Stocks eke out gains after Jackson Hole speeches

Marco Green
August 28, 2017

The UK benchmark index looks set to open marginally higher this morning, as investors await central bankers' speeches at the ongoing meeting in Jackson Hole, Wyoming. It was last at United States dollars 1.1921, up 1.05% on the day, its best daily percentage gain in two-month. Oil prices were up about 0.6 percent.

Overnight, Wall Street indexes closed between 0.1 percent and 0.2 percent lower as a rift between US President Donald Trump and Congress appeared to widen.

"Beyond Jackson Hole, attention will quickly shift to the U.S. debt ceiling; comments from President Trump indicate negotiations are contentious", says Sue Trinh, an FX strategist at Royal Bank of Canada.

Experts say that a government shutdown is more likely than not to happen. "In our view these issues are likely more transitory, and the strength in gold is likely to abate with a debt ceiling resolution and continued Fed policy normalization". The S&P 500 and the Dow on course to snap a two-week losing streak, while the Nasdaq was poised to post its first week of gain in five.

Japan's Nikkei advanced 0.6 percent, heading for a flat end to the week.

The euro pushed sharply higher after Yellen's speech was released, gaining 0.6 percent against the U.S. currency at $1.1872 near 1450 GMT. Hong Kong's Hang Seng gained nearly 1 percent. Australia's S&P/ASX 200 was little changed at 5,743.90.

Fed Chair Janet Yellen and European Central Bank President Mario Draghi are both scheduled to speak at the conference on Friday.

Interest-rate sensitive sectors such as telecommunications, up 0.8 per cent, and utilities, up 0.3 per cent, rose as Yellen's speech did not comment on the path of interest rate rises for the central bank, which sent US Treasury yields lower. The dollar index fell 0.43% to last trade at 92.89. One goal of the changes enacted since the crisis is to guard against problems that regulators do not anticipate. Some of the Fed's own indicators suggest that financial risk is at lower-than-average levels.

With much of the immediate focus on the euro after Jackson Hole, the dollar did not fare as badly against the Japanese yen.

Petroleum-linked stocks gained as some oil producers curtailed production due to Hurricane Harvey and gasoline prices rose in anticipation of refinery outages.

That came after crude prices fell overnight as some refiners shut down as Harvey crossed the Gulf of Mexico, reducing their short-term crude demand.

U.S. crude futures rose 0.7 percent to $47.75 a barrel, after Thursday's 2 percent slump.

Looking at reactions in forex markets, the dollar was trading at 109.36 yen, the euro/dollar pair rose to 1.1855 and sterling reached $1.2854 in early exchanges during the U.S. session.

OIL: Benchmark U.S. crude oil fell 19 cents to $48.22 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the worldwide pricing standard, fell 15 cents to $52.42 per barrel in London.

Other reports by Click Lancashire

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