Global markets mostly slide before Powell

London (AFP) – World stocks mostly fell Thursday before a key speech from US Federal Reserve chief Jerome Powell, while geopolitical concerns resurfaced after Beijing reportedly fired missiles during exercises around the South China Sea and the US sanctioned several Chinese firms linked to the disputed region.

Powell is expected to outline the Fed’s monetary policy plans in a presentation at the virtual meeting of global central bankers.

While observers predict the speech will spell out a new policy framework for inflation and interest rates, there is also some hope for some further easing measures, especially with lawmakers in Washington failing to reach any agreement on a new stimulus.

The Fed has provided crucial support worth trillions of dollars to the world’s top economy during the Covid-19 virus crisis, helping stocks bounce back from their March troughs.

– ‘Craving stimulus fix’ –

“Stock markets are paring gains … as investors eagerly await the appearance of Fed Chairman Jerome Powell at this year’s virtual Jackson Hole event,” said OANDA analyst Craig Erlam.

“Despite central banks offering unprecedented amounts of stimulus and stock markets hitting new highs on a regular basis, investors are craving another stimulus fix.”

European equities were roiled Thursday after aerospace giant Rolls-Royce and advertising giant WPP posted each sizeable losses on coronavirus fallout.

A fourth successive record run on Wall Street was not enough to stoke a rally in Asia, with a fresh flare-up in coronavirus cases in the region keeping dealers grounded.

The mood was also downbeat after Bloomberg News reported that China had fired four ballistic missiles as part of a military exercise, a day after a flyover by a US spy plane.

The region is one of a number of issues over which China-US tensions have spiked in recent months.

In July, Washington declared Beijing’s pursuit of territory and resources there illegal, explicitly backing the territorial claims of Southeast Asian countries against China.

And on Wednesday, it imposed sanctions and restrictions on 24 Chinese companies and associated officials for taking part in building artificial islands in the disputed waters.

The US Commerce Department said the firms “enabled China to construct and militarise disputed outposts in the South China Sea”.

Hong Kong stocks lost 0.8 percent with HSBC taking a hit after being slammed by US Secretary of State Mike Pompeo over reports it had frozen access to credit card and bank accounts for executives of independent media group Next Media.

– Storm hits oil production –

Oil traders are keeping tabs on Hurricane Laura in the Gulf of Mexico, which made landfall in Louisiana on Thursday morning.

Around three million barrels a day of refining capacity have been closed after US authorities said the hurricane could bring “potentially catastrophic storm surges, extreme winds and flash flooding”.

Crude prices traded relatively flat but remain close to their highest levels for about five months.

“Investors are concerned about the economic damage that Hurricane Laura is going to cause,” noted Avatrade analyst Naeem Aslam.

– Key figures around 1130 GMT –

London – FTSE 100: DOWN 0.2 percent at 6,032.17 points

Frankfurt – DAX 30: DOWN 0.4 percent at 13,140.14

Paris – CAC 40: DOWN 0.5 percent at 5,022.68

EURO STOXX 50: DOWN 0.6 percent at 3,338.15

Tokyo – Nikkei 225: DOWN 0.4 percent at 23,208.86 (close)

Hong Kong – Hang Seng: DOWN 0.8 percent at 25,281.15 (close)

Shanghai – Composite: UP 0.6 percent at 3,350.11 (close)

New York – Dow: UP 0.3 percent at 28,331.92 (close)

Euro/dollar: UP at $1.1837 from $1.1830 at 2100 GMT on Wednesday

Dollar/yen: UP at 106.04 yen from 105.99 yen

Pound/dollar: DOWN at $1.3209 from $1.3210

Euro/pound: UP at 89.60 pence from 89.56 pence

Brent North Sea crude: FLAT at $45.66 per barrel

West Texas Intermediate: UP 0.3 percent at $43.25

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