PARIS: Stock markets diverged Monday following last week’s strong performance, as traders await a meeting of central bankers that could give fresh signals about the US interest-rate outlook.
Positive data last week eased concerns about the health of the US economy after markets were hammered earlier this month due to recession fears and a Japanese interest-rate hike.
Traders are now turning their attention to the annual symposium of central bank chiefs later this week in Jackson Hole, Wyoming.
The highlight will be Friday’s speech by Federal Reserve chairman Jerome Powell, with investors hoping that he will flag an interest rate cut when Fed policymakers meet next month.
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“Investors and analysts alike will be paying close attention to any signals from Fed officials about the future direction of US interest rates,” said Luca Santos, currency analyst at ACY Securities.
“There’s growing speculation that… Powell might hint at the possibility of starting rate cuts as early as September. But the size of the cut is still up in the air.”
Santos said a “modest” cut of 0.25 percentage points seems likely while a larger 0.50-point reduction “would need stronger evidence of a weakening US job market”.
All three main indexes on Wall Street rose Friday, leaving them back near the record highs touched before their August 5 rout as investors grow confident the US economy will avoid recession as the Fed cuts rates.
Asian and European markets wavered after a positive start to Monday.
Hong Kong, Shanghai, Singapore, Sydney, Mumbai, Taipei, Manila and Bangkok rose, although Tokyo, Seoul, Jakarta and Wellington dipped.
Paris and Frankfurt were up around midday while London was slightly in the red.
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