Marketmind: After a week of mania, TGIF

Marketmind: After a week of mania, TGIF

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A look at the next day in European and global markets from Anshuman Daga

Friday seems like a slow day.

Well kinda. Stock markets are still licking their wounds, US bond yields are at 11-year highs and the dollar is hovering near a two-decade peak. [MKTS/GLOB]

However, investors will likely have had enough this week, as the Federal Reserve raised interest rates by 75 basis points as expected, but shook the markets with realistic expectations.

The Bank of Japan took “decisive” action, making its first intervention in the foreign exchange market since 1998 to prop up the ailing yen.

A handful of central banks including the UK, Switzerland and Norway raised interest rates this week, offering no signs that borrowing costs are approaching a peak.

The latest warning came from ECB Governing Council member Isabel Schnabel who said that inflation is set to rise further and that price growth is likely to be more steady than previously thought.

While the European Central Bank raised interest rates combined by 125 basis points during its last two meetings to combat inflation that is hovering near 10%, markets have priced in further increases.

More bad news came from the UK.

British consumer confidence has fallen to its weakest since records began in the mid-1970s, adding to pressure on new Finance Minister Kwasi Quarting to provide additional support to households, possibly at the expense of gold bonds.

On Friday, the first reading of business activity will also be released from around the world and is expected to show the global economy heading into recession.

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Meanwhile, in a sign of relief for those visiting Hong Kong, the government is set to provide an update on easing the controversial COVID-19 hotel quarantine policy for all arrivals.

Japan Intervenes to Support Yen Weakness https://graphics.reuters.com/JAPAN-ECONOMY/dwpkrxxnqvm/chart.png

Central banks ramp up their fight against inflation https://graphics.reuters.com/GLOBAL-CENTRALBANKS/klvykaanlvg/chart.png

Key developments that may affect the markets on Friday:

Economic Data – Flash PMI Estimates for Major Economies

S&P reviews Germany’s credit rating

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