Stock markets wobbled Friday ahead of a speech by Federal Reserve boss Jerome Powell that is expected to reiterate his plan to ramp up US interest rates to fight soaring inflation.
London equities edged up despite news that UK domestic energy bills will rocket even higher this year on surging wholesale gas prices as Britain’s cost-of-living crisis worsens.
Frankfurt and Paris stocks edged lower amid fears of a eurozone energy crunch in the coming peak-demand winter as Russia curbs supplies.
Europe’s benchmark Dutch TTF gas contract dipped Friday one day after soaring to 324 euros per megawatt hour, not far from the record high struck in March after key gas producer Russia invaded Ukraine.
But German and French electricity futures prices soared to new records that are at least 10 times above last year.
Wall Street stocks opened mixed, with the Dow adding less than a tenth of a percent.
Sentiment was boosted by the latest readings of the US personal consumption expenditures price index, the Fed’s preferred yardstick for inflation, which dipped 0.1 percent from in July from June, and slowed to 6.3 percent from 6.8 percent on an annual basis.
All eyes are now on Powell’s remarks later Friday at the annual symposium of top bankers and finance chiefs at Jackson Hole, Wyoming.
Most expect him to confirm that more hikes are on the way as officials try to bring inflation down from painful highs not seen in four decades.
– Choosing words carefully –
“I have no doubt Powell will have chosen his words very carefully today, all too aware of the consequences of even the smallest deviation in his intended message,” said OANDA trading platform analyst Craig Erlam.
“It’s a little ridiculous that markets put so much weight on such things but that is the situation we are in and I expect the Fed chair will be very clear in the message he wants to send.”
The key issue now is how much the bank will tighten its monetary policy over the coming months, with expectations for a half-point rate lift next month, after two three-quarter moves in June and July.
The July inflation report was “welcome news,” said analyst Patrick O’Hare at Briefing.com.
“But it is unlikely to dissuade the Fed — and Fed Chair Powell — from suggesting more rate hikes are needed and that interest rates will probably need to stay higher for longer to ensure success in an inflation battle that has gotten more challenging with structural changes, like de-globalisation, in the mix.”
Elsewhere, Asia was buoyed by signs of progress in talks between US and Chinese regulators that could see tech titans including Alibaba and JD.com avoid a delisting in New York.
More than 200 Chinese firms have for months had the threat of a New York delisting hanging over them as they are caught in a wide-ranging row between the world’s two biggest economies.
– Key figures at around 1330 GMT –
London – FTSE 100: UP less than 0.1 percent at 7,486.13 points
Frankfurt – DAX: DOWN less than 0.1 percent at 13,264.06
Paris – CAC 40: DOWN 0.2 percent at 6,372.15
EURO STOXX 50: FLAT at 3,674.03
New York – Dow: UP less than 0.1 percent at 33,310.04
Tokyo – Nikkei 225: UP 0.6 percent at 28,479.01 (close)
Hong Kong – Hang Seng Index: UP 3.6 percent at 19,968.38 (close)
Shanghai – Composite: UP 1.0 percent at 3,246.25 (close)
Euro/dollar: UP at $1.0058 from $0.9974 on Thursday
Pound/dollar: UP at $1.1869 from $1.1832
Euro/pound: UP at 84.75 pence from 84.31 pence
Dollar/yen: UP at 136.60 yen from 136.49 yen
West Texas Intermediate: DOWN 0.2 percent at $92.36 per barrel
Brent North Sea crude: DOWN less than 0.1 percent at $99.33
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