss the contours of proposals presented to Trump by Putin at a summit in Alaska on Friday, which included Ukraine losing a chunk of its eastern Donetsk region.
Zelensky, who will be flanked by leaders from a host of European countries as he meets with Trump, has said he supports a "swift and reliable" termination to the more than three-year conflict, but said Russia must be willing to end the war "it started."
Trump, for his part, said in a post on his Truth Social platform that Zelensky can "end the war with Russia almost immediately, if he wants to, or he can continue to fight."
"[T]he Ukraine situation seems to be entering a highly fluid state, and there could be additional developments in the days, weeks, and months ahead," analysts at Vital Knowledge said in a note to clients.
They added that, from a markets perspective, the Trump-Putin talks in Anchorage did not feature any of the major outcomes investors had been bracing for, such as a complete ceasefire or "draconian secondary tariffs on China."
5. Eurozone flash PMIs
Beyond the U.S., preliminary gauges of activity in the manufacturing and services sectors of several European countries -- and the broader Eurozone currency area -- are scheduled to be published.
The figures could provide a early glimpse into the effect Trump’s aggressive trade agenda is having on European firms.
Separate numbers last week indicated that the Eurozone is seeing "fading industrial resilience," despite the broader economy having been relatively "resilient" in the second quarter, according to analysts at ING. They flagged that much of the boost in the April-June period was due to the frontloading of orders by many companies prior to the implementation of elevated "reciprocal" U.S. tariffs -- and fears are swirling around whether the benefits from this trend are fading.
Still, the manufacturing industry could be supported by a recent push by many Eurozone countries to increase their defense spending goals, the analysts added.
"[T]he eurozone manufacturing sector remains highly affected by two main, rather opposing, factors. While tariffs and the stronger euro will continue to weigh on the manufacturing sector, the gradual cyclical turning of the inventory cycle as well as the structural shift towards defence should support growth ahead," the analysts wrote.