Friday preview: Investors eye Powell speech at Jackson Hole

(Sharecast News) - With no corporate releases of note due on Friday, investors will turn their attention to a speech by Federal Reserve chair Jerome Powell at the central bank's symposium in Jackson Hole, Wyoming. The symposium this year is entitled 'Structural Shifts in the Global Economy'.

CMC Markets analyst Michael Hewson said: "Markets have been chopping around for several weeks now on the basis that for all the Fed's hawkish rhetoric the central bank is close to, or even at the end of its rate hiking cycle. The key question now appears to be less about how much further will rate rise, but for how long they will stay at current levels. It doesn't seem that long ago markets were pricing in rate cuts for later this year. These have now been pushed out into next year, with significant uncertainty as to whether they will come during the first half or the second half of the year.

"When Powell spoke last year, he made it plain that there was more pain ahead for US households and that this wouldn't deter the central bank in acting to bring down inflation, even if it meant pushing unemployment up. His tone this week is unlikely to be anywhere near as hawkish, although he will also be reluctant to declare victory either. It is clear that the Fed believes the fight against inflation is far from over, and in that context it's unlikely he will deliver any dovish surprises."

On the macroeconomic front, German second-quarter GDP and the German Ifo business climate survey are due, while in the US, the University of Michigan consumer sentiment index will be released.

Hewson noted that the most recent German IFO survey showed sentiment fall its lowest level since October last year in July at 87.3.

"Expectations also slipped back to 83.5 suggesting the economy could remain in recession in Q3," he said.

"Any thoughts that we might see an improvement in August were likely dealt a blow by this sharp rise in oil prices seen in the last few weeks, while recent economic data out of China suggests that the economy there is in a funk, which will be difficult to get out of."

Friday August 25

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INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Gross Domestic Product (GER) (07:00)

IFO Business Climate (GER) (09:00)

IFO Current Assessment (GER) (09:00)

IFO Expectations (GER) (09:00)

M3 Money Supply (EU) (09:00)

U. of Michigan Confidence (Prelim) (US) (15:00)

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