By Joyce Yu
Market movements were mainly small ahead of speeches later by Federal Reserve and European Central Bank heads Janet Yellen and Mario Draghi at the annual meeting of central bankers. U.S. stocks were holding steady at open this morning.
Wall Street futures rose after President Donald Trump’s top economic adviser Gary Cohn said he expected a U.S. tax reform to pass through Congress this year.
“Our current assessment of the overall risk and reward picture keeps us overweight global equities in our tactical asset allocation,” UBS Wealth Management chief investment officer, Mark Haefele, said in a monthly note.
He added, “Earnings and economic growth are strong enough, and central bank policy is still sufficiently loose to suggest that, in the absence of a shock, markets are likely to trend higher over the next six months.”
While the markets don’t expect any new policy messages from today’s speeches, investors are looking for clues on the timing of tapering.
“Will financial-stability concerns prompt the Fed to hike, even when inflation is so low? This is what the market wants to know,” John Cairns, a strategist at Rand Merchant Bank in Johannesburg, wrote in a client note. “With little else to focus on, the market has morphed the symposium into a colossus. Risks are two-way: Yellen could take the hike off the table, or reaffirm it.”
“The markets have become relatively complacent about Jackson Hole and the two big guns, Yellen and Draghi, speaking on Friday; not many expect market-moving headlines,” Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management, told the Financial Times.
“We expect potential for surprise from Yellen, as she might refer to the loose financial conditions. The market would take this as a signal that they are currently under-pricing the probabilities of a December rate hike. This would push up short-term US interest rates and the dollar: both would counter the recent trend and would squeeze current market positioning.”
European markets drifted up in early trading. Most Asian markets posted gains overnight, with Chinese indexes jumping by more than 1%.
On Thursday, the Dow Jones industrial average, S&P 500 and Nasdaq all dropped by 0.1% to 0.2%.
Amazon took center stage after the company announced on Thursday that its takeover of Whole Foods will close on Monday. It said its first order of business will be to slash prices for some groceries such as organic avocados, organic brown eggs, almond butter and organic rotisserie chicken.
Shares in Kroger and Sprouts Farmers Market and other competing grocery chains dropped following the announcement.
