Five things to watch in markets in the week ahead

US Tariffs, Jobs Data, AI Earnings and Economic Indicators

As global markets prepare for a shortened trading week, a number of high-stakes developments are expected to influence investor sentiment. From major legal decisions in the US to critical economic data and high-profile earnings, here are the five most important things to watch in financial markets this week.

1. Legal Challenge to Trump-Era Tariffs

A major ruling from the US Court of Appeals has cast doubt over sweeping import tariffs introduced by former President Donald Trump. The decision, delivered late last week, rejected the legitimacy of the emergency powers used to impose the taxes.

• The US government now has until mid-October to appeal to the Supreme Court.
• If not appealed, the ruling could significantly alter trade policy and market dynamics.

Market analysts warn that if the ruling holds, it could impact revenue already collected and send ripples through bond markets. The decision is also being closely watched by global trade partners.

2. Jobs Data Takes Centre Stage

The highlight of the US economic calendar this week is the monthly jobs report, due Friday. It’s a key piece of data that may determine the Federal Reserve’s next interest rate decision.

• Economists expect August non-farm payrolls to be around 74,000.
• July’s revised figures sparked political controversy and led to internal reshuffling at the Bureau of Labour Statistics.

Investors are currently pricing in an 87% chance that the Fed will cut rates by 25 basis points at their September meeting. Any deviation in this week’s jobs data could dramatically shift market expectations.

3. US Business Activity Figures

In addition to jobs data, market watchers will closely follow the ISM Manufacturing and Services PMIs.

• Manufacturing PMI is expected to edge up to 48.9 from 48.0 – still in contraction.
• Services PMI may tick slightly higher to 50.5, indicating mild expansion.

With manufacturing still struggling and the services sector showing minimal growth, these numbers could further confirm or challenge the Fed’s current policy stance.

4. Federal Reserve’s Beige Book Release

The Fed will also release its "Beige Book" on Wednesday – a qualitative snapshot of economic conditions across the US.

• July’s report highlighted persistent inflation and uncertainty due to trade policy.
• Businesses have reported delaying hiring decisions amid unclear tariff directions.

This release could be one of the final inputs the Fed uses before its September rate decision and may offer further clues into regional economic resilience or weakness.

5. Broadcom and Salesforce Earnings

On the corporate earnings front, Broadcom leads the tech sector this week with its results. Investors are especially focused on:

• Outlook for artificial intelligence (AI) spending
• Whether software firms like Salesforce show resilience amidst AI disruption fears

Last week, Nvidia's cautious forecast dampened AI enthusiasm. If Broadcom or Salesforce echo similar concerns, it could accelerate the rotation from AI to more traditional tech sectors.

Conclusion: A Pivotal Week for Market Direction

This week presents a crucial mix of legal, economic, and corporate developments that could set the tone for September. With trade uncertainty still looming, jobs data in focus, and tech earnings under the spotlight, investors should brace for potential volatility.

Expectations for rate cuts and economic resilience are delicately balanced. If the data disappoints or if the tariff ruling escalates tension, equity markets could face renewed pressure — especially in sectors sensitive to trade and interest rates.

Now more than ever, staying informed and diversified is key to navigating the road ahead.

Sources: (Investing.com, Reuters.com)