Market Commentary | All eyes on Jackson Hole

Global markets were lower on Thursday, with traders reluctant to make big bets the day before the much anticipated speech from the head of the Federal Reserve which could shed some light on when US interest rates will next be raised. Stocks and the dollar have been locked in a narrow range ahead of the conference, with little else on the earnings or economic calendar to steer direction.

Stocks in Asia closed mostly lower as investors remained on the sidelines in a day which didn’t see much volume. European markets followed suit, and dropped sharply with Germany’s DAX amongst the biggest decliners after a disappointing reading on German business sentiment. US stocks dropped yet again on Thursday, having fallen yesterday due to a drop in healthcare shares and weaker energy stocks after oil prices tumbled on worries about oversupply.

Big falls by pharma stocks were a drag on the FTSE with Shire and AstraZeneca trading in negative territory. German shares were also having a bad day, extending losses after a key survey showed an unexpected drop in business sentiment in the country. All of the DAX’s components were in the red, led by a fall in shares of car makers Volkswagen and Daimler.

Weakness in mining stocks also weighed heavily on the blue chips as metal and oil prices retreated once more due to a firmer dollar. Glencore was the biggest sector casualty, after falling yesterday in reaction to weak first half results. Shares continued to trade in the red on Thursday, losing 4%.

On the upside, building materials group CRH was the top gainer as the Irish firm inched up its dividend as it reported solid first half results. The company said it foresees posting full year earnings before interest, taxes, depreciation and amortization of more than €3 billion.

Elsewhere, retail shares were having a good day. Shares in popular clothing brand Guess Inc soared 22% on the back of earnings out late Wednesday that beat expectations. Shares in Tiffany & Co. also rallied 6.4%, after the high-end jewelry retailer beat fiscal second-quarter profit expectations.

Oil futures rebounded towards the end of the trading session, and turned positive after sinking to a one-week low on Wednesday thanks to disappointing US inventory data. Crude oil reversed an early drop, to trade about $47 a barrel.

Meanwhile, weekly jobless benefits claims fell to 261,000, showing that fewer Americans are losing their jobs as summer nears an end. Plus, U.S. durable-goods orders jumped 4.4% in July. Analysts say that while job growth has been a bright spot in the U.S. economy, signs of stubbornly low inflation has remained the hick-up for market participants.

This article was issued by Rabecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, views and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.