Wall Street will hold fire in record territory

LONDON, Aug. 25 (Reuters) – Wall Street was heading for a flat start on Wednesday as investors paused after pushing stock indices to new highs ahead of the much-anticipated Federal Reserve speech on Friday.

The Dow, S&P 500 and Nasdaq 100 futures were very mixed after the S&P stock index posted its 50th year-end record on Tuesday, supported by positive news on COVID-19 vaccines. The tech-laden Nasdaq has also reached new heights.

Markets around the world were waiting on Friday, when Jerome Powell, chairman of the US Federal Reserve, was scheduled to speak at the annual Jackson Hole event.

There have been strong expectations that Powell could indicate when the central bank could start to “cut” or ease stimulus measures in an economy that is now recovering from COVID-19.

John Vail, chief global strategist at Nikko Asset Management, said the market was already expecting a slowdown to begin this year, with no new information expected from Jackson Hole.

“With fewer central bank purchases, bond yields will likely rise globally, but not too much,” Vail said. “However, this will likely be a reason for cyclical and financial stocks to perform well, even if the global economy may decelerate more than expected to reach a more average rate in the future.”

While the data remains strong, there are clear signs that the global economy is losing momentum after rebounding in early 2021 after the crisis from last year’s pandemic.

Citi’s Global Economic Surprise Index, which measures how much data exceeds or misses economists’ forecasts, this week turned negative for the first time since last June (.CESIGL), indicating more misses than beats.

The equivalent US and Chinese indices turned negative a few weeks ago.

A report from the US Department of Commerce, due at 12:30 p.m. GMT, is expected to show durable goods orders fell 0.3% in July, after rising 0.9% in June.

The benchmark 10-year Treasury yield was 1.3087% above its US close on Tuesday of 1.29%.

The dollar was slightly firmer, trading above a one-week low against other major peers.

In Europe, the STOXX index of 600 companies (.STOXX) strengthened slightly, about 5 points below its high at the start of the month.

Fund managers expect European stocks to hold around current levels for the remainder of 2021, according to a Reuters poll.

Business morale in Germany, Europe’s largest economy, fell for the second month in a row in August, indicating a slowdown amid concerns over increasing COVID cases and bottlenecks in supply. Read more

The blue chip DAX index (.GDAXI) in Frankfurt lost modest early gains to trade slightly weaker.

GROSS EDGES TO THE TOP

US crude reversed earlier weakness to hit $ 67.69 per barrel, while Brent crude gained 0.45 to $ 71.37 per barrel. However, both are up about 8% on the week, after posting their biggest weekly decline in over nine months last week.

Safe haven gold fell alongside the general increase in risk appetite, with the spot price falling 0.4% to $ 1,794 an ounce.

Asian stocks held onto their recent gains after falling last week, as global stocks rebounded, although most asset classes focused on the Fed’s upcoming event.

The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) spent most of the day flat, but was last up 0.3% and around 4% from more so far this week.

This marks a change from last week, when the index fell to its lowest level in 2021, spooked by a combination of fears of slower growth in Asia amid outbreaks of the Delta variant of the coronavirus, and fears that the Fed will start reducing its monetary stimulus sooner rather than later.

The Japanese Nikkei (.N225) was also stable, but a Reuters poll of analysts and fund managers showed Japanese stocks are expected to recover from their eight-month low on Friday to near a 30-year high by the end of this year. Read more

Editing by Ana Nicolaci da Costa, David Holmes and Alison Williams

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