Global stocks saw an upward trend on Monday as traders focused on the Federal Reserve’s summer conference for signals regarding the control of inflation and potential interest rate hikes to counter inflationary pressures.
Markets in London, Tokyo, Paris, and Wall Street futures all advanced, while Shanghai experienced a decline. Oil prices also rose.
Wall street’s S&P 500 dips ahead of key fed conference, global markets watchful
Last week, Wall Street’s S&P 500 index faced a decline ahead of the highly anticipated Jackson Hole conference in Wyoming, an event where the Fed historically hints at policy shifts.
There are concerns among investors that there might be “rude hawkish surprises” if rate hikes are believed to be completed, as suggested by Tan Boon Heng of Mizuho Bank.
The possibility of structurally higher and more volatile inflation becoming the new norm could be alluded to by Fed Chair Jerome Powell.
In London, the FTSE 100 gained 0.3%, the CAC 40 in Paris rose 1%, and Frankfurt’s DAX advanced 0.6%. On Wall Street, S&P 500 futures were up 0.3%, and Dow Jones Industrial Average futures gained 0.2%.
In Asia, the Shanghai Composite Index lost 1.2%, the Nikkei 225 in Tokyo rose 0.4%, and the Hang Seng in Hong Kong declined by 1.8%. Seoul’s Kospi gained 0.2%, while Sydney’s S&P-ASX 200 dropped 0.5%.
Higher interest rates prompted shifts in investor behavior, with some moving funds to bonds for potentially larger and less risky payouts.
Tech and high-growth stocks, seen as vulnerable to higher rates, faced declines, with several dropping more than 10% from their 2023 highs.
Amid indications of stronger U.S. consumer spending and employment, expectations arise that the Fed might prolong its higher benchmark lending rate to manage inflation.
While inflation has declined from its peak in the previous year, it remains above the Fed’s 2% target, with a year-on-year increase of 3.2% in consumer prices for July.
In the energy sector, U.S. crude gained 62 cents to reach $81.28 per barrel, and Brent crude, the international oil trading benchmark, rose 68 cents to $85.48 per barrel in London.
The dollar saw a minor increase against the yen and the euro, moving to 145.58 yen and $1.0883, respectively.
