Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

Marketmind: Fed fireworks set nervy stage for BoE

Published 21/09/2023, 05:31
© Reuters. FILE PHOTO: A general view of the Bank of England (BoE) building, in London, Britain, August 4, 2022. REUTERS/Maja Smiejkowska/File Photo
JP225
-
CL
-

A look at the day ahead in European and global markets from Kevin Buckland

If the market vacillations that followed the Federal Reserve are anything to go by, European investors should buckle up ahead of policy decisions from no less than four of the region's biggest central banks today - with the Bank of England providing the crescendo.

Considering investors largely expected a hawkish pause from U.S. policymakers, the resulting surge in Treasury yields and slide in stocks show that Chair Jay Powell showed a little more talon than they were comfortable with.

U.S. yields pushed even higher in the Asian time zone, while U.S. stock futures pointed lower. Asian shares slumped region-wide - including a 1% slide for Japan's Nikkei - while crude oil extended its retreat from a 10-month peak.

European equities have scope to fall at the open, following their bounce in the previous session. How much a hawkish Fed can spoil the good feeling from yesterday's surprise fall in British inflation will ultimately come down to what the BoE makes of the conflicting forces at play, in a finely balanced call on whether to hike or skip.

But the BoE is actually the last of the European central banks to set policy on Thursday, with the SNB and Riksbank kicking things off, followed shortly by Norges Bank.

This week's central bank bonanza doesn't end in Europe either. The Bank of Japan's policy decision on Friday will be one of the most scrutinised in a string of closely watched recent meetings, after Governor Kazuo Ueda made a startling hawkish shift in a Yomiuri newspaper interview this month, suggesting negative interest rates could be gone by year-end.

Japanese 10-year yields spiked to decade highs in today's session.

Japan's currency, though, is at the mercy of the dollar, sinking to the weakest since the start of November to 148.465 yen, increasing the risk of central bank intervention.

Key developments that could influence markets on Thursday:

-Swiss National Bank (0730 GMT)

-Riksbank (0730 GMT)

© Reuters. FILE PHOTO: A general view of the Bank of England (BoE) building, in London, Britain, August 4, 2022. REUTERS/Maja Smiejkowska/File Photo

-Norges Bank (0800 GMT)

-Bank of England (1100 GMT)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.