Wall Street Set for More Records as Powell's Rate Comments Lift Global Stocks
Frankkfurt (Aug 27) Global stocks traded firmer Monday, with shares in Asia hitting a multi-week high and Europe posting solid gains in holiday-thinned dealing, as investors reacted to a dovish outlook on U.S. rate increases last week from Federal Reserve Chairman Jerome Powell that clipped gains for the dollar and eased pressure on emerging markets.
Powell's speech to the annual symposium of central bankers and finance ministers in Jackson Hole, Wy. last week, alongside a view from St. Louis Fed President James Bullard that rate hikes be paused as the impact from Republican-led tax cuts fades into the early part of next year, allowed the U.S. dollar index to slip from a near one-year high to around 95.13 against a basket of six global currencies Monday, as investors moved cash out of the greenback.
"The economy is strong. Inflation is near our 2 percent objective, and most people who want a job are finding one," Powell said. "If the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate."
Early indications from U.S. equity futures suggest the potential for another record-setting session on Wall Street, with contracts tied to the S&P 500 indicating a 8.4 point advance for the broadest measure of American stocks at the opening bell, following on from the all-time peak recorded Friday, while those linked to the Dow Jones Industrial Average looked for a 75 point bump at the start of trading for the 30-stock average.
Tesla (TSLA) shares were indicated sharply lower again Monday in pre-market trading after founder and CEO Elon Musk said late Friday that he was abandoning plans to take his company private following consultations with major investors.
Tesla shares were seen 4.38% lower in pre-market trading, indicating an opening bell price of $308.68, a move that would lop around 19.2% from the carmaker's shares since Musk Tweeted his infamous "taking Tesla private" message on August 7.
Benchmark 10-year U.S. Treasury bond yields drifted lower, as well, in the wake of the dollar's overnight pullback and were marked at 2.815% during the Asian trading session.
The currency moves allowed stocks in Asia to trade at their highest levels in more than two months, with the MSCI Asia ex-Japan index rising 1.13% by the close of trading and Japan's Nikkei 225 hitting a 10-week high of 22,799.64 points after rising 0.9% on the session as the yen slipped to 111.15 against the dollar amid the "risk on" trade that colored the the day's trading.
European stocks got off to a solid start, as well, thanks in part to a stronger-than-expected reading of German business morale from the closely-watched Ifo Institute's business sentiment index, which rose for the first time this year in August to 108.3, with the Institute's president, Clemens Fuest, citing a "truce in the trade conflict with the U.S." which he said "contributed to improved business confidence".
Germany's DAX performance index was marked 0.43% higher by mid-morning in Frankfurt, with similar percentage gains recorded around the region, while the Stoxx 600 gained 0.28%, although volumes were thin owing to a national holiday in the United Kingdom which kept London-based banks -- and the FTSE 100 -- closed for the day.
Global oil prices were modestly softer in early New York trading amid continued concern that the ongoing U.S.-China trade dispute will crimp demand from the world's biggest energy consumer even as the level of U.S. crude inventories -- as well as the number of drilling installations in the Gulf of Mexico -- unexpectedly declined last week.
Brent crude contracts for November delivery, the global benchmark, were seen 16 cents lower from their Friday close and changing hands at $75.97 per barrel, while WTI contracts for October delivery, were are more closing linked to U.S. gas prices, were little-changed at $68.48 per barrel.
TheStreet
