Top stories for the morning: risk of a bubble in Chinese stocks, rising oil prices and a weak dollar

In China, stock indices are hitting ten-year highs amid deflation, real estate crisis and tariff pressure from the U.S., raising fears of a bubble. In currency markets, the dollar is faltering after hints from Fed chief Jerome Powell of a possible rate cut. And oil quotes are reacting to Ukraine's attacks on Russian infrastructure. About these and other topics - in our review of key events for the morning of August 25.

The U.S. dollar is trying to recover from the fall caused by the "dovish" statements of Fed chief Jerome Powell, writes Reuters. In Asian trading on Monday, it strengthened 0.2% against the euro to $1.1699 and added 0.4% against the yen, but remains close to four-week lows. The Australian dollar and pound sterling are showing volatility after sharp gains in the previous session.

Powell at a symposium in Jackson Hole stated the rising risks to employment and effectively opened the way for a rate cut as early as the September meeting. Markets are pricing in an 80% probability of a 0.25bp cut in September and 50bp of easing by the end of the year. The fate of the Fed's further steps will depend on the data - the key publications will be inflation (PCE index) and employment report for August.

Additional pressure on the dollar is exerted by Donald Trump's attacks on the Fed's independence. The President sharply criticizes Powell for refusing to cut the rate and even threatens to fire the council member Lisa Cook. Political pressure increases uncertainty, adding nervousness to currency markets, the agency points out.

Chinese stock indices show strong growth despite weak macroeconomic indicators, Bloomberg writes. Over the month, stock capitalization rose by almost $1 trillion, Shanghai Composite reached a ten-year high, and CSI 300 rose more than 20% from the low. At the same time, data on consumption, house prices and inflation point to a slowdown, while deflationary pressures are reducing the pricing power of companies.

Experts warn of the risk of a bubble. Growth is fueled by high liquidity and lack of alternatives for investors, but margin debt is once again approaching the levels of a decade ago. Corporate profits are falling, with JD.com and Geely suffering from price competition and the CSI 300 earnings forecast down 2.5%.

While there are supporting factors - stronger technology companies, large deposits and market rescue measures - weak domestic demand and deflation cast doubt on the sustainability of the rally. Analysts call the current growth more of a "surprise box" than a story of a solid recovery: the slightest deterioration in sentiment could lead to sharp capital outflows, the agency points out.

Oil prices rose slightly on Monday amid Ukraine's attacks on Russian infrastructure and expectations of a rate cut in the United States, Reuters writes. Brent futures rose to $67.79 and WTI to $63.75 a barrel. Drone strikes caused a fire at a terminal near St. Petersburg, the fourth day continues to burn refinery in the Rostov region, processing about 100 thousand barrels per day. Experts note the growing risk of supply disruptions.

In parallel, diplomatic signals intensified: US Vice President JD Vance announced "significant concessions" to Russia in the talks, including abandoning the idea of a pro-Russian regime in Jim and a willingness to discuss security guarantees for Ukraine. However, Donald Trump threatened sanctions if there was no progress on a peace settlement within two weeks.

Investors were also supported by signals from Fed chief Jerome Powell about a possible rate cut as early as September. This strengthened optimism on global growth and demand for raw materials, adding positive momentum to commodity markets, the agency adds.

U.S. stock futures hovered near zero on Monday after a strong rally on Wall Street late last week, Yahoo Finance reports. The Dow Jones added more than 800 points on Friday, hitting a record, with the S&P 500 up 1.5% and the Nasdaq up 1.9%, inspired by signals from Fed chief Jerome Powell that he may cut rates as early as September.

The main event of the week will be the report of Nvidia, the largest company in the S&P 500 index. Analysts expect earnings of $1.01 per share on revenue of $46.13 billion, betting on continued strong demand for AI chips. Nvidia shares are already up 32% YTD and have nearly doubled since the April lows, making the release a key indicator for the entire market. Dell and Marvell Technology will also report on Thursday.

Investors are also closely watching macroeconomic data: the July PCE index, the Fed's "favorite" inflation indicator, will be released on Friday. The core index is forecast to grow by 2.9% year-on-year against 2.8% in June, which may affect expectations on monetary policy.

Shares of Chinese electric car maker Nio rose nearly 15% on the Hong Kong stock exchange, extending a seven-day rally. The rise followed the presentation of the new ES8 SUV on August 21, CNBC writes. The battery-powered model will cost 308,800 yuan ($43,000) when subscribed, making it one of the most affordable in the company's lineup. Deliveries will begin in late September.

Nio's American Depositary Receipts also rose sharply, +9.3% on Thursday and +14.4% on Friday, to $6.34. The new pricing approach lowers the barrier for buyers and allows them to change or upgrade their battery at a subscription fee.

The launch of the ES8 and the launch of two new brands - Onvo for the mass segment and Firefly for younger buyers - reflect Nio's strategy to expand its audience amid increasing competition in China's electric car sector, CNBC writes.

- Japan's broad Topix index was up 0.33 percent.

- The benchmark Nikkei 225 was up 0.68%.

- In South Korea, the Kospi index was up 0.9% and the Kosdaq small-company index was up 1.75%.

- Australia's S&P/ASX 200 was up 0.35 percent.

- Futures on the S&P 500 were down 0.14 percent, the Nasdaq 100 was down 0.15 percent and the Dow Jones Industrial Average was down 0.16 percent.

This article was AI-translated and verified by a human editor