Daily summary: Global stocks waver as FED announces new approach to inflation

 

Mixed sentiment prevailed in the markets today as investors digested US Fed Chair Powell's address to Jackson Hole Symposium. Powell noted some downward risks regarding employment and inflation and announced a flexible form of average inflation targeting as a policy tool, but added that any inflation overshoot will be only moderate and not permanent.  In other words, the central bank will let inflation run “moderately” above its 2% goal for “some time.” Meanwhile, macro data showed the number of Americans which applied for unemployment benefits increased by 1.006 million slightly above analysts expectations of 1.0 million while continuing claims fell less than hoped. US GDP in the second quarter shrank by an annualized 31.7%, lower than a 32.9% fall expected by the markets. Pending home sales in July reached their highest level since 2005.  US indices rose after Chair Powell speech, with both S&P500 and Nasdaq hitting new all-time highs. However in the later part of the session US indexes gave up early gains mostly due to the poor performance of tech giants like Facebook, Amazon, Alphabet, Apple. S&P500 and Dow Jones are trading 0.20% and 0.70 %  higher respectively while Nasdaq is 0.37% lower. Major European indices finished today's session lower. DAX 30 fell 0.7%, CAC40 declined 0.7% and FTSE 100 finished 0.8% lower. 

Oil prices extended losses and fell about 2%, with WTI crude around $42.5 a barrel and Brent crude near $44.7 a barrel. Still oil is trading near the five month highs as Hurricane Laura made landfall in Louisiana and threatens oil production as oil rigs and refineries across Gulf Coast could be forced to shut down their operations.
Gold prices dropped over 1.8% to around $1,920 per troy ounce while silver prices fell more than 2.5% to around $26.9 an ounce as climbing yields on US government bonds and a steady dollar lowered demand for the precious metals. Yields on 10-year Treasury notes have increased to their highest level in over a month after Federal Reserve Chair Jerome Powell speech.