Markets Pull Back on Interest Rate Fears and Bank Downgrades
US markets dropped back down in trading yesterday as once again interest rate fears dominated investor thinking. Investors are looking for clarity on where the US is going with interest rates, and it looks like it’s going to be a long wait until the end of the week when we hear from the Fed Chair at Jackson Hole. The Dow slid 0.51%, the S&P 0.28% and the Nasdaq finished just above flat despite another big day for Nvidia share volatility ahead of its earning data tomorrow. US treasury yields remained high, and the day saw a pullback for the dollar on most of the majors although it remains at elevated levels.
Jackson Hole in Focus for Investors
It has been a nervous week for global markets so far and investor focus is firmly placed on the Kansas City Fed’s annual Economic Symposium in Jackson Hole at the end of the week. The last few weeks have seen a dramatic turn in Fed expectations about rate rises and probably more importantly the length of time that rates are expected to remain elevated. Stock markets have been powering ahead all year on expectations that the Fed has hit a peak but it seems for some that reality is starting to kick in now concerns are accelerating that the market has got well ahead of itself. Jackson Hole has been used in the past to set longer-term Fed expectations and this year’s anticipation seems to be than even. Expect volatility to increase further around this event whilst the markets are open on Friday and for possible gapping on Monday’s opens.
Busiest Calendar Day of the Week
It is set to be the busiest day of the week in terms of data releases. We have already seen New Zealand Retail Sales numbers disappoint early in the day today and traders are poised for a raft of Flash Manufacturing and Service PMI data releases across the trading sessions ahead. Updates come from Australia, the UK, France, Germany and finally the US in the final session of the day. On top of this, we have what is now a key earnings report from market darling Nvidia coming after the New York close – given the moves, we have seen in the last couple of days in this stock and its effect on overall indices, expect the result to set the early tone for Thursday’s trading day.
