Caution reigns ahead of Jackson Hole

LONDON — European markets were uncertain on Thursday as global investors awaited the start of the U.S. Federal Reserve‘s Jackson Hole economic symposium.

The pan-European Stoxx 600 index hovered fractionally above the flatline by afternoon trade, having given back gains of more than 0.7% in early trade. Oil and gas stocks climbed 1.5% while retail stocks fell 0.7%.

The Fed’s annual symposium kicks off on Thursday, with Chairman Jerome Powell due to deliver a speech Friday. Investors will be listening for information on the central bank’s monetary tightening trajectory as it looks to rein in inflation, and whether interest rate cuts are in sight at the end of the current cycle.

Luke Bartholomew, senior economist at Abrdn, said Powell may use the speech to deliver a “mea culpa” on his prediction a year ago that inflation would be “transitory,” and to demonstrate what the Fed has learned about price pressures over the past year.

“Powell is likely to stress that policy still has a long way to go before the Fed will feel comfortable it has decisively turned the corner on restoring price stability. This is important because the market has behaved recently as if the Fed has pivoted away from its hawkish stance,” Bartholomew said in an email Wednesday.

“It is hard to believe the Fed leadership is comfortable with how financial conditions have become much more accommodative after the last month, and so Powell will use this speech as an opportunity to push back against this more dovish interpretation of Fed policy that has arisen recently.”

U.S. stock futures jumped in early premarket trade on Thursday, after Wall Street snapped a three-day losing streak on Wednesday.

Investors stateside will also be closely watching Thursday’s weekly jobless claims data and Friday’s PCE (personal consumption expenditure) reading, one of the Fed’s favored inflation measures.

Shares in Asia-Pacific mostly ticked higher on Thursday, while Hong Kong’s morning session was canceled due to a typhoon warning.

On the data front in Europe, Germany’s Ifo Institute business climate and expectations surveys and final second-quarter GDP figures from Europe’s largest economy were published Thursday.