Wednesday 26 August 2020 3:32 pm

FTSE 100 drops as investors turn to Jackson Hole

The UK’s FTSE 100 stock index was flat this afternoon as investors awaited a speech by US Federal Reserve chief Jay Powell tomorrow.

It was down 0.01 per cent 6,035 points mid-afternoon. The FTSE 250 index of smaller companies rose 0.6 per cent, however.

Read more: Jackson Hole symposium: All eyes on Fed chair Powell

Germany’s Dax climbed 0.6 per cent after the government extended its short-time work scheme that supports jobs. France’s CAC 40 gained 0.5 per cent.

Asian markets fell overnight as the optimism from the start of the week wore off. China’s CSI 300 dropped 1.2 per cent while Hong Kong’s Hang Seng fell 0.1 per cent.

The mixed mood came as investors stepped back and weighed economic indicators and the pace of the recent rally.

In the US, the S&P 500 opened up 0.2 per cent and Nasdaq opened up 0.6 per cent after both hit new highs last night. They were driven by a 3.5 per cent jump in Facebook yesterday.

Facebook was up 2.9 per cent today, Netflix rose 4.2 per cent and Salesforce jumped nearly 25 per cent after delivering stellar earnings figures last night. 

However, US consumer confidence unexpectedly fell in August to its lowest level since 2014, data showed yesterday.

FTSE 100 treads water before Powell speech

The FTSE 100 fell behind its European peers, continuing a recent trend. The pound’s slight rise did not help the index.

Neil Wilson of said: “The FTSE 100 has endured a tough 24 hours.” He added:  “Having hit a high yesterday morning near 6,180, this morning the blue-chip index is testing the 6,000 support.”

“If the dollar weakens further and sterling rallies, this support level could go.” A higher pound makes the overseas earnings of FTSE 100 firms worth less.

David Madden, market analyst at trading platform CMC Markets, said: “There is a lack of direction in European equity markets.”

He said that “is probably because traders are waiting for the Jackson Hole symposium”.

Fed chair Powell is due to speak tomorrow at the Jackson Hole economic policy symposium. Usually held in Jackson Hole, Wyoming, it will be completely online due to coronavirus.

Read more: Alibaba’s Ant Group files for dual listing in Hong Kong and Shanghai

He is expected to give an update on the central bank’s monetary policy review. Any shifts in policy could move markets.

Fiona Cincotta, market analyst at City Index, said: “Investors are waiting anxiously for any hints over the direction of monetary policy.”

Oil prices slip as Hurricane Laura heads to US

Oil prices fluctuated around five-month highs as Hurricane Laura headed towards the US’s Gulf of Mexico, causing producers to stop most of their offshore output.

Such an event should push prices up. But investors are worried about lower demand as coronavirus cases rise around the world, bringing the threat of second lockdowns.

WTI crude, the US benchmark, was down up 0.8 per cent at $43.71 a barrel. That was just shy of yesterday’s five-month high of around $43.60 a barrel.

Read more: ‘Devastating’ Hurricane Laura makes US oil producers halt production

Brent crude, the global benchmark, was up nearly 0.4 per cent at $46.04 per barrel. It yesterday hit a five-month high of more $46 per barrel.

Producers on the Gulf Coast, which includes Florida, Alabama, Mississippi and Louisiana, evacuated 310 offshore facilities. They shut 1.56 million barrels per day of crude oil output, amounting to 84 per cent on the Gulf’s offshore production.