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Withdrawal in sight in Europe, caution before Powell in Jackson Hole – archyde

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EUROPEAN SCHOLARSHIPS EXPECTED TO FALL

by Blandine Henault

PARIS (Reuters) – The main European stock markets are expected to decline Thursday at the opening, in a wait-and-see climate before the much-awaited speech by Jerome Powell, the chairman of the US Federal Reserve, at the Jackson Hole symposium.

According to the first available indications, the Parisian CAC 40 should open down 0.17%. Futures are reporting a decline of 0.31% for the Dax in Frankfurt and 0.23% for the FTSE in London.

If investors have been reassured by the recent news concerning the vaccination against COVID-19, their number one concern remains the evolution of the recovery and that of monetary policy in the United States, a double subject on which Jerome Powell will speak on Friday.

“Jerome Powell should try to spare the goat and the cabbage by recognizing on the one hand a gradual improvement in the employment market and on the other a deterioration of the economic outlook due to the evolution of the Delta variant”, says John Plassard, strategist at Mirabaud Securities.

Before that, investors will learn this Thursday at 12:30 GMT of the second estimate of the gross domestic product (GDP) for the second quarter.

A WALL STREET

US index futures foreshadow a slight pullback at the opening after the previous day’s advance which took the S & P-500 and Nasdaq to closing records.

The Dow Jones index gained 0.11% to 35,405.50 points. The S & P-500 gained 0.22%, to 4,496.19 points.

The Nasdaq Composite advanced 0.15% to 15,041.86 points.

IN ASIA

The Asian stock market session was marked by the announcement of a rate hike by the Bank of South Korea, for the first time in nearly three years, making it the first in Asia to tighten monetary policy since the onset of the coronavirus crisis.

In Seoul, the Kospi index fell 0.54%.

For its part, the Tokyo Stock Exchange is stable as the close approaches, with initiatives remaining limited before the opening of the Jackson Hole symposium.

The stock markets of mainland China and Hong Kong are on the downward trend, the rebound in technology stocks having run out of steam. The warning from China Evergrande (-7.02%), one of the major Chinese real estate developers, on its results also penalizes the compartment as well as the banks, which are heavily exposed to this sector.

The Hang Seng lost 1.29% and the CSI 300 fell 1.37%.

CHANGES / RATES

The dollar rose slightly against a basket of benchmark currencies, as traders remained on the lookout for Jerome Powell’s intervention on Friday in Jackson Hole.

The euro does not change much, around 1.1765 dollars.

For its part, the South Korean won appreciates against the dollar after the central bank’s rate hike.

On the bond market, the ten-year Treasuries yield fell slightly to 1.3339%, after climbing more than five basis points the day before and reaching a high since August 13.

OIL

Crude prices are pulling back as demand fears return over the spread of the Delta variant of the coronavirus ending a three-day rally.

The resumption of production in Mexico, affected by a fire on Sunday on an offshore platform, also contributes to weigh on prices.

The barrel of Brent fell 0.57% to 71.84 dollars and that of US light crude (WTI) dropped 0.82% to 67.8 dollars.

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