US futures dip before Warsh Jackson Hole speech

Summary

US stock futures dipped early on Friday as investors awaited Federal Reserve Chair Kevin Warsh’s Jackson Hole speech, while European futures edged higher. US Treasury yields remained well above levels at the start of the year, reflecting continued concerns over inflation and Federal Reserve policy. Markets are focused on whether Warsh will reconcile the Fed’s recent policy decisions with his hawkish stance on inflation.

Equities

The FTSE 100 fell 0.8% to 10,792.54 at Thursday’s close, its second consecutive decline and steepest one-day fall in six weeks. The FTSE 250 finished broadly flat, down 0.04%, while weakness in banking and energy shares weighed on the blue-chip index.

Shell and BP both closed around 1.5% lower on Thursday as energy shares declined. Technology and data companies performed more strongly, with Relx rising 3.3%, London Stock Exchange Group gaining 4.4% and Experian climbing 2.8% after stronger forecasts from US software companies supported the sector.

Computacenter rose 4.7% to a record high on Thursday and led the FTSE 100 after Peel Hunt upgraded the shares to “buy” from “add” and increased its price target to 6,000p from 4,400p. On the FTSE 250, Halfords jumped 12.6% after forecasting annual profit above market expectations, while Ten Lifestyle Group gained 3.9% after securing a new multi-year contract in the Americas.

US stocks closed higher on Thursday, led by technology shares following Nvidia’s quarterly results. The Nasdaq Composite jumped 1.57% to 26,541.35, the S&P 500 gained 0.72% to 7,730.99 and the Dow Jones Industrial Average rose 0.20% to 53,569.44.

Nvidia shares surged 8.7% on Thursday after its revenue forecast met high investor expectations and reinforced confidence in continued demand for AI infrastructure. Morgan Stanley said Nvidia’s forecast for 70% revenue growth next year was well above its own estimate of 52% and the consensus estimate of around 40%.

Salesforce jumped 22.6% at Thursday’s close after raising its annual revenue and profit forecasts and launching a new plug-in integrated with Anthropic’s Claude AI models. CrowdStrike climbed 20.5% after increasing its annual revenue forecast and beating second-quarter earnings estimates, while Moderna fell 4.6% after announcing a $2 billion convertible bond sale and HP dropped almost 3% following weaker PC shipments and margins.

Forex & Commodities

The US dollar held close to a one-week high early on Friday as investors awaited Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole. The dollar index edged up to 99.18, although it remains on course for a second consecutive monthly decline.

The euro slipped to $1.165 early this morning, while sterling eased to $1.359, leaving both currencies near one-week lows against the dollar. Despite the recent weakness, the euro and pound remain on course for a second successive monthly gain. The Japanese yen weakened to 159.6 per dollar, while the Australian dollar strengthened to a three-month high of $0.7205.

Spot gold fell early on Friday to $4,580 an ounce, down from the more than three-month high of $4,696 reached on Tuesday. The precious metal has come under pressure ahead of Warsh’s speech, with the possibility of a more hawkish stance on interest rates putting recent highs under scrutiny.

Oil prices also moved lower early this morning. Brent crude fell to $89.10 a barrel and West Texas Intermediate declined to $82.89, putting both benchmarks on course for weekly losses after two consecutive weekly gains. Brent was heading for a 5.3% weekly decline and WTI for a 4.3% fall.

The decline came despite renewed uncertainty over US-Iran relations. Reports indicated that the US administration was not interested in restoring the terms of its June agreement with Iran, while increased Gulf oil exports through the Strait of Hormuz have helped improve supply flows compared with their March lows.