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Stocks, U.S. yields gain ahead of Fed chair Powell’s Jackson Hole speech

Powell is due to speak on Friday at the Fed’s annual economic symposium at Jackson Hole, Wyoming. Worries the Fed was edging closer to tapering its stimulus weighed on global markets last week, but investors are now much less confident Powell’s speech at Jackson Hole will indicate a timeline for winding down the Fed’s bond-buying program.

Benchmark 10-year yields rose two and a half basis points to 1.2835%. The yields are in a range after falling from a one-month high of 1.379% on Aug. 12, while holding above a six-month low of 1.127% reached earlier this month.

“I can’t see a shift in monetary policy in the next two to three months”, said Mikael Jacoby, head of continental European sales trading at Oddo Securities in Paris.

The MSCI world equity index, which tracks shares in 50 countries, rose another 0.54% after its 1.1% gain on Monday, setting it on a recovery course after last week’s selloff.

In Europe, the pan-European STOXX 600 was broadly flat, while MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 1.9%, with Chinese stocks rebounding after being hit by regulatory worries last week.

Spiking COVID-19 infections caused by the highly contagious Delta variant have fuelled concerns about the recovery, but the U.S. Food and Drug Administration granted full approval on Monday to the COVID-19 vaccine developed by Pfizer Inc, raising hopes inoculations could accelerate.

On Wall Street, all major indexes were trading higher, driven by financials, industrials, consumer discretionary and the communications sector.

The Dow Jones Industrial Average rose 0.19% to 35,403.36, the S&P 500 gained 0.19% to 4,488.24 and the Nasdaq Composite added 0.42%, to 15,005.94. [.N]

The dollar eased further on Tuesday as risk-related currencies benefited from rising commodity prices and markets set aside concerns about the spread of the Delta variant to gauge data that showed a U.S. economy in strong recovery mode.

The dollar index, which measures the greenback against a basket of six currencies, fell 0.091% to 92.903.

Oil prices rose 3% on Tuesday, extending sharp gains on a bullish demand outlook as U.S. regulators issued their first full approval for a COVID-19 vaccine and Mexico suffered a large production outage due to a fire on an oil platform. [O/R]

Brent crude oil futures were up $2.16, or 3.17%, at $70.93 a barrel in afternoon trading, while U.S. West Texas Intermediate (WTI) gained $1.86, or 2.83%, to $67.47.

Gold consolidated above $1,800 on Tuesday as some investors bet the recent surge in COVID-19 cases could steer the U.S. Federal Reserve away from announcing at its Jackson Hole symposium that it plans to taper its economic support.

Spot gold rose 0.1% to $1,806.39 per ounce, while U.S. gold futures gained 0.2% to $1,808.90.

(Reporting by Chibuike Oguh in New York and Julien Ponthus in London; Editing by Steve Orlofsky and Matthew Lewis)


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