The markets will remain closed on Monday, yet investors are gearing up for a week that could prove significant, as new labor market data is set to be released. Analysts have indicated that the figures may solidify expectations for a reduction in interest rates by the Federal Reserve at its forthcoming policy meeting later this month. A legal battle concerning extensive U.S. tariffs continues, as an appeals court has dismissed the levies imposed by the Trump administration.

U.S. markets will be closed on Monday in recognition of Labor Day. Amid the holiday-induced thin trading conditions, Asian shares exhibited a mixed performance, as evidenced by declines in Japan’s Nikkei and South Korean stocks. Equities in China continued their recent upward trajectory, bolstered by a stronger-than-expected survey on manufacturing activity in the world’s second largest economy. Hong Kong shares of e-commerce titan experienced a notable double-digit spike, marking its largest one-day surge since 2022, driven by optimism surrounding the potential of its cloud unit. Investors are preparing for a resurgence this week following a subdued summer phase. Anticipating them are a series of significant forthcoming events, encompassing a range of economic data releases and a pivotal Federal Reserve interest rate decision — both of which have the potential to influence sentiment in September. In the aftermath of a tariff-induced decline in April, Wall Street has consistently ascended, fueled by optimism that the extensive tariffs imposed by U.S. President Donald Trump will not, contrary to widespread concerns, lead the U.S. economy into a recession. Optimism regarding the prospective returns from substantial investments in artificial intelligence has supported stock prices as well.

The tariffs implemented by the Trump administration have encountered various legal challenges, especially from critics who contest the president’s invocation of emergency executive powers to establish these import taxes. A significant ruling was issued late on Friday, as the U.S. Court of Appeals for the Federal Circuit dismissed the tariffs, affirming a prior court’s decision. The White House faces a deadline of mid-October to file an appeal with the Supreme Court; failure to do so will result in the ruling taking effect. Media reports indicate that Trump officials have long expected the Supreme Court would ultimately need to resolve the issue, asserting that the administration is optimistic that the tariffs—and Trump’s efforts to assert his authority to implement them—will eventually receive backing from the court’s conservative majority. In a communication to clients, analysts at Vital Knowledge indicated that the appeals court decision is “at best neutral” for markets, noting that it “won’t come close to eliminating Trump’s import taxes, and it just creates more uncertainty for Corporate America as the White House searches for a studier legal scaffolding for its draconian trade policy.”

This week’s economic calendar is highlighted by the release of the latest labor market report on Friday. This report may offer valuable insights into the overall health of the economy and act as a critical indicator of investor confidence regarding the Federal Reserve’s potential rate cuts at its upcoming September meeting. This should not be construed as an offer or recommendation by Investing.com. Refer to the disclosure The recent U.S. payrolls report, which came in softer than anticipated, has strengthened expectations for a potential reduction in borrowing costs by the Federal Reserve, despite ongoing concerns among policymakers regarding persistent inflationary pressures. Fed Chair Jerome Powell subsequently indicated in a highly scrutinized address at an economic symposium in Wyoming that the risks to the job market were on the rise. As of Monday morning, the probability that the Fed will reduce rates by 25 basis points from its current range of 4.25% to 4.5% at the conclusion of its two-day meeting on Sept. 16-17 stood at over 87%, as indicated by CME’s FedWatch Tool. Estimates from economists suggest that nonfarm payrolls will reach 74,000 in August, closely aligning with the previous month’s figure of 73,000 in July. The earlier data set generated significant controversy, as substantial downward revisions provoked Trump’s anger and resulted in the dismissal of the commissioner of the Bureau of Labor Statistics, the agency responsible for compiling the monthly jobs figures.

In August, a private-sector survey indicated that China’s factory activity experienced its most rapid expansion in five months, presenting a slight indication of improvement despite less encouraging official signals. The RatingDog China General Manufacturing PMI increased to 50.5 in August, up from 49.5 in July, surpassing the anticipated figure of 49.7 and entering the expansion zone above the 50-point growth threshold. The increase was primarily attributed to a rise in new orders, as indicated by the survey, despite export demand experiencing a decline for the fifth consecutive month. In the interim, companies indicated their quickest buildup of incomplete tasks in half a year. New export orders remain in contraction; however, the rate of decline has moderated. That’s encouraging; however, we must exercise caution, as external demand appears to be somewhat pulled forward while domestic demand remains weak. Consequently, the potential for output growth may be constrained unless there is a strengthening in domestic demand,” stated Yao Yu. Despite the recent increase, manufacturers continued to exercise caution regarding hiring, as employment has contracted for the fifth consecutive month. Increasing input costs, driven by significant raw material price hikes, along with ongoing supplier delays, have also dampened optimism.

Oil prices experienced an uptick in volatile trading on Monday, as market participants assessed supply disruptions associated with airstrikes in the Russia-Ukraine conflict in relation to the potential for increased output and the effects of high U.S. tariffs on demand. As of 03:41 ET, Brent Oil Futures for October delivery experienced an increase of 0.5%, reaching $67.81 per barrel, while West Texas Intermediate crude futures saw a rise of 0.6%, settling at $64.36 per barrel. Both contracts experienced a decline exceeding 7% in August, influenced by concerns over a supply glut stemming from consistent production increases by OPEC+. “Oil prices concluded the week on a downward trajectory, even as there were increasing appeals from Europe for secondary sanctions targeting purchasers of Russian oil and gas.” The mild reaction may indicate that the market is becoming increasingly desensitized to sanction risks. In a statement made on Sunday, Ukraine’s president indicated that the nation would respond to the Russian drone strikes targeting its power infrastructure. In recent weeks, both parties have engaged in aerial assaults aimed at energy infrastructure, raising concerns about potential disruptions to Russian oil exports.