Stock

Shares secure as Jackson Gap wards warning

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© Reuters. FILE PHOTO: An investor looks at an electronic board with stock information at a brokerage house in Beijing, Aug 27, 2015. REUTERS / Jason Lee

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By Tom Arnold and Alun John

LONDON / HONG KONG (Reuters) – Global stocks held near record highs on Friday as investors caught their breath ahead of an eagerly awaited speech by the US Federal Reserve chief that may provide clues as to when the central bank will scale back its bond purchases program .

Europe's pan-European index was last unchanged after MSCI's broadest index for Asia-Pacific stocks outside Japan rose 0.17%, crowning its best week since February, when Chinese markets hailed central banks' liquidity surge.

While MSCI's global stock index was flat, US stock futures rose 0.3%, suggesting renewed optimism after sentiment was clouded by a deadly attack in Afghanistan on Thursday and after more restrictive Federal Reserve policymakers had pushed for an end to the stimulation.

But the moves were small as many traders kept their powder dry ahead of the week's most important market event: Fed chief Jerome Powell's speech at 1400 GMT at the Kansas City Fed's central bank conference, usually held in Jackson Hole, Wyoming, which used has been used by the bank in the past to provide guidance for future policy.

"At this point it is evident that there is an increasing tendency for the committee to reduce asset purchases," said James Athey, investment director at Aberdeen Standard Investments.

"Powell will likely have to acknowledge this reality without committing to details before those details are agreed among the voting members of the committee."

Given a number of investor expectations ahead of the speech, it is likely that market moves will occur regardless of where Powell's words fall on the "hawk / dove spectrum," Athey said.

And the potential for investor disappointment is high.

RBC analysts said in a note that while waiting for much of the summer for the event, "there has been skepticism that the Fed will provide more specific information on a schedule … amid a surge in Delta variant COVID cases".

Leading up to the speech, public statements by the Fed's more restrictive speakers on Thursday, urging the central bank to begin reducing bond purchases, weighed on Wall Street, which closed slightly lower and ended a series of all-time highs.

On Friday, the largest weekly cash injection by the Chinese central bank into the banking system since February caused early market cheers.

Chinese blue chips rose 0.45%, a reversal of recent weeks as mainland stocks weighed on the region, while Hong Kong's benchmark rose 0.15%.

The recent regulatory raids have rocked sectors from real estate to technology, wiping half a trillion dollars off China's markets in the last week alone.

"A shares (Chinese onshore stocks) and Hong Kong are on hold after some pretty extreme moves in the past two weeks," said Qi Wang, CEO of MegaTrust Investment (HK).

"Investors struggle with regulatory risk versus still strong profits."

But it was the anticipation of Powell's speech that dampened market excitement around the world.

There was little movement in dollar and US yields.

The benchmark return was 1.3441% after a two-week high of 1.375% the previous day, but little changed from the US closing price.

Gold rose 0.3% to $ 1,797.40 an ounce as some investors looked for safety ahead of the speech. (GOL /)

rose 1.7% to $ 68.58 a barrel, rose 1.5% to $ 72.12 a barrel as energy companies began halting production in the Gulf of Mexico ahead of a possible hurricane this weekend. (OR)

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