FTSE and US markets rise as Jerome Powell signals Fed rate rises
How major markets are performing on Friday
The FTSE 100 rose on Friday as US Federal Reserve chair Jerome Powell's said the central bank is "prepared to raise rates further" as it continues its fight to bring inflation back to its 2% target.
The FTSE (^FTSE) was up 0.5% by the afternoon, while the Dax (^GDAXI) rose 0.4% and the Cac (^FCHI) was up 0.6%.
The S&P 500 (^GSPC) was up 0.5%, the Dow (^DJI) rose 0.6% and the Nasdaq (^IXIC) was 0.5% higher, reversing some of the losses made on Thursday.
Speaking at the Jackson Hole Economic Symposium in Jackson, Wyoming, Powell reiterated his message to markets from a year ago: The Fed is going to bring down inflation one way or another.
"At last year's Jackson Hole symposium, I delivered a brief, direct message," Powell said. "My remarks this year will be a bit longer, but the message is the same: It is the Fed's job to bring inflation down to our 2 percent goal, and we will do so."
Meanwhile, the UK's energy regulator Ofgem cut the price cap for energy bills.
The energy price cap is to fall to £1,923 for the usage of a typical household, according to Ofgem — a measure which will come into effect from October to December. The cap is expected to go up again for January.
It had been set at £2,074 for July to September.
Although this seems like a good thing, the Resolution Foundation notes that the headline £200-a-year saving for a typical household masks a lot of variation, with the heaviest energy users in line for larger reductions in bills, and some households who use relatively little energy set to see bills rise this winter compared to last year.
Read more: Cost of living: Ofcom asked to investigate Virgin Media price hikes
Stay with us for live updates:
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Meanwhile, stocks have opened in the green:
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Jerome Powell is on in about 20 minutes. Watch it live here:
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Wilko's rescue deal rejected
A deal which could have rescued jobs at the ailing Wilko was rejected, as debt holders can recoup more if the business is broken up, according to The Guardian.
Currently 12,500 jobs are in jeopardy because of its administration.
Canadian entrepreneur, Doug Putman, is said to have been trying to take on around half of the group's 400 shops, and continue operations but could not match the costs associated with breaking it up entirely.
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While it's a relatively calm day in the FTSE 100 (^FTSE), the FTSE 250 (^FTMC) has seen some dramatic swings.
Watches of Switzerland (WOSG.L)is down 23.6% this morning following news that Rolex has bought a rival retailer, taking its first steps into the realm of retail. Watches of Switzerland is currently the UK's biggest retailer of Rolex watches.
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Here's Russ Mould, investment director at AJ Bell's take on the Nvidia dip:
There is a saying with investments that it can be better to travel than arrive, and one might conclude that Nvidia’s stellar share price run was susceptible to a bout of profit taking and that’s precisely what we got.
Despite the good fortunes of Nvidia and positive news flow from the company, there is no getting over the fact that investors remain worried that interest rates will stay higher for longer and that casts a downer on the markets as a whole.
It would take a brave person to load up on shares just before Federal Reserve chair Jerome Powell makes his speech later today at the Jackson Hole summit. Any comments to suggest the Fed is going to keep raising rates for some time could trigger another risk-off mood for investors.
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Pound at 10-week low
The pound has pulled back against the dollar even further this morning, heading below the $1.26 mark and at a 10-week low.
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1-day look at the pound. Chart: Yahoo Finance UK
"The pound has also continued to look soggy after the latest CBI retail sales volume numbers for August fell to -44, and the lowest since March 2021, indicating that consumer demand is slowly starting to feel the cumulative effects of higher interest rates and higher prices," said Michael Hewson, chief market analyst at CMC Markets. "The weak nature of recent data is prompting markets to pare bets for the number of rate hikes the Bank of England will have to implement before calling a halt."
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Overnight in the US and Asia
Stocks across Asia and the US saw dramatic drops overnight as the Jackson Hole meeting of central bankers continues and market watchers await Fed chair Jerome Powell's speech.
Japan's Nikkei (^N225) finished 2.1% lower, while the Hang Seng (^HSI) in Hong Kong lost 1.2%. China's SSE Composite (000001.SS) was also down 0.6%.
The slide comes particularly in tech stocks, which had rallied following bumper results from chipmaker Nvidia.
Over in the US, the S&P 500 (^GSPC) was down 1.4%, the Dow (^DJI) pulled back 1.1% and the Nasdaq (^IXIC) lost 1.9%.
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Good morning! Main news of the day so far is revolving around energy bills, with news of regulator Ofgem cutting the energy price cap.
We have Bank of England capital issuance figures and a measure of consumer confidence on the way too.
Let's get to it.
Watch: What is the energy price cap – and how will it affect my bills?
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