By Geoffrey Smith
Investing.com -- U.S. GDP and jobless claims data will refresh the backdrop for Jerome Powell's Jackson Hole speech on Friday. Korea raises interest rates, the first big Asian country to do so since the pandemic started. Stocks are becalmed ahead of the Fed while Delta Air Lines' new vaccine policy stirs controversy. The SEC is going after the ESG industry and commodities suffer a fresh scare on Chinese growth. Here's what you need to know in financial markets on Thursday, 26th August.
1. GDP, jobless claims and price data set the stage for Powell
U.S. economic data takes on a special significance today, refreshing the backdrop for Jerome Powell’s keenly awaited speech on Friday at the Federal Reserve’s Jackson Hole symposium.
The first revision of GDP data for the second quarter will be issued at 8:30 AM ET (1230 GMT), and while this will be largely backward-looking, some of its sub-components will still be of interest – notably the personal consumer expenditures prices index, which is the Fed’s preferred measure of inflation.
Core PCE prices rose 6.1% in the year through the second quarter, according to the government’s first estimate. Any revision to that number may affect perceptions of Powell’s willingness to flag a tapering of bond purchases on Friday.
In addition to all that, there will be the (more timely) weekly jobless claims numbers also at 8:30 AM ET, and the Kansas City Fed’s regional business survey at 11 AM ET.
2. Korea raises rates; ECB minutes due
Some central banks, of course, aren’t waiting for the Fed. The Bank of Korea became the biggest central bank in Asia to start tightening monetary policy after last year’s splurge in the first stage of the pandemic.
The bank raised its key rate to 0.75% from 0.5%, a decision that was not expected by most analysts.
The loose policy adopted last year has fueled a house price boom and a surge in household debt, both of which are growing at annual rates of over 10%.
Elsewhere, the European Central Bank is scheduled to release the minutes of its latest policy meeting, but these are unlikely to produce any fears of a policy tightening, given the warnings over the German growth outlook in recent days. Germany’s monthly consumer confidence index for September plunged, survey maker GfK said earlier.
3. Stocks set to open mixed; Delta in focus
U.S. stocks are set to open mostly lower later, after eking out new record highs in low volume on Wednesday. Premarket moves are looking moderate, with investors already holding off big new bets until after today’s data and Powell’s speech on Friday.
By 6:15 AM ET, Dow Jones Futures were flat, while S&P 500 Futures were down 0.1% and Nasdaq 100 Futures were down 0.2%.
Companies likely to be in focus later include Williams-Sonoma (NYSE:WSM), which was up over 11% in premarket after saying there was no sign of the post-pandemic trend for home improvement easing up. The company raised its guidance again after beating forecasts with its quarterly numbers.
Also in the spotlight will be Delta Air Lines (NYSE:DAL), which became the latest high-profile company to take action against unvaccinated employees. The airline will add $200 to their premiums under the company’s health insurance plan and is also threatening to reduce their sickness benefits.
4. SEC puts down a marker to ESG greenwashing
U.S. regulators stirred up the cozy, feelgood world of ESG investing, with an investigation into whistleblower allegations at German asset manager DWS Group (DE:DWSG).
The Wall Street Journal reported people familiar with the matter as saying the Securities and Exchanges Commission is in the early stages of looking into claims by DWS’s former head of sustainability that the company overstated its use of environmental, social and governance-related benchmarks. DWS stock, most of which is owned by Deutsche Bank (DE:DBKGn), fell sharply in the European morning.
ESG investing has been the hottest new area for institutional money managers in the last few years, offering a new way to offer premium products at a time when cheaper passive investing strategies are eating their traditional business. Assets under management by ESG funds have more than tripled in two years to over $2 trillion, according to data from Morningstar.
5. Oil struggles after latest Chinese worries
Oil prices struggled with resistance around the $70 level, despite data from the U.S. government showing healthy draws on crude and gasoline stockpiles as Labor Day, traditionally seen as the end of the summer driving season, draws closer.
By 6:20 AM ET, U.S. crude futures were down 0.9% at $67.69 a barrel, while Brent Futures were down 0.8% at $70.68 a barrel, both benchmarks consolidating after a solid rise at the start of the week in response to U.S. and Chinese economic data.
Other commodities were also in consolidation mode, with both base and precious metals falling, as China signalled fresh measures to cool the real estate sector, ending a three-day rally in local stocks.