FTSE 100 and European stocks higher ahead of Jackson Hole

The FTSE 100 made a positive start to trading on Thursday. Photo: Eddie Keogh/Reuters

The FTSE 100 and European stocks are off to a good start as investors await the US Federal Reserve’s annual Jackson Hole conference for clues on how steep future interest rate hikes might be.

The FTSE 100 (^FTSE) rose 0.5% to 7,408 at the opening, while the CAC (^FCHI) in Paris advanced 0.68% to 6,430 points. In Germany, the DAX (^GDAXI) gained 0.82% to 13,238.

London’s blue-chip index has pushed higher at the open, offering some relief after posting its third consecutive day of losses.

The FTSE 100 was being driven by gains in oil index heavyweights, with BP (BP.L) up 1.57% and Shell (SHEL.L) 1.31%.

Richard Hunter, head of markets at Interactive Investor, said: “The FTSE 100 opened firmly, erasing losses from the previous session, and despite the headwind of seven stocks being marked ex-dividend.”

“In early exchanges, the oil majors gained some inevitable support after the oil price rise, while more broadly mining stocks made ground after some more recent pressure.”

“The broad based nature of the early gains is more suggestive of bargain hunting rather than a return to risk-on sentiment, with the end of the week announcements more likely to be the main drivers of near-term sentiment.”

But despite some economic data coming out this Thursday in Europe and the US, all eyes will be on the Jackson Hole Symposium that kicks off later today.

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Michael Hewson chief market analyst at CMC Markets UK said “The Jackson Hole Symposium gets underway today with the main focus expected to be on Federal Reserve chairman Jay Powell’s speech which markets have become increasingly nervous about over the past few days, and which has seen bond yields move sharply higher in the expectation he will deliver a hawkish message.”

“The symposium will be closely scrutinised for evidence of the Federal Reserve’s intent with respect to its September meeting, 50bps or 75bps, as well as the intent of other central banks more broadly at a time when inflation expectations are surging against a backdrop of concern over the risks of overtightening monetary policy at a time, when the challenges facing the global economy are numerous” Hewson added.

Meanwhile, Brent crude (BZ=F) is still at the $100/barrel mark, with prices driven by mounting supply tightness concerns amid disruptions to Russian exports, the potential for major producers to cut output, and the partial shutdown of a US refinery.

“Equities markets at the moment see bad news about the economy as being essentially good news because to them it means that the Fed might not tighten as much as thought,” said Rob Subbaraman, Nomura’s head of global macro research.

“But equities markets could have to reassess that after Jackson Hole.”

S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the green as trade began in Europe.

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In Asia, Tokyo’s Nikkei 225 (^N225) climbed 0.58% to finish at 28,479 while the Hang Seng (^HSI) in Hong Kong gained 2.77% to 19,802. The Shanghai Composite (000001.SS) also finished in positive territory, rising 0.91% to close at 3,244 points.

On Wall Street, the Dow Jones (^DJI) went up 0.18% to close Wednesday at 32,969. The S&P 500 (^GSPC) rose 0.29% to 4,140 points and the tech-heavy Nasdaq (^IXIC) climbed 0.41% to 12,381.

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