Global stock markets rose on Thursday as investors geared up for a flood of headlines from the central bank summit in Jackson Hole.
The European region’s Stox 600 rose 0.3% in afternoon trading, while futures contracts tracking Wall Street’s S&P 500 gauge and tech-focused Nasdaq 100 rose 0.6% and 0.8%, respectively.
Traders were gearing up for the start of the conference in Jackson Hole, Wyoming, on Thursday. There, central bankers, including US Federal Reserve Chairman Jay Powell, discuss global economic challenges.
Hosted by the Kansas City Chapter of the Federal Reserve, the event is watched by investors looking for signals on the future direction and pace of monetary policy.
Market pricing shows investors expect the Fed to raise interest rates to 3.7% by February 2023. The central bank’s current target range is 2.25% to 2.50%.
Chairman Powell acknowledged the weakening of the growth cycle . . . Joseph Little, global chief strategist at HSBC Asset Management said: It means that it is right to factor in an early pivot in 2018 and turn short-term rate expectations toward a ‘up and wait and see’ approach.
European bond markets recouped losses ahead of central banks’ monetary policy speeches, with Bank of England Governor Andrew Bailey and European Central Bank Governor Isabel Schnabel also scheduled to speak at Jackson Hole.
Sensitive to changes in interest rate expectations, UK 2-year yields fell 0.1 points to 2.8%, while Italian 2-year yields fell 0.16 points to trade at 1.76%. Yields on bonds fall when prices rise.
This came after short-term securities were sold on Wednesday as investors grew concerned that the Bank of England and the European Central Bank would raise interest rates more aggressively to curb inflation.
The benchmark 10-year Treasury yield fell 0.01 points to 3.10%.
The recent bond volatility comes at a time when the summer holidays and heightened economic uncertainty have reduced liquidity in European bond markets.
Asian stock markets rose early Thursday, with Hong Kong’s Hang Seng gaining 3.6% and mainland China’s CSI 300 gauge gaining 0.8%, after China announced its stimulus package.
China’s State Council and Cabinet announced Wednesday that it would add 300 billion yuan ($44 billion) to policy bank credit support.
In currency markets, the dollar fell 0.2% against a basket of six currencies. The euro plunged to $0.997 after temporarily surpassing its parity with the dollar, he rose 0.1% in a day.