Analyst
European stocks remain largely unchanged while energy and mining shares gain, driven by rising crude oil and iron ore prices. The Stoxx 600 Europe index remains flat, reflecting the uncertainty before Powell's awaited speech. On the other hand, US futures remain steady following a drop led by profit taking in tech stocks on Thursday. The US 100 suffering over a near 2% decline, its worst in three weeks.
Asian equities didn't fare as well, showing a decline of over 1% despite optimism from China's aim to support its economy with the announcement of eased mortgage rules.
Treasury yields continue to rise, with two-year note yields (more sensitive to imminent policy shifts) remaining above 5%. This uptick comes as investors anticipate insights from the annual gathering of top central bankers in Jackson Hole, Wyoming. The event will feature a speech from Powell, expected to provide clarity on rate dynamics and potential future cuts.
As Powell's address nears, various opinions surface among Fed officials. Boston's Fed Bank President Susan Collins suggests the possibility of rate hikes, while Philadelphia counterpart Patrick Harker believes sufficient tightening has occurred. A survey by 22V Research indicates 78% of investors expect Powell to emphasize data dependency.
Global currency movements see the USD advancing towards a three-month high, while the JPY weakens after Tokyo's inflation data comes in slightly below expectations.
UK's GfK Consumer Confidence indicator improves to -25 in August 2023 from July's -30, beating expectations. The betterment comes as the UK's headline inflation slows to 6.8% from 7.9% in June. On the other hand, Germany's business confidence decreased to 85.70 points in August from 87.30 points in July of 2023. This also comes in lower than the consensus of 86.7.
Commodities show mixed movements with oil prices rising by 0.5%, while iron ore is on track for its third weekly advance, suggesting Chinese steel mills might increase output. European natural gas prices face their first weekly drop this month. Gold prices also declined with gold dipping below the $1,920 mark.
Key events today:
EU GDP Growth Rate - 06:00 UTC+0 (released)
EU Ifo Business Climate - 08:00 UTC+0 (released)
US Michigan Consumer Sentiment - 14:00 UTC+0
US Fed Chair Powell Speech - 14:05 UTC+0
EU ECB President Lagarde Speech - 19:00 UTC+0
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