FTSE 100 closes higher and Wall Street rises as investors turn focus to Jackson Hole

·Finance Reporter, Yahoo Finance UK
·3-min read
Federal Reserve chair Jerome Powell and New York Federal Reserve president John Williams walk together in Jackson Hole, Wyoming, in 2019. Photo: Ann Saphir/Reuters
Federal Reserve chair Jerome Powell and New York Federal Reserve president John Williams walk together in Jackson Hole, Wyoming, US, in 2019. Photo: Ann Saphir/Reuters

The FTSE 100 rallied as investors await the US Federal Reserve's annual Jackson Hole Symposium for clues on how steep future interest rate hikes might be.

The FTSE 100 (^FTSE) closed in positive territory, climbing 0.16% to 7,483, while the CAC (^FCHI) in Paris was muted. In Germany, the DAX (^GDAXI) was up 0.33% as markets closed across Europe.

On Wall Street, the Dow Jones (^DJI) was treading water but the S&P 500 (^GSPC) was up 0.57% to 4,164 points and the tech-heavy Nasdaq (^IXIC) climbed 0.77% to 12,527.

Chair Jerome Powell's speech due on Friday will be scrutinised for any indication that an economic slowdown might alter the Fed's strategy and if the central bank can achieve a "soft landing" for the economy.

London’s blue-chip index was being driven by gains in oil index heavyweights, with BP (BP.L) up 1.58%% and Shell (SHEL.L) 1.13% after oil prices rose on the prospect of tighter supplies.

Richard Hunter, head of markets at Interactive Investor, said: “The FTSE 100 opened firmly, erasing losses from the previous session, and despite the headwind of seven stocks being marked ex-dividend.”

“In early exchanges, the oil majors gained some inevitable support after the oil price rise, while more broadly mining stocks made ground after some more recent pressure.”

“The broad based nature of the early gains is more suggestive of bargain hunting rather than a return to risk-on sentiment, with the end of the week announcements more likely to be the main drivers of near-term sentiment.”

Building materials firm CRH (CRH.L) was the biggest riser, up 3.16% after it reported strong first-half results.

But despite some economic data coming out this Thursday in Europe and the US, all eyes will be on the Jackson Hole Symposium that kicks off later today.

Read more: Energy companies drive global dividend payments to record high

"Jerome Powell, the Fed chair, will deliver his speech tomorrow and traders will be listening out for clues as to whether the bank will lift rates by 50-basis points or 75-basis points in September? Patrick Harker, Fed member, said he is undecided on a 0.5% or a 0.75% hike," David Madden, market analyst at Equiti, said.

"The central banker confirmed he is not in favour of hiking rates aggressively, only to bring them right back down. This suggests that he would prefer a more measured approach to tackling inflation, and therefore could be interpreted as a little less hawkish," he added.

Meanwhile, Brent crude (BZ=F) is still at the $100/barrel mark, with prices driven by mounting supply tightness concerns amid disruptions to Russian exports, the potential for major producers to cut output, and the partial shutdown of a US refinery.

"Equities markets at the moment see bad news about the economy as being essentially good news because to them it means that the Fed might not tighten as much as thought," said Rob Subbaraman, Nomura's head of global macro research.

"But equities markets could have to reassess that after Jackson Hole."

Read more: Bitcoin trades sideways as investors anticipate Fed move

In Asia, Tokyo’s Nikkei 225 (^N225) climbed 0.58% to finish at 28,479 while the Hang Seng (^HSI) in Hong Kong gained 2.77% to 19,802. The Shanghai Composite (000001.SS) also finished in positive territory, rising 0.91% to close at 3,244 points.

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