US equities and futures were flat as the rally in Chinese tech stocks stalled and markets settled into a holding pattern ahead of the Federal Reserve’s Jackson Hole policy symposium in late September. this week.
The Stoxx Europe 600 Index posted a modest gain at the open, while contracts on the S&P 500 and Nasdaq 100 fluctuated after the indices hit new records on Tuesday. A Hong Kong gauge of Chinese tech names struggled to extend this week’s rally amid lingering concerns about Beijing’s crackdown on private industries. Treasury yields were flat and the dollar rose against a basket of major pairs.
Corporate earnings, vaccine expansion and monetary policy support have partially repaired sentiment after a nervous breakdown over the economic outlook caused by delta stress. The next key reading on the central bank’s outlook will come later this week when Fed Chairman Jerome Powell speaks in Jackson Hole on Friday.
“There is a sense of stabilization in the markets as investors are already looking forward to the Jackson Hole meeting,” said Dariusz Kowalczyk, senior strategist at Credit Agricole CIB. “With the uncertainty surrounding the message from Fed Chairman Jerome Powell, markets are likely not to take important new positions until there is more clarity on the Fed’s outlook.”
Investors hope the Jackson Hole event will provide more clarity on the Fed’s thinking on monetary stimulus amid a liftoff in inflation, but still mixed economic data. This week’s reports from purchasing managers around the world showed the return of concern over growth prospects, with US business activity declining to its weakest level in eight months.
Powell has already started formal talks on a path to withdrawing from the central bank’s massive bond-buying program, a timetable on which he may offer more perspective this week. Most Fed officials judged last month that it would probably be appropriate for the cuts to begin this year.
In commodities, oil fell back after the biggest two-day gain since November with Covid-19 still overshadowing assessments of the demand outlook. Iron ore futures extended a rebound from last week’s loss on optimism that China will not allow demand for steel to collapse as long as its economic outlook remains uncertain.
Meanwhile, the tension between the United States and China is back in focus. Securities and Exchange Commission Chairman Gary Gensler has pledged to enforce a three-year deadline for US-listed Chinese companies to allow inspections of their financial audits or face delisting. .
Here are some events to watch this week:
- Bank of Korea Policy Decision; Governor Lee Ju-yeol briefing on Thursday
- Fed officials attend Jackson Hole Economic Policy Symposium Thursday through Saturday
- US GDP, Initial Jobless Claims Thursday
- July Personal Income and Expenses in the US Friday. Investors will look at the price index for personal consumption expenditures, an inflation measure that the Fed closely monitors.
Some of the main movements in the markets:
- The Stoxx Europe 600 was up 0.1% at 8:30 am London time.
- S&P 500 futures were unchanged
- Nasdaq 100 futures changed little
- Dow Jones Industrial Average futures changed little
- The MSCI Asia Pacific Index rose 0.1%
- The MSCI emerging markets index rose 0.3%
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $ 1.1744.
- The Japanese yen fell 0.1% to 109.77 per dollar
- The offshore yuan changed little at 6.4733 to the dollar.
- The British pound changed little to $ 1.3721
- The 10-year Treasury yield changed little to 1.29%.
- Germany’s 10-year yield advanced one basis point to -0.46%
- UK 10-year yield advanced two basis points to 0.55%
- Brent crude fell 0.1% to $ 70.97 a barrel
- Spot gold fell 0.6% to $ 1,792.74 an ounce
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