As the global economy continues to recover from the COVID-19 pandemic, the performance of European bourses and US equities has been a tale of two markets. While European bourses have gradually climbed higher, reaching peak levels, US equity futures are flat ahead of Federal Reserve Chair Jerome Powell’s testimony.

In Europe, the latest data showed diverging fortunes for manufacturing and services. The UK’s Purchasing Managers’ Index (PMI) came in soft, weighing on the pound. Meanwhile, Eurozone data revealed a modest improvement in services, but a decline in manufacturing. This contrast highlights the ongoing recovery of the European economy, with some sectors still struggling to regain their footing.

In the US, Treasury yields are essentially flat, while Gilts have modestly outperformed peers following disappointing flash PMI metrics. This suggests that investors are becoming more cautious in their expectations for economic growth, despite the overall positive trend.

Moving to commodities, crude oil initially fell but has since rebounded, reaching another all-time high. This resilience can be attributed to reports of China’s plans to become the custodian of foreign gold reserves, which have boosted investor confidence in the metal.

Looking ahead, a slew of economic data is scheduled for release, including US Flash PMIs (September), US Richmond Fed Index, and the NBH Policy Announcement. Speakers from central banks and governments, including Federal Reserve Chair Jerome Powell, Bank of England’s Andrew Bailey, and European Central Bank’s Christine Lagarde, will also provide insights into the current economic landscape.

In addition, earnings season continues, with Micron set to release its quarterly results. This could provide further clarity on the state of the tech sector and its impact on broader market trends.

Overall, the diverging fortunes of European bourses and US equities highlight the complex nature of global economic recovery. While some sectors are experiencing growth, others remain challenged, underscoring the need for careful analysis and decision-making in today’s markets.