European stocks drift as traders eye Ukraine talks, Jackson Hole

LONDON: European shares wobbled on Monday ahead of what is likely to be an eventful week for US interest rate policy, as investor attention turned to Washington where Ukraine's Volodymyr Zelenskiy and European leaders will meet Donald Trump.
The pan-European STOXX 600 index was down about 0.2% after hitting its highest level since March on Friday, while the MSCI All Country World Index hovered close to the record high touched last week. Earlier in the Asian session, indices in Japan and Taiwan notched record peaks, while a gauge of Chinese stocks reached its highest level in a decade.
Investors were bracing for US President Trump's meeting with Ukrainian President Zelenskiy and European leaders later on Monday to discuss the next steps to end the war in Ukraine, after Trump's summit with Russian President Vladimir Putin in Alaska on Friday. While the summit did not result in an agreement, Trump appeared more aligned with Moscow on seeking a full peace deal with Ukraine instead of a ceasefire first.
Skovgaard added that whether or not a deal is reached, focus was already turning to the Kansas City Federal Reserve's August 21-23 Jackson Hole symposium, where Chair Jerome Powell is due to speak on the economic outlook and the central bank's policy framework. Markets imply around an 85% chance of a quarter-point rate cut at the Fed's meeting on September 17, and are priced for a further cut by December.
In Europe, Germany's DAX eased 0.3%, while Britain’s FTSE was down 0.1%. S&P 500 and Nasdaq futures eased 0.1%, though both were near all-time highs. Valuations have been underpinned by a solid earnings season, as S&P 500 EPS grew 11% on the year and 58% of companies raised their full-year guidance.
In bond markets, the chance of Fed easing is keeping short-term Treasury yields low, while the longer end is pressured by the risk of stagflation and large budget deficits. Wagers on more Fed easing have weighed on the dollar, which dropped 0.4% against a basket of currencies last week. The dollar was up 0.2% on the yen at 147.42, while the euro slipped to $1.1682. Gold bounced 0.4% to $3,349 an ounce. Brent was up 0.4% at $66.08 a barrel, while US crude rose 0.5% to $63.11 per barrel.— Reuters