Powell is widely expected to reiterate the central bank’s hawkish stance
Wall Street stocks closed higher overnight to notch the second consecutive session of gains ahead of Federal Reserve Chair Jerome Powell’s Jackson Hole speech. The Dow spiked 0.98%, the S&P 500 jumped 1.41%, and the Nasdaq Composite advanced 1.67%. However, the indices are on pace for a bearish week, with the Dow down 1.23%, the S&P 500 is 0.69% lower, and the Nasdaq Composite is down 0.52% through Thursday. On the data front, US GDP contracted by 0.6% in the second quarter to show a smaller decline compared to an earlier reading of -0,9%.
In Asia, equities followed US counterparts higher on Friday, with investor sentiment looking upbeat even as Powell is widely expected to reiterate the central bank’s hawkish stance later today. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.67% higher. China’s Shanghai Composite ticked marginally higher, Japan’s Nikkei 225 added 0.57%, the Hang Seng index in Hong Kong gained 0,62%, and Australian S&P/ASX 200 added 0.79%.
European stock markets opened higher albeit overall risk sentiment is still rather tepid ahead of the weekend. The early gains in the region are more of a function to the late advance in US equities overnight. US stock index futures are holding slightly lower, with Sand Nasdaq futures down 0.2% in early pre-market deals. On the data front, Germany September GfK consumer sentiment arrived at -36.5 versus -31.8 expected as rising energy prices continued to push sentiment to new lows.
Elsewhere, the dollar is steady today, trading back in positive territory after yesterday’s brief dip below 108.00. The USD index regained the 108.50 intermediate zone and could target 109.00 if Powell expresses a hawkish tone during the upcoming speech. EURUSD failed to break parity on Thursday to come under renewed pressure ahead of the weekend, still looking fragile and vulnerable to even deeper losses in the short term.
