BEIJING, Aug 21: Global stocks were higher Monday as traders looked ahead to the Federal Reserve’s summer conference for signs of whether the US central bank thinks inflation is under control or more interest rate hikes are needed to cool inflation.
London, Tokyo, Paris and Wall Street futures advanced. Shanghai declined. Oil prices rose.
Wall Street’s benchmark S&P 500 index declined Friday ahead of this week’s closely watched Jackson Hole, Wyoming, conference. Fed officials have used the event in previous years to indicate changes in policy direction.
There “may be rude hawkish surprises” for investors who assume rate hikes are finished, said Tan Boon Heng of Mizuho Bank in a report. Chair Jerome Powell “may allude to structurally higher (and potentially more volatile) inflation being the new norm.”
In early trading, the FTSE 100 in London rose 0.3 per cent to 7,281.64. The CAC 40 in Paris gained 1 per cent to 7,237.32 and the DAX in Frankfurt advanced 0.6 per cent to 15,672.15.
On Wall Street, the S&P 500 future was up 0.3 per cent and that for the Dow Jones Industrial Average was 0.2 per cent higher.
On Friday, the S&P declined 0.1 per cent. The Dow added 0.1 per cent while the Nasdaq composite slipped 0.2 per cent.
In Asia, the Shanghai Composite Index lost 1.2 per cent to 3,092.97 while the Nikkei 225 in Tokyo advanced 0.4 per cent to 31,565.64. The Hang Seng in Hong Kong lost 1.8 per cent to 17,623.29.
The Kospi in Seoul gained 0.2 per cent to 2,508.80 while Sydney’s S&P-ASX 200 shed 0.5 per cent to 7,115.50.
India’s Sensex gained 0.5 per cent to 65,300.30. New Zealand and Singapore retreated while Bangkok and Jakarta gained.
The S&P 500 soared in the first seven months of 2023 but has given back more than one-quarter of that gain after critics warned the market embraced the notion too early that inflation was under control and rate hikes were finished.
Some investors are shifting money to bonds as higher interest rates make their payout bigger and less risky.
Microsoft slipped 0.1 per cent Friday. Alphabet dropped 1.9 per cent and Tesla sank 1.7 per cent.
Tech and other high-growth stocks are seen as some of the biggest losers due to higher rates. Several are down more than 10 per cent from this year’s highs.
Data indicating US consumer spending and hiring are unexpectedly strong have fueled expectations the Fed might feel pressure to keep its benchmark lending rate higher for longer.
Inflation has declined from its peak above 9 per cent last year but still is above the Fed’s 2 per cent target. Consumer prices rose 3.2 per cent in July over a year earlier, up from the previous month’s 3 per cent increase.
Economists say the last stage of getting inflation down to the Fed’s target may prove the most difficult.
In energy markets, benchmark US crude gained 62 cents to USD 81.28 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, advanced 68 cents to USD 85.48 per barrel in London.
The dollar edged up to 145.58 yen from Friday’s 145.32 yen. The euro rose to USD 1.0883 from USD 1.0878. (AP)