Stocks sputter ahead of Fed chief’s speech

TDT | Manama

The Daily Tribune - www.newsofbahrain.com

Stock markets wobbled yesterday as investors await a highly-anticipated speech by US Federal Reserve chief Jerome Powell, hoping he will drop more clues about an expected interest-rate cut.

The Dow, the broader S&P 500 and the tech-heavy Nasdaq had all opened on the right foot, extending gains from the previous day, but faltered later in the morning. In Europe, Paris finished flat while London and Frankfurt were in the green but not as strong as earlier in the day when key surveys showed business activity accelerated in Britain and the eurozone in August.

The dollar has been under pressure from expectations of lower rates, but it pared down some losses against other major currencies yesterday. The spotlight will turn to Powell on Friday when he addresses an annual gathering of global central bankers in Jackson Hole, Wyoming, with investors eager to hear for fresh signals about the Fed’s plans.

“We can see the mounting tension (heading) into Powell’s speech,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told AFP. “Markets are preparing for possible turbulence on Friday,” she added. Investor confidence in a rate cut grew after minutes from the Fed’s July policy meeting, released on Wednesday, showed that most members believed that it would be “appropriate” to lower borrowing costs in September.

Traders were also buoyed by official figures showing that US employers added around 68,000 fewer jobs monthly in the year to March than initially estimated. US data released yesterday showed initial jobless claims rose by 4,000 last week, a modest rise “that won’t alter the market’s rate cut view”, said Briefing.com analyst Patrick O’Hare.