Global equity and oil prices found stability on Thursday following a tumultuous start to September, while the yen reached a one-month peak and government bond markets experienced a rally, as investors maintained their positions in anticipation of interest rate cuts.

The recent market turbulence, which has erased over $2 trillion from global stock valuations and negatively impacted commodities, subsided just enough for major European exchanges to stabilize after a nearly 2% decline in recent days.

Stronger-than-expected German industrial orders and euro zone retail sales figures aligning with forecasts contributed to this stabilization, while a series of important U.S. economic reports, including non-farm payrolls, were anticipated later in the week.

Speculation that the U.S. Federal Reserve may initiate its long-anticipated rate-cutting cycle with a significant half-point reduction this month kept the dollar under pressure.

The Japanese yen, which has appreciated nearly 2% this week, emerged as the primary beneficiary, reaching a one-month high of 143.20 per dollar overnight before adjusting to 143.43 during European trading hours.

In the bond markets, euro zone yields declined for the third consecutive session, while U.S. Treasury yields stood at 3.767%, as concerns about the health of major global economies persisted.

Recent data indicated that U.S. job openings fell to their lowest level in three and a half years in July. Currently, markets are pricing in a 44% likelihood of a 50 basis point cut by the Fed at its September 17-18 meeting, with expectations of a total easing of 110 basis points by the end of the year.

"The market is on edge," noted Jefferies analyst Mohit Kumar. However, he added, "we are maintaining a cautious long position in risk assets despite recent fluctuations. We do not anticipate the U.S. economy slowing as significantly as some fear."

CHALLENGING

China's economy continues to struggle despite various stimulus measures aimed at revitalizing its beleaguered property sector.

On Wednesday, JPMorgan, a leading investment bank, abandoned its long-standing bullish stance on Chinese equities, although the response from the country's blue-chip stocks on Thursday was a slight uptick.

Commodities traders were nursing their losses as oil prices rebounded to over $73 a barrel, recovering from a decline of more than 7% since early September. Meanwhile, copper, a key indicator in the metals market, rose slightly above $9,000 per ton after experiencing a nearly 20% drop since May.

"Historically, September has posed significant challenges for risk assets," noted Daniel Tan, a portfolio manager at Grasshopper Asset Management based in Singapore.

Wall Street stock futures indicated a relatively stable opening ahead. Investors are particularly interested in the performance of Nvidia, a standout among the 'Magnificent Seven,' following its recent downturn, as well as the day's reports on the services sector and unemployment claims.

On Wednesday, San Francisco Fed President Mary Daly emphasized the necessity for the Federal Reserve to lower interest rates to maintain a healthy labor market, stating that the extent of any cuts would depend on forthcoming economic data.