Focus on the Fed as tariffs talks disappoint
U.S. equity-index futures rose alongside stocks in Europe following a mixed session in Asia after trade negotiations with China drew a blank. Oil and most commodities rallied as the dollar slipped with Treasuries before an address from Federal Reserve Chairman Jerome Powell on Friday night.
Energy majors led the advance in the Stoxx Europe 600 Index as crude gained along with industrial metals. The Stoxx Europe 600 Index gained 0.2%, as the The MSCI All-Country World Index advanced 0.1%. In the United Kingdom the FTSE 100 Index increased 0.2%, with the Germany’s DAX Index also climbing 0.2% percent to the highest level in two weeks.
Futures on the Dow, S&P 500 and Nasdaq indexes climbed while China and Hong Kong equities underperformed as trade talks wound up with no major progress. Shares in Japan and South Korea rose. Treasuries edged lower with the greenback as investors awaited Powell’s scheduled comments at the Jackson Hole retreat later Friday.
The euro gained 0.5% tp $1.1594 after data confirmed solid growth in Germany, the region’s biggest economy. The British pound also climbed 0.3, but the Japanese yen fell less than 0.05% to 111.32 per dollar, the weakest in more than two weeks.
Investors hoping for a globaltrade resolution were left disappointed after the U.S. talks with China ended with an increased likelihood that tit-for-tat tariffs will escalate, casting a shadow over the global-growth outlook. The focus now shifts back to Fed policy, with bond traders clinging to bets for two rate hikes by year-end as they brave turmoil in emerging markets, continuing trade tensions and a U.S. president who openly pushed policy ideas on the central bank days before Powell speaks. The yield on 10-year Treasuries increased one basis point to 2.83%, as Germany’s 10-year yield climbed less than one basis point to 0.34%. Britain’s 10year yield gained one basis point to 1.27% but Italian bonds fell on concern the government will flout European Union spending rules as it pursues a populist agenda.
The West Texas Intermediate crude increased 1.2% to $68.67 a barrel, the highest in more than three weeks. As in other commodities gold advanced 0.6% to $1,192.24 an ounce, the largest gain in a week, whilst copper climbed 0.7% to $2.70 a pound.