World stocks fell from the previous session’s record highs, European stocks dropped, and Wall Street futures were down on Sept. 8 on caution over the pace of economic recovery, while the dollar hit one-week highs as investors pared down their exposure to riskier assets.
MSCI’s all-country world equity index fell by 0.34 percent after seven consecutive days of gains, while in Europe, the STOXX index of 600 European companies edged down by 2.76 points, or 0.58 percent, as of 6:52 a.m. EST on Sept. 8.
The German DAX index fell by 111.14 points, or 0.70 percent, the UK’s FTSE 100 was down by 35.32 points, or 0.49 percent, and the French CAC 40 dropped by 25.47 points, or 0.36 percent, as of 6:54 a.m. EST.
In U.S.-focused markets, Nasdaq futures ticked down by 12.50 points, or 0.08 percent, while S&P 500 futures fell by 4.00 points, or 0.09 percent, and Dow Jones futures dropped by 41.00 points, or 0.12 percent, as of 6:44 a.m. EST.
The DXY dollar index, which measures the currency against six major rivals, rose by 0.17 points to 92.68, near a one-week high, as of 6:46 a.m. EST.
While optimism about the reopening of economies has combined with central bank easy-money policies to push world stocks to record highs, concerns are growing about a potential cooling effect of the spread of the Delta variant on economic activity.
“What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months, which likely started in August,” Sebastien Galy, senior macro strategist at Nordea Asset Management, told Reuters.
Investors also continue to weigh the impact of last week’s disappointing jobs report in the United States, which shows that U.S. employers added far fewer jobs than economists predicted.
“There is plenty of demand for workers and there are more job openings than there are unemployed workers,” Bullard told the outlet. “If we can get the workers matched up and bring the pandemic under better control, it certainly looks like we’ll have a very strong labor market going into next year.”
Speaking at the Jackson Hole symposium, Powell said that if further signs confirm the strength of the labor market recovery, this could make it “appropriate to start reducing the pace of asset purchases this year,” with some analysts predicting a possible announcement as soon as during the Fed’s next policy meeting over Sept. 21 and 22.
Bullard, in his interview with the Financial Times, provided more clarity around when the Fed is likely to start tapering.
“The big picture is that the taper will get going this year and will end sometime by the first half of next year,” he said.