Stocks volatile as traders await Powell speech: Markets summary

(Bloomberg) — Stocks halted a rally that had pushed the global index to a record high as traders took a cautious stance ahead of key appearances by the heads of the Federal Reserve and the Bank of Japan.

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The MSCI World Index rose 0.1%, trading near an all-time high. The pan-European Stoxx 600 index rose 0.3% as Deutsche Bank rose after it forecast stronger third-quarter results. U.S. futures were flat. The yield on 10-year Treasury notes was steady at 3.79% and the dollar was little changed.

Growing expectations of a U.S. interest rate cut have fueled a market rally in August, but Thursday’s subdued moves suggest traders are wary of surprises from Fed Chairman Jerome Powell’s speech at the Jackson Hole Economic Symposium on Friday.

More dovish signals came from Wednesday’s payrolls review and minutes from the Fed’s meeting, which showed several officials conceding a reasonable case for a rate cut. Traders are back pricing in a 100 basis point rate cut this year.

“With the Jackson Hole conference approaching, risk appetite may be limited due to concerns over any disappointment from the Fed Chairman. Markets are in a waiting phase, with the US dollar seeking stability after a recent sell-off,” said John Rong-Yip, market strategist at IG Asia Pte.

In Europe, data showed a mixed picture for the region’s economy. France’s services sector expanded at its fastest pace in more than two years, while Germany’s composite PMI added to evidence that the country’s recovery has faltered.

Meanwhile, Bank of Japan Governor Kazuo Ueda faces intense market scrutiny on Friday when he speaks to lawmakers, after the central bank’s hawkish signals contributed to turmoil in global markets earlier this month.

Elsewhere, Bank of Korea Governor Ri Chang-yong said some members are open to cutting interest rates in the next three months, after keeping borrowing costs steady.

Shares of Xiaomi Corp. surged more than 8% after better-than-expected second-quarter results, boosting China’s tech stock index. That followed a string of mixed earnings from major companies including Alibaba Group Holding Ltd.

In commodities, oil prices fell slightly as concerns about a slowing US economy outweighed support from lower inventories.

Main events this week:

• Eurozone HCOB PMI, Consumer Confidence, Thursday

• The European Central Bank will publish a report on its July interest rate decision, Thursday.

• US initial jobless claims, existing home sales, S&P global PMI, Thursday

• Japan CPI, Friday

• Bank of Japan Governor Kazuo Ueda is scheduled to attend a special session of the Japanese parliament to discuss raising interest rates in July, Friday.

• US New Home Sales, Friday

• Jerome Powell speaks in Jackson Hole on Friday

The story continues

Some key movements in the markets:

Stocks

• The Stoxx Europe 600 index was up 0.3% by 8:45 a.m. London time.

• S&P 500 futures were little changed.

• Nasdaq 100 futures were little changed.

• Dow Jones Industrial Average futures were little changed.

• MSCI Asia Pacific Index rose 0.4%

• The MSCI Emerging Markets Index rose 0.2%.

Currencies

• The Bloomberg Dollar Index was little changed.

• The euro fell 0.1% to $1.1137.

• The Japanese yen was little changed at 145.16 yen to the dollar.

• The offshore yuan was little changed at 7.1322 against the dollar.

• The pound was little changed at $1.3092.

Cryptocurrencies

• Bitcoin fell 0.6% to $60,863.51

• Ether was little changed at $2,632.78.

Bonds

• The yield on the 10-year US Treasury note fell one basis point to 3.79%.

• The yield on the 10-year German bond was little changed at 2.19%.

• The yield on the 10-year UK bond was little changed at 3.89%.

Goods

• Brent crude was little changed.

• Spot gold fell 0.2 percent to $2,507.61 an ounce.

This story was produced with the help of Bloomberg Automation.

–With assistance from Winnie Hsu, Mia Glass, Abhishek Vishnoi, David Engels, Yvonne Mann, and Chiranjeevi Chakraborty.

(A previous version of the story was corrected on the day of Ueda’s meeting with lawmakers.)

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