Markets Hold Steady Ahead of Powell’s Jackson Hole Speech

Global stocks were flat on Friday as investors awaited a speech by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium. MSCI’s broadest global index was flat, as were shares in Europe. Futures on Wall Street were between 0.1 and 0.2 percent higher. In Asia, China’s CSI 300 Index climbed 2.1% on a wave of news about domestic AI advances. The dollar index rose 0.1%, and the euro dipped to $1.15985 after Germany’s economy shrank by 0.3% in Q2.

Focus on Powell And Fed Policy

Jerome Powell’s comments will be watched closely, amid continued attacks on the U.S. central bank by President Donald Trump and increasing discomfort over the Federal Reserve’s independence. The speech is likely to provide insight into whether the central bank is in favor of cutting rates in September. Futures markets now price in a 66% chance of a 25-basis-point cut, from 85% last week. Analysts have said Powell may opt for a cautionary tone, giving himself room to respond to incoming data on jobs and inflation.

Central Banks’ Independence in Focus

Portfolio managers say that defending the Fed’s independence could become a not-so-unofficial theme of the Jackson Hole gathering. And with producer prices having increased over the past year, Fed officials have expressed reluctance to cut rates in the near term. Investors think Powell’s tone could help reset market expectations more toward a 50:50 chance of changes in rates. The Bank of Japan is also in focus as Governor Kazuo Ueda is scheduled to speak, with Japan’s inflation still sitting above 2%.
Commodities Edge Lower
Oil prices were slightly lower on easing after Thursday’s gains on the back of simmering geopolitical tensions between Russia and Ukraine, with Brent crude down 0.2% at $67.5 a barrel. Gold also slipped, with spot prices dropping 0.2% to $3,330.9 an ounce. The yen, meanwhile, stayed on the back foot and was on track for a 1 percent weekly loss as traders looked for future policy moves by the BOJ.