Europe cautious ahead of Jackson Hole talks

European markets have opened cautiously ahead of what will be a closely scrutinised comments by the Fed chairwoman, as well as talks by Haruhiko Kuroda, governor of the Bank of Japan, and Mario Draghi, president of the European Central Bank, at the annual Jackson Hole central banking conflab later on Friday.

As the FT’s Jamie Chisholm reports in the Global Market Overview, traders have already gotten themselves into a bit of a lather.

The more simplistic view of the event sees a binary outcome. If Ms Yellen is sufficiently dovish in her topic on “Reevaluating Labor Market Dynamics” then bulls will perceive the market is accurate in its assessment that US interest rates will begin rising in the middle of next year and at a slow pace.

This would suppress implied US borrowing costs and could help the S&P 500 breach the 2,000 level. The yield on the US 10-year note is steady at 2.40 per cent, just 10 basis points above 14-month lows.

But if she is reckoned to be a bit more hawkish, then investors may bring forward the timing of tightening, pushing bond yields higher and providing an excuse for some profit taking in stocks.

Here’s how European markets currently stand;

The FTSE Eurofirst 300 is flat at 1,355 points.

The FTSE 100 in London is also flat at 6,779.

The Xetra Dax in Frankfurt is down 0.15 per cent or 13 points at 9,389.

The CAC 40 in Paris is down 0.12 per cent or 5 points at 4,288.

There are few major movers on the indices, with Alcatel Lucent topping the Eurofirst 300, up 1.8 per cent at €2.56 after strengthening its balance sheet with an early repayment of a $1.75bn credit facility.