Stocks are broadly flat as traders await a key speech from Federal Reserve chair Jerome Powell at the annual Jackson Hole symposium that could shed light on the future direction of monetary policy.
Powell’s past speeches at the event have often moved markets, and his remarks this weekend face particularly close scrutiny as his position comes under heavy criticism from US President Donald Trump, sparking concerns about potential threats to the Fed’s independence.
A surge in US producer prices in July has caused investors to pare bets on Fed rate cuts, with futures markets now pricing a 66 per cent chance of a 25 basis point cut at its next meeting in September, down from an 85 per cent chance just a week ago.
Other Fed speakers at the Jackson Hole event have also appeared lukewarm on the idea of a September cut, despite recent signs of weakness in the US labour market.
A cautious tone from Powell on prospects for a September cut deferring to forthcoming jobs and inflation data could be enough to pare market pricing to a 50-50 call, said Nabil Milali, portfolio manager at Edmond de Rothschild Asset Management.
Powell may also choose to defend the Fed’s independence, Milali said.
“We think that the unofficial theme of this meeting would be central banks’ independence,” he said.
MSCI’s broadest index of global stocks was broadly flat on Friday after European stocks edged higher in morning trading.
Wall Street futures were up 0.1 per cent to 0.2 per cent.
China’s CSI 300 Index gained 2.1 per cent, after DeepSeek released an upgrade to its flagship V3 AI model and Reuters reported that Nvidia had asked Foxconn to suspend work on the H20 AI chip, lending support to Chinese rivals.
The dollar index, which measures the greenback against six peers, edged 0.1 per cent higher, while the euro slipped 0.1 per cent to $US1.15985 after a revision to official data showed Germany’s economy shrank by 0.3 per cent in the second quarter.
Japanese data showed core consumer prices slowed for a second straight month in July but stayed above the central bank’s two per cent target, keeping alive expectations for a rate hike in the coming months.
That did little to help the yen, though, which was poised for a one per cent decline for the week. BOJ governor Kazuo Ueda will also speak at Jackson Hole.
Oil prices slipped, with Brent crude last trading down 0.2 per cent at $US67.5 a barrel, following strong gains on Thursday as Russia and Ukraine blamed each other for a stalled peace process.
Gold edged lower, with spot bullion off 0.2 per cent at $US3,330.9 per ounce.
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