Fed officials are divided over the need for further rate hikes

Federal Reserve meeting

The minutes of the last Federal Reserve meeting showed that policymakers expressed concerns about the pace of inflation and that more rate hikes could be necessary unless conditions change. That discussion came during the two-day July meeting, which resulted in a quarter-point rate rise to between 5.25 and 5.5%, a rate hike that markets generally expected to be the last one of this cycle.

However, with most Federal Reserve (Fed) members suggesting that they foresaw further upside inflation risks, that could merit further tightening. A couple voted not to raise rates in July.

A "number" said balance sheet runoff need not end when rate cuts start. The minutes noted that with rates at these elevated levels, members said that the economy was expected to slow and unemployment would likely rise from current levels, but staff economists retracted an earlier forecast that troubles in the banking industry could lead to a mild recession this year.

Japanese exports

In Japan, exports fell in July for the first time in nearly 2 1/2 years. Japanese exports fell 0.3% in July year-on-year, compared with a 0.8% decrease expected by economists. It followed a 1.5% rise in the previous month. Exports to China, Japan's largest trading partner, fell 13.4% year-on-year in July due to drops in shipments of cars, stainless steel, and integrated circuit chips (IC), following a 10.9% decline in June.

Australian labour market

Is the Australian labour market finally loosening? After two months of very strong growth, employment in Australia unexpectedly fell in July. Net employment fell by 14,600 in July from June, reversing some of June's 31,600 jump. The jobless rate rose to 3.7% from 3.5%, topping analysts' forecasts of 3.6%. This is also the highest reading since April.

The Australian Bureau of Statistics

The Australian Bureau of Statistics warned that these figures were likely impacted by the timing of school holidays in July, which could have artificially depressed the numbers.

Nonetheless, market commentators can't help thinking that Australia's economy is now at a turning point and wonder what Reserve Bank of Australia ( RBA) members will make of this latest data. Opinions on the next rate decision couldn't be more split. Futures imply a 50-50 chance of one more quarter-point hike to 4.35% by the end of the year.

Cisco

There was a lot of volatility around Cisco shares in extended trading yesterday evening. The stock eventually ended up 1.2% higher on the IG all-session market. Investors were torn between some good news and better than expected earnings and revenue, and concerns around revenue forecasts. Earnings came in at $1.14 per share, better than the $1.06 anticipated by analysts. Revenue reached $15.20 billion, higher than the Street's expectations of $15.05 billion. But expectations cast a shadow on the group's quarterly performance.

Cisco forecast

Cisco forecast full-year revenue to be between $57 billion and $58.20 billion, below estimates of $58.4 billion. During the call following this release, Cisco CEO Chuck Robbins talked up the group's position in the Al race, saying that Cisco is likely to be a leading supplier of the networking equipment needed for the expansion of Al.

Walmart

The world's largest supermarket chain, Walmart, is due to report at lunchtime. Earnings are expected at $1.69 per share for the second quarter on revenue just short of $160 billion. Compared to the same quarter a year ago, this would mean a rise in revenue but a fall in earnings, a very similar situation to what we saw three months ago. The increase in revenue reflects a rise in costs, but Walmart has to reduce its margins to keep its customers.