Stocks higher as investors await Fed chief speech
AFP, London :
Stock markets advanced Friday ahead of a pivotal speech by the US central bank chief, expected to shed light on possible interest rate cuts in the world’s top economy.
Major European stock markets ticked up, following gains in Asia led by Chinese indices.
Recent days have seen cautious trading as investors await clarity from Federal Reserve chief Jerome Powell about the path on US interest rates, with recent data showing a cooling jobs market and a mixed picture for inflation.
Powell is set to deliver remarks during an annual gathering of central bankers in Jackson Hole, Wyoming, a key event for observers weighing the chances of a rate cut at a September meeting of policymakers.
“Investors will be keenly watching whether Powell places more emphasis on weaker payrolls versus more stable measures of labour market slack and still solid activity and inflation data,” said Deutsche Bank managing director Jim Reid.
Powell has come under intense public pressure this year from President Donald Trump to lower rates — an unusual political intervention at the independent central bank.
In Asia, Shanghai’s main index rose 1.5 percent, breaking 3,800 points for the first time in a decade as shares in Chinese semiconductor firm Cambricon surged.
Tokyo’s Nikkei index closed slightly higher, and Hong Kong advanced.
Japan announced Friday that core inflation eased in July — still above its central bank’s two-percent target and boosting expectations of an October rate hike.
After a shaky few days on Wall Street, Asia “should act as a safe harbour while the Fed’s credibility is under the spotlight”, noted Chris Weston, head of research at Pepperstone.
Still, “hesitation to push risk higher will remain”, he said, adding that there is “a very low probability” of Powell calling explicitly for rate cuts in his speech later in the day. Also weighing heavily on investors’ minds is the potential for a peace deal in Ukraine more than three years after Russia’s invasion.
Trump on Thursday set a two-week time frame for assessing peace talks between Moscow and Kyiv, following days of high-stakes diplomacy that saw him meet with Russian and Ukrainian counterparts in person, as well as several European leaders.