European stocks US index futures struggled for direction as investors digested the latest hawkish noises from the Federal Reserve amid mounting signs of a global economic slowdown.
(Bloomberg) — European stocks US index futures struggled for direction as investors digested the latest hawkish noises from the Federal Reserve amid mounting signs of a global economic slowdown.
The Stoxx Europe 600 index erased early losses to trade little changed, buoyed by the consumer-products sector as luxury-goods giant Richemont surged after selling a stake in its online business.
Futures on the S&P 500 and Nasdaq 100 fluctuated between modest gains and losses, with markets on edge ahead of the Jackson Hole central bankers’ retreat later this week. The 10-year Treasury yield held above 3% and the dollar was steady.
Investors will pore over Fed Chair Jerome Powell’s speech at Jackson Hole on Friday for a sense of how hawkish the US central bank will be in the face of mounting economic challenges.
A global rebound in equities from a June low has stalled ahead of the widely-anticipated event.
“Globally we haven’t seen a deceleration like this that has been so synchronized in many decades,” Frances Stacy, director of strategy at Optimal Capital Advisors LLC, said on Bloomberg Television.
“I don’t want to be directional” in picking trades, she added.
The latest data showed economic activity weakening from the US to Europe and Asia, underlining the delicate task the Fed faces in hiking interest rates to bring down high inflation without sparking a recession.
Still, Minneapolis Fed President Neel Kashkari said inflation is very high and the central bank must act to bring it under control.
The Fed “is probably going to use this weekend to reiterate the fact that rates have more room to climb because they really want to bring inflation down,” Kelvin Tay, Asia-Pacific chief investment officer at UBS Global Wealth Management, said on Bloomberg Television.
Elsewhere, WTI crude oil climbed above $95 a barrel, bolstered by shrinking US stockpiles and possible OPEC+ output cuts.
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What to watch this week:
- US durable goods, MBA mortgage applications, pending home sales, Wednesday
- US GDP, initial jobless claims, Thursday
- Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
- ECB’s July minutes, Thursday
- Fed Chair Powell speaks at Jackson Hole, Friday
- US personal income, PCE deflator, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 was little changed as of 9:40 a.m.
London time
- Futures on the S&P 500 were little changed
- Futures on the Nasdaq 100 were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 0.5%
- The MSCI Emerging Markets Index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $0.9947
- The Japanese yen rose 0.2% to 136.54 per dollar
- The offshore yuan fell 0.3% to 6.8773 per dollar
- The British pound was little changed at $1.1826
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.03%
- Germany’s 10-year yield was little changed at 1.32%
- Britain’s 10-year yield advanced two basis points to 2.59%
Commodities
- Brent crude rose 1.1% to $101.32 a barrel
- Spot gold rose 0.2% to $1,751.29 an ounce
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