Stocks, futures steady on dovish Powell stance

Bloomberg

Stocks in Europe and US futures were steady on Monday, bolstered by Jerome Powell’s signal that pandemic-era Federal Reserve policy support will be withdrawn cautiously and gradually.
Contracts on the S&P 500 were little changed and those on Nasdaq 100 edged higher after a record Wall Street close in the wake of Chair Powell’s Jackson Hole speech, while the Stoxx Europe 600 index hovered close to an all-time high. Powell said the Fed may start paring bond purchases this year but is in no hurry to raise interest rates and will be guided by data on Covid-19 risks.
The dollar was steady against a basket of peers after last week’s drop, the biggest since May. The 10-year Treasury yield held at around 1.3%, with no cash trading taking place in London as markets are closed for a public holiday. Traders are awaiting US jobs data this week to assess whether the economic recovery merits an earlier tapering, after Powell gave no timeline for scaling back stimulus. Strong figures could extend the first weekly steepening of the Treasury yield curve since July.
In Asia, Japan led gains and Chinese technology stocks advanced on bargain-hunting in the beaten-down sector. The focus in China remains on Beijing’s regulatory broadside against private industries. A commentary in Chinese state-run media described President Xi Jinping’s crackdown as a “profound revolution” sweeping the country and warned that anyone who resisted would face punishment.
Central banks are seeking to reduce monetary policy support in part to keep a lid on inflation, while at the same time nurturing economic recoveries facing challenges from the delta virus strain. Global shares are at all-time highs, suggesting markets expect officials can achieve this delicate balancing act.
“There is little doubt Powell was dovish, relative to market pricing and positioning,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note. Weston remains “positive on risk for now” but added a slowing global economy allied with Fed policy normalisation remains a threat.
Commodity markets are focused on Hurricane Ida. US gasoline futures jumped after the storm barreled ashore in Louisiana, disrupting energy supplies. Oil edged lower as it appeared local rigs may have escaped significant damage and the Opec+ producers’ cartel is expected to endorse a supply increase. Elsewhere, gold pared gains and Bitcoin fluctuated around $48,000.
The Stoxx Europe 600 rises 0.1% as of 9:43 am London time and futures on the S&P 500 were little changed.
While futures on the Nasdaq 100 climb 0.1%, futures on the Dow Jones Industrial Average were little changed.
The MSCI Asia Pacific Index rises 1% and the MSCI Emerging Markets Index also climbs by 1%.
The Bloomberg Dollar Spot Index was little changed and the euro was little changed at $1.1798.
While the Japanese yen was little changed at 109.85 per dollar, the offshore yuan was little changed at 6.4644 per dollar and the British pound was little changed at $1.3761.