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Stocks Slip as Focus Turns to Jackson Hole

By:
David Becker
Published: Aug 21, 2017, 11:15 UTC

European stock markets are in the red, after a mixed session in Asia. Geopolitical risks saw Nikkei and ASX closing with losses of -0.40% and -0.37%,

Stocks Slip as Focus Turns to Jackson Hole

European stock markets are in the red, after a mixed session in Asia. Geopolitical risks saw Nikkei and ASX closing with losses of -0.40% and -0.37%, while Hang Seng and CSI 300 managed to move higher, underpinned by gains in China’s oil firms and AAC Technology Holdings Inc. Oil prices are marginally higher with WTI trading at USD 48.60 per barrel. In Europe, miners picked up as metals remain underpinned oversupply and demand outlooks in China, with Rio Tinto leading the way. Overall though indices are mostly down. The currency markets are holding steady with most of the focus geared toward the speeches Yellen and Draghi will give at Jackson Hole later this week.

WTI crude prices are showing a small gain just off the Asia-session high at 48.89, which is the highest level traded since last Monday. Prices rose just over 5% from the low seen last Thursday at 46.46, with most of the gains seen on late Friday following a decline in the Baker-Hughs weekly oil rig count. Baker-Hughes weekly oil rig count revealed 763 U.S. rigs in operation, a decline of five over the prior week.

Bundesbank Sees Strong Growth Ahead

Bundesbank sees strong growth, but EUR strength to dampen inflation. The German central bank said in its latest monthly report that the 2017 GDP growth forecast may be revised up in the light of the strong economic momentum in the summer quarter. At the same time, the strengthening EUR is dampening price pressures, although the Bundesbank still said that German core inflation at least, is expected to pick up in coming months. The fresh reference to the strong EUR ahead of Draghi’s speech at Jackson Hole on Friday adds to signs that the ECB is remaining cautious as the strong currency already provides some degree of monetary tightening.

UK house prices fell 0.9% month over month, according to the Rightmove price index for August, which is the biggest drop in a month this year. In the year over year comparison, prices rose 3.1%. Hardest hit were prices in London, where prices fell 1.9%. Prices have been hit by a slew of negative forces including Brexit-related uncertainties, political uncertainty which include the June elections PM May’s Conservative Party is governing from a greatly weakened position, relying on support from Northern Ireland’s DUP, declining inflation-adjusted average household incomes, and tax changes. These forces are likely to remain in play for a good time yet, and we expect the property market to subdued in the months ahead, and seen year over year comparisons dipping into negative territory before long.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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