Focus remains on the dovish remarks from Fed Chair at Jackson Hole.
by Andre Janse van Vuuren
Stocks declined as investors reduced risk ahead of the US inflation data scheduled for Friday, which could influence expectations regarding the Federal Reserve’s interest rate adjustments.
S&P 500 futures dropped by 0.3% after the index hit a new record high. Dell Technologies experienced a more than 5% slump in premarket trading following a drop in AI server sales. Nasdaq 100 contracts saw a 0.4% decrease, while European stocks fell by 0.5% amidst continuing political uncertainty in France.
Yield on longer-term US Treasuries rose, with 30-year notes increasing by three basis points to 4.90%. European bonds showed a milder decline following disappointing consumer price data from French and Spanish markets. The dollar remained relatively unchanged, poised to end its three-week streak of losses.
Jerome Powell’s cautious stance during Jackson Hole supported expectations for an initial rate cut next month; however, concerns persist about subsequent moves due to inflation remaining above desired levels. The anticipated inflation report for Friday is forecasted to show a 2.9% rise in core personal consumption expenditures for July.
Experts, including Ipek Ozkardeskaya from Swissquote Bank, suggest that with an increasing focus on weakening labor statistics, only a significant inflation surprise could alter expectations for a September cut. Nevertheless, inflation containment remains uncertain.
In commodities, oil prices declined after fading optimism regarding an end to the Ukraine conflict, thus limiting Russian supply access. Concerns about an impending oversupply along with geopolitical tensions contributed to Brent crude’s projected monthly loss.
