Positive sentiment for new week's trading following Jackson Hole

Positive sentiment for new week's trading following Jackson Hole
Global markets tracked Friday's Wall Street gains in early trade Monday.
AUG 28, 2023

European stocks started the week on a positive note, tracking Friday’s gains on Wall Street following cautious comments from central bankers at Jackson Hole. China’s support measures for its equities market helped lift sentiment.

The rate-sensitive technology sector led the advance in Europe after Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde at Jackson Hole on Friday failed to shake the outlook for interest rates. Trading volumes may be subdued throughout the day with UK markets closed for a bank holiday. 

U.S. stocks rose and Treasury yields jumped on Friday after Powell stuck to the script in his Jackson Hole speech, saying that the Fed is “prepared to raise rates further if appropriate,” even as he stressed that the central bank would “proceed carefully,” guided by economic data. Lagarde, likewise, said the ECB would set borrowing costs as high as needed to keep inflation in check but stopped short of signaling an increase at the next meeting. 

“Not much was said that changed our outlook for US equities” at Jackson Hole, RBC Capital Markets strategist Lori Calvasina wrote in a note. “Equity investors have already been wrapping their heads around the idea that rates may be higher for longer, that it’s possible the Fed’s job may not be done just yet, and that they are data dependent. That message seemed reinforced Friday.”

U.S. equity futures edged higher, while Treasury yields dipped and the dollar was steady. Among individual pre-market movers, 3M Co. gained more than 4% after agreeing to pay more than $5.5 billion to resolve lawsuits related to military earplugs.

Asian benchmarks rose after Beijing reduced the levy charged on stock trades, among other measures. Chinese stocks pared most of their early gains, however, showing once again that efforts to boost its markets are falling flat in the face of economic worries. Foreign funds accelerated their selling through the day, poised to take this month’s outflows to the biggest on record.

Key events this week:

  • US Conference Board consumer confidence, Tuesday
  • Eurozone economic confidence, consumer confidence, Wednesday
  • US GDP, wholesale inventories, pending home sales, Wednesday
  • China manufacturing PMI, non-manufacturing PMI, Thursday
  • Japan industrial production, retail sales, Thursday
  • Eurozone CPI, unemployment, Thursday
  • ECB publishes account of July monetary policy meeting, Thursday
  • US personal spending and income, initial jobless claims, Thursday
  • China Caixin manufacturing PMI, Friday
  • Eurozone S&P Global Eurozone Manufacturing PMI, Friday
  • South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
  • Boston Fed President Susan Collins speaks at virtual event, Friday
  • US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.6% as of 9:46 a.m. London time
  • S&P 500 futures rose 0.2%
  • Nasdaq 100 futures rose 0.3%
  • Futures on the Dow Jones Industrial Average rose 0.3%
  • The MSCI Asia Pacific Index rose 1%
  • The MSCI Emerging Markets Index rose 0.6%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0804
  • The Japanese yen was little changed at 146.52 per dollar
  • The offshore yuan was little changed at 7.3018 per dollar
  • The British pound was little changed at $1.2576

Cryptocurrencies

  • Bitcoin fell 0.5% to $25,960.03
  • Ether fell 0.8% to $1,641.45

Bonds

  • The yield on 10-year Treasuries declined two basis points to 4.22%
  • Germany’s 10-year yield advanced one basis point to 2.58%
  • Britain’s 10-year yield advanced two basis points to 4.44%

Commodities

  • Brent crude rose 0.3% to $84.70 a barrel
  • Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

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