A look at the day ahead in European and global markets from
Ankur Banerjee
Inflation remains the watch word in the markets on Friday as
investors await data on consumer prices from Spain, France and
Sweden after U.S. data showed sticky inflation, while the latest
report from China highlighted persistent deflationary pressures.
Thursday’s U.S. consumer price data stoked expectations that
the Federal Reserve is perhaps not yet done with monetary
tightening. Markets are now pricing in about a 40% probability
of a rate hike in December, versus a 28% chance before the
report.
In recent comments, Fed officials have cited rising bond
yields as a factor that may allow them to end the rate hike
cycle.
But the latest data has brought some of the rate jitters
back.
It all made for a risk-off environment during Asian hours,
with MSCI’s broadest index of Asia-Pacific shares outside Japan
sliding 1%, on course to snap its three-day
winning streak.
The dollar held onto its overnight gains against a
basket of currencies, after ending Thursday trade with its
biggest one-day percentage jump since March. That has put the
yen back under pressure and hovering close to the 150
per dollar level. It last fetched 149.78 per dollar.
Meanwhile, Singapore’s central bank surprised the market by
announcing it would shift to a quarterly schedule of policy
statements in 2024 from its twice-a-year routine. Its monetary
settings were left unchanged.
Futures indicate European stocks are set to continue the
sombre mood with a lower open.
Also likely weighing on investors’ minds is Friday’s report
from China – where deflation, not inflation, is worrying the
markets – which showed the consumer price index unchanged in
September from a year earlier, missing the forecast of a 0.2%
gain in a Reuters poll.
There was some good news, though, among the raft of economic
data from the world’s second-biggest economy. The pace of
decline in China’s exports and imports slowed for a second month
in September, adding to recent signs that the faltering economy
may be gradually stabilising.
With earnings season upon us, the market’s eyes will be on
U.S. banks. Results from JPMorgan Chase due on Friday
will set the tone.
Key developments that could influence markets on Friday:
Economic events: September inflation data from Spain, France
and Sweden; Eurozone industrial production data for August
(Reporting by Ankur Banerjee; Editing by Edmund Klamann)
