Global Stocks Drop as Jay Powell Keynote Speech in Focus

27 Aug 2021 · 3rd Party Analysis

Global Stocks Drop as Jay Powell Keynote Speech in Focus

WRITTEN BY ThorFX

In Summary

  • Equities slide globally while investors brace for volatility around Jerome Powell’s speech today
  • The Fed chairman is expected to reveal fresh insights into the Fed’s monetary policy

Shares around the world tumbled slightly on Thursday as traders and investors set their gaze on today’s speech from Federal Reserve chair Jerome Powell at the Jackson Hole symposium. While market participants expect to glean new insights from the Fed chief, some analysts say Mr. Powell is likely to give few clues on the potential timeline for tapering.

Thursday’s market performance was relatively subdued globally. Quiet trading in the US saw major averages dip into the red with the S&P500 and the Nasdaq Composite breaking a five-day winning streak. A day earlier, both major benchmarks had closed at all-time records.

The S&P500 slipped about 0.6% with the majority of its sectors in the red. The tech-driven Nasdaq Composite declined roughly 0.6% as tech giants weighed on the index. Shares of Tesla, Facebook, and Microsoft dropped by 1% or more, while Apple and Google parent Alphabet slipped by half a percent apiece. The Dow Jones Industrial Average lost around 0.5% or nearly 200 points.

European markets were also under pressure on Thursday. Major bourses across the old continent fell between 0.1% and 1%. The pan-continental Stoxx Europe 600 dropped 0.3%. The biggest decliner among indexes of individual economies, the French CAC40, erased nearly 1% from its valuation. The global stock market gauge, the FTSE All-World index turned lower by 0.5% on the day.

Markets Trade Fairly Steadily

Financial markets were fairly steady early Friday as trading was getting up to speed. European indexes hovered around the flat line, while US stock futures were higher ahead of the opening bell in New York.

Central bankers around the world who were supposed to be gathered in Jackson Hole, Wyoming, have convened virtually for the most prominent Federal Reserve event of the year, the Jackson Hole symposium.

The summit’s agenda today will include a headline speech by Federal Reserve chair Jerome Powell. Slated for 10 am Eastern time, Mr. Powell remarks will kick off this year’s theme “Macroeconomic Policy in an Uneven Economy”.

The highly-anticipated comments by the Fed chair are expected to hold at least similar importance as his address at the same event a year ago. As central bank officials last year gathered online for the first time for the annual economic policy conference, Jerome Powell unveiled a new policy approach by the Fed that would aim to keep interest rates lower for longer to prevent inflation expectations from slipping too low.

This year, the Federal Reserve is faced with the challenge of surging inflation, supply-chain disruptions, uneven activity across business sectors, and an economy that is flashing slow-down signals. Mr. Powell’s speech, to be streamed online, is expected to address the major issues that threaten to dent or even derail the expansion of the world’s biggest economy.

In other news, the prices of gold have accelerated overnight to float around the $1,800 mark. Bitcoin and other digital assets continue to trade subdued after the crypto market slipped in the second half of the week. The leading crypto token is gravitating slightly above $47,000 per coin. Ether, the second-largest virtual coin by market cap, is little changed on the day, changing hands at levels near $3,100 per token.

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