BOJ’s Ueda Boosts Yen; All Eyes on Powell’s Speech

The yen strengthened by 0.5% after Bank of Japan Governor Kazuo Ueda reiterated plans to raise interest rates if economic and inflation forecasts hold, while Japan's core inflation rose to 2.7% in July. European markets are set for a mixed opening as investors await Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium, which could significantly influence market direction. Wall Street futures edged up slightly after technology shares led declines in major stock markets.

Equities

The FTSE 100 closed flat on Thursday, edging up just 0.1%, as gains in the retail sector were offset by declines in metal prices. JD Sports Fashion led the retail sector, surging 10.7% after reporting a 2.4% increase in second-quarter underlying sales. In contrast, industrial and precious metal miners weighed on the index, with Glencore, Anglo American, and Hochschild dropping between 1.8% and 2.7% as copper and gold prices eased. Ithaca Energy saw its shares fall by 5.5% following a report of lower first-half net profits, reflecting weaker production and natural gas prices.

Turning to the US markets, all three major indexes finished lower on Thursday, pressured by technology stocks and rising Treasury yields. The Nasdaq Composite was the hardest hit, falling 1.67%, driven by declines in the "Magnificent Seven" megacap tech stocks ahead of Nvidia’s earnings report next week and in anticipation of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium. The S&P 500 dropped 0.89%, with the technology sector suffering the steepest decline at 2.1%. Snowflake’s shares plummeted 14.7% despite raising its full-year product revenue forecast, as its margin outlook remained unchanged. On the positive side, Zoom Video Communications saw a 13.0% jump after lifting its annual revenue forecast.

Meanwhile, the Dow Jones Industrial Average fell by 0.43%, with Advance Auto Parts tumbling 17.5% after the company trimmed its annual profit forecast. The CBOE Volatility Index, a measure of investor anxiety, briefly breached 18 before settling at 17.56, reflecting the market's cautious mood ahead of key economic signals from Jackson Hole. Volume on US exchanges was lighter than usual, with 9.79 billion shares traded compared to the 20-day average of 11.89 billion.

Forex & Commodities

The US dollar regained strength on Thursday, rising 0.38% against a basket of major currencies, as it rebounded from a 13-month low against the euro ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium. The euro, which had recently climbed to a high of $1.11735, fell 0.36% to $1.111, as traders reassessed their positions in anticipation of Powell’s comments.

Sterling briefly touched a 13-month high of $1.3130 against the dollar following data showing an acceleration in British business activity in August. However, the pound later settled at $1.3093 as the dollar gained momentum. Despite these moves, there remains uncertainty around how central banks, including the Federal Reserve, the European Central Bank, and the Bank of England, will manage their respective easing cycles.

In the commodities market, gold prices edged up by 0.3% to $2,491.35 per ounce but are on track for a weekly decline as the dollar's rebound and rising US Treasury yields pressured the precious metal. Gold had surged to an all-time high of $2,531.60 earlier in the week but has since pulled back, with traders awaiting further direction from Powell's speech. Silver, platinum, and palladium also saw minor gains but remain poised for weekly losses.

Oil prices saw little change on Friday but are expected to finish the week lower, with Brent crude rising slightly by 0.2% to $77.38 a barrel, and US West Texas Intermediate crude inching up to $73.16.