Global Shares Hover Near Record Highs as Markets Await Powell's Jackson Hole Speech

Global stock markets remained near all-time highs on Friday, with the MSCI All Country World Index just 1% below its peak from mid-July. Investors are closely monitoring the upcoming speech by Federal Reserve Chair Jerome Powell at the Kansas City Fed’s annual Jackson Hole Research conference for insights on future U.S. rate cuts.

European shares saw a modest increase, with the Stoxx 600 index rising by 0.14% in early trading. Asian markets were mixed: while shares outside Japan dipped slightly by 0.1%, Japan’s Nikkei gained 0.4% as investors reacted to inflation data and comments from Bank of Japan Governor Kazuo Ueda, who suggested a readiness to raise interest rates if economic conditions and inflation forecasts hold.

The dollar struggled near one-year lows ahead of Powell’s speech, with market participants keenly awaiting guidance on U.S. monetary policy. Futures for the S&P 500 rose 0.3%, reflecting positive sentiment in anticipation of the Fed’s next moves.

The market is currently pricing in a 25 basis point rate cut by the Fed in September, with expectations for additional cuts at each of the Fed’s remaining meetings this year, including a potential larger 50 basis point reduction. Powell’s upcoming speech is expected to provide clarity on whether these market expectations will be met or adjusted.

Rob Carnell, ING’s regional head of research for Asia-Pacific, noted that Powell’s ability to offer surprises may be limited due to the reliance on upcoming economic data. “Any decision that deviates from market pricing will rest on as yet unknown data,” Carnell said, emphasizing that Powell’s remarks might only confirm a modest easing in September, barring unexpected economic developments.

As investors await more concrete guidance from Powell, global equities remain buoyant, while the dollar’s weakness highlights the ongoing market uncertainty surrounding future U.S. interest rate policies.