Markets in Asia and Europe diverged on Friday ahead of a pivotal speech by the US central bank chief, expected to shed light on possible interest rate cuts in the world’s top economy.
Recent days have seen cautious trading as investors parse a mixed outlook for the global economy, beset by worries over inflation even as a boom in tech — especially artificial intelligence — continues.
US Federal Reserve Chairman Jerome Powell is set to deliver remarks during an annual gathering of central bankers in Jackson Hole, Wyoming, on Friday, a key event for observers weighing the chances of a rate cut at a September meeting of policymakers.
Powell has come under intense public pressure this year from President Donald Trump to lower rates — an unusual political intervention at the independent central bank.
Stock markets in Asia and Europe were split across mostly narrow ranges on Friday afternoon, roughly five hours before Powell’s speech.
Tokyo’s Nikkei index closed up 0.1 per cent, an improvement from Thursday’s 0.7 per cent drop.
Japan announced Friday that core inflation had eased to 3.1 per cent in July from 3.3 per cent the previous month — still above its central bank’s two-per cent target and boosting expectations of an October rate hike.
Meanwhile, Shanghai’s main index finished up 1.5 per cent, breaking 3,800 points for the first time in a decade as shares in Chinese semiconductor firm Cambricon surged.
Benchmarks in Hong Kong, Seoul and Bangkok also rose, while Sydney and Taipei were down.
Morning trading in Europe saw shares edge down in London and Frankfurt. Paris was up slightly.
After a shaky few days on Wall Street, Asia “should act as a safe harbour while the Fed’s credibility is under the spotlight”, said Chris Weston, head of research at Pepperstone, in a note.
Still, “hesitation to push risk higher will remain”, he said, adding that there is “a very low probability” of Powell calling explicitly for rate cuts in his speech later in the day.
Also weighing heavily on investors’ minds is the potential for a peace deal in Ukraine more than three years after Russia’s invasion.
Trump on Thursday set a two-week time frame for assessing peace talks between Moscow and Kyiv, following days of high-stakes diplomacy that saw him meet with Russian and Ukrainian counterparts in person, as well as several European leaders.
Observers have been speculating lately about the impact on oil markets of the possible lifting of sanctions on Russia, a major producer.
Oil prices were up narrowly on Friday afternoon, adding to previous gains made over recent days.
– Key figures –
Tokyo – Nikkei 225: UP 0.1 per cent at 42,633.29 (close)
Hong Kong – Hang Seng Index: UP 0.9 per cent at 25,339.14 (close)
Shanghai – Composite: UP 1.5 per cent at 3,825.76 (close)
London – FTSE 100: DOWN 0.1 per cent at 9,300.77
Euro/dollar: DOWN at $1.1592 from $1.1604 on Thursday
Pound/dollar: DOWN at $1.3410 from $1.3412
Dollar/yen: UP at 148.60 yen from 148.37 yen
Euro/pound: DOWN at 86.45 pence from 86.52 pence
West Texas Intermediate: UP 0.2 per cent at $63.66 per barrel
Brent North Sea Crude: UP 0.2 per cent at $67.78 per barrel
New York – Dow: DOWN 0.3 per cent at 44,785.50 (close)
AFP
