Markets hold fire ahead of Draghi and Yellen Jackson Hole speeches

News on US rate hike central keenly awaited

Mario Draghi, president of the European Central Bank: to address the Jackson Hole gathering

Mario Draghi, president of the European Central Bank: to address the Jackson Hole gathering

 

Markets are adopting a wait-and-see attitude on Friday ahead of speeches from central bankers in Jackson Hole, Wyoming, including addresses by the Federal Reserve’s Janet Yellen and European Central Bank president Mario Draghi.

European markets have opened mixed, with the Ftse 100 up 0.1 per cent, the Xetra Dax down 0.3 per cent and the Stoxx 600 flat.

The euro is holding against sterling at just above the 92p level, a devaluation for the pound that has sparked debate in Britain about the possibility of the two currencies reaching parity.

“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,” says Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management.

“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 underpricing 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 and Asia Pacific investors are taking their cues from Wall Street, keeping their powder dry ahead of the meeting in Jackson Hole later.

– Copyright The Financial Times Limited 2017