US stocks continue to drop ahead of Fed Chair Powell’s speech at Jackson Hole. The US dollar rises as Asian markets show resilience.
US stocks wobbled, Asia recovered, US dollar rose ahead of Powell’s Jackson Hole speech
Yesterday, the US stock market continued its week-long descent ahead of today’s key risk event, the US Federal Reserve Chair Powell’s speech at the annual Jackson Hole Symposium. The S&P 500 and Nasdaq 100 dropped by -0.4% and -0.5% respectively, as mega-cap technology stocks remained soft with higher losses seen in Meta Platforms (-1.1%), and Amazon (-0.8%).
Even the Dow Jones Industrial Average was not spared after its prior three days of outperformance, and it declined by -0.3% triggered by Walmart. One of its component stocks plummeted by -4.5% after a surprise Q2 earnings miss for the first time in three years.
The fear of the Fed not cutting rates in the upcoming FOMC meeting on 17 September also contributed to the current bout of risk aversion in stocks, reinforced by yesterday’s upbeat preliminary US manufacturing and services PMI data for August that indicated the US economy remains resilient.
The US dollar rose along with the increased risk of a less dovish Fed. The US Dollar Index extended its gains in today’s Asia session by 0.1% after it increased by 0.4% yesterday, led by weakness in the NZD (-0.2%), CHF (0.2%), and EUR (-0.1%) against the greenback.
The continuation of a firm inflation trend in Japan, where the core-core CPI rose by 3.4% y/y in July, unchanged from the previous month.
It supports at least a potential interest rate hike by the Bank of Japan (BoJ) before 2025 ends. But the Japanese yen failed to see an uptick today after it shed -0.7% against the US dollar yesterday.
Asia Pacific stock markets have performed better today. Hong Kong’s Hang Seng Index rose by 0.6% at the time of writing, its second consecutive session of gain, supported by a possible less frosty US-China trade relation as media reported that Boeing is heading to finalise a deal with China to sell as many as 500 aircraft. In addition, Japan’s Nikkei 225 trimmed its intraday loss of -0.7% to close almost unchanged.
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