(Bloomberg) — Stocks dropped on Thursday amid a retreat in technology shares and commodities as markets remained cautious ahead of a Federal Reserve gathering that may provide more clues about its approach to paring stimulus. The dollar rose.
The Stoxx Europe 600 Index fell 0.6%, dragged lower by basic resources and retailers, with media and construction shares the lone bright spots. MSCI Inc.’s Asia-Pacific gauge snapped a three-day rally, with Chinese tech names slumping on disappointing earnings and Beijing’s crackdown on private industries. Bonds in Europe slipped ahead of the release of minutes from the European Central Bank’s July meeting.
Futures on the Nasdaq 100 declined and contracts on the S&P 500 were little changed following another record close for the underlying indexes. The 10-year U.S. Treasury yield ticked higher. Traders are looking ahead to the Jackson Hole policy symposium, which may offer fresh insight on how the Fed intends to scale back bond purchases.
Views are split on whether Chairman Jerome Powell’s speech to the Jackson Hole meeting Friday will provide a clearer guide on tapering emergency Fed support. While the ongoing economic rebound and elevated inflation add to the case for starting policy normalization, the fast-spreading delta virus strain threatens a slower pace of recovery than some had expected.
“Given the prevailing Covid-19 uncertainty, the market is not expecting Powell to talk bold and announce an imminent tapering,” said Sébastien Barbé, a strategist at Credit Agricole CIB. “The fact that this is priced in suggests that any ‘hawkish’ surprise could fuel a downward correction.”
Elsewhere, WTI crude oil dipped below $68 a barrel, paring a rally this week driven by bets that demand will weather the delta virus strain’s impact on the economic recovery. Gold fell below $1,790 an ounce and Bitcoin slid to around $47,000.
Here are some events to watch this week:
Fed officials participate in the Jackson Hole Economic Policy Symposium on FridayU.S. GDP, initial jobless claims ThursdayJuly U.S. personal income and spending data Friday. Investors will scrutinize the personal consumption expenditures price index, an inflation measure closely watched by the Fed.
For more market analysis read our MLIV blog.
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.5% as of 10:32 a.m. London timeFutures on the S&P 500 fell 0.1%Futures on the Nasdaq 100 fell 0.3%Futures on the Dow Jones Industrial Average were little changedThe MSCI Asia Pacific Index fell 0.4%The MSCI Emerging Markets Index fell 0.5%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%The euro was little changed at $1.1765The Japanese yen was little changed at 110.11 per dollarThe offshore yuan fell 0.2% to 6.4811 per dollarThe British pound fell 0.2% to $1.3737
Bonds
The yield on 10-year Treasuries advanced one basis point to 1.35%Germany’s 10-year yield advanced one basis point to -0.41%Britain’s 10-year yield advanced one basis point to 0.61%
Commodities
Brent crude fell 0.9% to $71.60 a barrelSpot gold fell 0.3% to $1,784.79 an ounce
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