© Reuters. FILE PHOTO: People walk outside the Bank of England within the City of London financial district in London, Britain May 11, 2023. REUTERS/Henry Nicholls//File Photo
A have a look at the day ahead in European and global markets from Tom Westbrook
A red tide swept over Asia-session screens on Friday as markets took a hot Japanese inflation reading and the Bank of England’s super-sized rate hike as bad news for growth.
looks set to snap a 10-week winning streak and the MSCI Asia ex-Japan index was poised for its worst week of the yr, as rates and inflation look higher for longer. [MKTS/GLOB]
The yen earned some reprieve, however it’s shaky and at 143 to the dollar is firmly in intervention-watch territory.
Sterling had already didn’t hold on to much of the boost from the Old Lady of Threadneedle Street’s hawkish turn, as bond markets see the economic fallout from high rates being deleterious, and it slid further against a rising dollar on Friday. [GB/][GBP/]
The , a growth bellwether, is quickly unwinding a two-week rally and Aussie stocks are down 3% in three days.
The sour turn leaves markets in a fragile spot ahead of world purchasing managers’ index surveys due through the day.
Softening is already broadly expected, but, on this kind of mood, any surprise may very well be taken badly, as solid numbers may only augur more hikes and better rates. British retail sales figures are also due and expected to indicate contraction.
Chinese markets were closed on Friday for a vacation, but China futures were down almost 1% and an early-month rally on stimulus hopes has all but faded away, leaving investors feeling besieged by bad news.
In emerging markets, it’s a protracted method to the weekend for the Turkish Lira which is crumbling as a 650 basis point rate hike on Thursday fell far wanting market expectations and was seen as an indication of the political limits on monetary policy.
Key developments that might influence markets on Friday:
Europe, UK and U.S. PMIs
UK Retail Sales