Investors are hoping that the Jackson Hole summit this week will see the US Federal Reserve hint at further stimulus measures like it has done in the past. However, in spite of an upwards revision to US gross domestic product (GDP) growth figures for the second quarter today – adjusted to an annual rate of 1.7% from 1.5% - US benchmarks slipped after the opening bell.
the data in itself is unlikely to cause too much of a stir, the fact that the number has been revised higher since the last meeting is not going to work in the favour of those hoping the Fed loosen monetary policy next month.
European Central Bank (ECB) President Mario Draghi is being forced to miss the Jackson Hole conference due to "a heavy workload", increasing speculation that he could be putting the finishes touches to plans for strong action ahead of an ECB meeting next week.
Draghi hit back at German criticism of his bond-buying proposal today, sparking rumours that something big is on the horizon in Europe. The ECB “will always act within the limits of its mandate,” Draghi said in German newspaper Die Zeit. “Yet it should be understood that fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools.”
I don’t think there’s any doubt any more than Draghi will announce their bond buying programme at the ECB press conference in September.”
In other news, German Chancellor Angela Merkel reiterated her opposition to the European Stability Mechanism being granted a banking licence, saying that the idea is “not compatible with the treaties”. However, Italian Prime Minister Mario Monti argued that “modifications to the treaties can be asked for”.
During early U.S. trade, the Dow Jones Industrial Average eased up 0.06%, the S&P 500 index added 0.12%, while the Nasdaq Composite index rose 0.17%.
European stocks remained lower on Wednesday, as investors awaited comments by Federal Reserve Chairman Ben Bernanke on Friday amid sustained hopes for fresh action by world central banks to bolster growth.
During European morning trade, the EURO STOXX 50 dropped 0.68%, France’s CAC 40 declined 0.73%, while Germany’s DAX 30 retreated 0.53%.
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