Hong Kong (AFP) – Stocks mostly rose Friday ahead of a closely watched speech by Federal Reserve boss Kevin Warsh that investors will be parsing for clues about the outlook for interest rates amid elevated inflation and no sign of an end to the Middle East crisis. With the euphoria following Nvidia’s blistering earnings report petering out, the attention is back on the economy as debate surrounds if or when the US central bank will tighten monetary policy.
Last month’s Fed meeting saw policymakers keep borrowing costs on hold but with three of them dissenting in favour of a hike, and while the latest figures showed inflation easing slightly, it remains well above the two percent target. Worries that price rises will remain elevated for some time — fuelled largely by a spike in energy costs caused by the Iran war — have put upward pressure on long-term Treasury yields, making government borrowing increasingly expensive. Traders are hoping Warsh’s speech at the annual meeting of central bankers and economic leaders at Jackson Hole, Wyoming, will give them an insight into decision-makers’ thinking.
However, his last major public appearance after the July meeting was widely panned as giving an ambiguous message, and analysts warn that his refusal to give forward guidance will likely mean investors are left disappointed. Stephen Innes at Quintex Intel said Friday’s address — Warsh’s first at Jackson Hole since taking the helm at the Fed — would be “the most consequential central bank speech left this year.” It comes almost three weeks before the next policy announcement.
“Recent data have reduced the immediate need for tighter policy, giving Warsh room to re-establish the Fed’s inflation-fighting message without signalling imminent action,” Innes wrote. “The speech arrives against a difficult policy backdrop. Inflation remains above target for a sixth consecutive year, while Fed officials have begun debating whether tighter policy may still be required.”
Equity markets largely advanced Friday, with tech firms struggling to extend Thursday’s rally that came on the back of Nvidia’s profit blowout and bumper forecast, which soothed worries over the AI boom. Tokyo, Hong Kong, Sydney, Singapore, Jakarta, Taipei, and Mumbai all rose, though Seoul retreated along with Shanghai, Wellington, Bangkok, and Manila. London, Paris, and Frankfurt all rose. Wall Street had provided a positive lead, with all three main indexes rising, though the gains were based entirely on the tech sector, which was the only one of 11 to advance.
Oil prices edged down but remain in danger of spiking further as investors await a breakthrough in efforts to reopen the Strait of Hormuz to tanker and cargo traffic. US officials have vowed further economic pressure to make Iran open the waterway — through which about a fifth of world oil passes — after six months of war, but attempts at a diplomatic solution remain elusive.
– Key figures at around 0810 GMT –
Tokyo – Nikkei 225: UP 0.4 percent at 66,405.56 (close)
Hong Kong – Hang Seng Index: UP 0.1 percent at 25,584.79 (close)
Shanghai – Composite: DOWN 0.1 percent at 3,952.18 (close)
London – FTSE 100: UP 0.2 percent at 10,817.53
Dollar/yen: UP at 159.49 yen from 159.41 yen on Thursday
Euro/dollar: DOWN at $1.1644 from $1.1649
Pound/dollar: UP at $1.3588 from $1.3586
Euro/pound: DOWN at 85.70 pence from 85.74 pence
West Texas Intermediate: DOWN 0.9 percent at $82.79 per barrel
Brent North Sea Crude: DOWN 0.8 percent at $88.95 per barrel
© 2024 AFP
