On Monday, the main highlight of the U.S. economic agenda is the Empire State Manufacturing Survey for September, which will be released at 8:30 AM ET. The market expects a reading of -5.0, compared to -4.7 in August. The Fed’s two-day policy meeting is set to begin on Tuesday, with the interest rate decision expected at 2 PM on Wednesday.

In the commodities market, oil prices edged up slightly on Monday, supported by expectations of a potential U.S. rate cut. However, gains were limited by weak data from China, including a slowdown in industrial production and a decline in refinery output. Additionally, around 20% of crude oil production and 28% of natural gas production in the Gulf of Mexico remain offline due to Hurricane Francine.

West Texas Intermediate crude for October rose 0.47% to $68.99 per barrel, while Brent for November increased 0.38% to $71.88 per barrel.

Asia-Pacific markets advanced, with Hong Kong’s Hang Seng rising 0.13% in late trading. Australia’s S&P/ASX 200 gained 0.27%, and Taiwan’s Weighted Index increased 0.42%. Markets in mainland China, South Korea, and Japan were closed.

In China, industrial production slowed to a five-month low in August, growing by 4.5%, with retail sales rising just 2.1%, and new home prices also weakening. These weak figures add pressure on the government to implement aggressive stimulus measures to support the economy, which faces growing challenges.

Goldman Sachs and Citigroup have cut their growth forecasts for China’s economy to 4.7% following the weak industrial production data. The sluggish economic activity has heightened the need for more stimulus to boost demand. Goldman Sachs also sees an increasing risk of missing the 5% growth target for this year.

In August, new home prices in China fell by 5.3% year-over-year, marking the largest drop in over nine years, according to official data. The monthly decline was 0.7%, continuing a 14-month trend. Support measures have not been sufficient to reverse the real estate sector’s downturn.

From January to August, foreign direct investment in China amounted to $81.80 billion (580.19 billion yuan), a 31.5% drop compared to last year, according to the Ministry of Commerce, exceeding the 29.6% decline recorded through July.

China will announce its one- and five-year loan prime rates on Friday. Currently, the one-year rate, which affects most new and outstanding loans, stands at 3.35%. The five-year rate, which influences mortgage pricing, is 3.85%.

In Japan, the BOJ will meet this week, and interest rate decisions could impact the yen carry trade, which caused market turbulence in August. Unexpected rate changes could influence the attractiveness of this trade, which involves borrowing yen at low rates and investing in higher-yielding assets.

Sanae Takaichi, a candidate for the Liberal Democratic Party leadership, argued for keeping interest rates low to support economic recovery, stating that the Bank of Japan’s recent hikes were premature. She believes the central bank should maintain an accommodative monetary policy.

European markets declined, with the Stoxx 600 falling due to losses in sectors such as mining and automobiles. Investors are awaiting earnings from H&M and Italian inflation data in a week marked by important monetary policy decisions. On Thursday, the Bank of England will meet to decide on its monetary policy, with markets uncertain about a potential second rate cut in two months.

On Friday, U.S. stocks closed higher, with the Dow Jones rising 297.01 points (0.72%), the S&P 500 up 30.26 points (0.54%), and the Nasdaq climbing 114.30 points (0.65%). Optimism over interest rate cuts fueled the market. Goldman Sachs advocated for a 0.25 percentage point cut at the upcoming Fed meeting, while Bill Dudley suggested a more aggressive 0.50 point cut. Real estate, gold, and steel stocks led sector gains, while the 10-year Treasury yield fell to 3.650%.

Adding to the sentiment, the University of Michigan released a report showing an improvement in U.S. consumer sentiment in September, with the index rising to 69.0, up from 67.9 in August and exceeding economists’ expectations of 68.0. Additionally, the report revealed a drop in inflation expectations for the coming year, which fell to 2.7%, the lowest level since December 2020. The Department of Labor also reported that import prices fell more than expected in August.

On Sunday, Secret Service members confronted a possible shooter with a rifle near former President Donald Trump in Palm Beach. The incident, following a similar shooting in Pennsylvania, may impact the presidential race and shift the negative perception of Trump’s campaign. The suspect, Ryan Routh, was detained, and further details about the motive are awaited.

Companies reporting their quarterly earnings on Monday include ImmunoPrecise Antibodies (NASDAQ:IPA) before the market opens; and High Tide (NASDAQ:HITI), RF Industries (NASDAQ:RFIL) and Vince Holding Corp (NYSE:VNCE) after the market closes.