Caution reigns in front of Jackson Hole

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LONDON — European markets were uncertain on Thursday as global investors awaited the start of the US Federal Reserve’s Jackson Hole economic symposium.

The pan-European Stoxx 600 index hovered slightly above the flatline in afternoon trading, after returning gains of more than 0.7% in early trade. Oil and gas stocks climbed 1.4% while retail stocks fell 1.2%.

The Fed’s annual symposium kicks off Thursday, with Chairman Jerome Powell scheduled to deliver a speech on Friday. Investors will be on the lookout for information on the central bank’s monetary tightening path as it seeks to contain inflation, and whether interest rate cuts are in sight at the end of the current cycle.

Luke Bartholomew, senior economist at Abrdn, said Powell could use the speech to deliver a “mea culpa” on his prediction a year ago that inflation would be “transient” and to demonstrate what the Fed has done. learned about price pressures over the past year. .

“Powell is likely to point out that politics still has a long way to go before the Fed feels comfortable having decisively turned the corner on restoring price stability. This is important because the market has behaved recently as if the Fed has moved away from its hawkish stance,” Bartholomew said in an email Wednesday.

“It’s hard to believe that Fed leadership is comfortable with how much more accommodative financial conditions have become after last month, and so Powell will use this speech as an opportunity to push back against this more accommodative interpretation of Fed policy that has popped up recently.”

U.S. stocks were mixed in early morning trading on Thursday after Wall Street ended a three-day losing streak on Wednesday.

Investors in the United States will also be keeping a close eye on Thursday’s weekly jobless claims data and Friday’s PCE (personal consumption expenditure) reading, one of the Fed’s favorite inflation measures.

Asia-Pacific shares were mostly higher on Thursday, while the morning session in Hong Kong was canceled due to a typhoon warning.

On the data front in Europe, Germany’s Ifo Institute business climate and expectations surveys and final second-quarter GDP figures for Europe’s largest economy were released on Thursday.

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