EU flash PMI, new commercial vehicle registrations in Europe;
flash PMIs for Germany, France, UK; no major corporate updates
Shares may inch higher in Europe after losses the previous day.
In Asia, stock benchmarks declined; the dollar steadied; Treasury
yields mostly gained; while oil and gold declined.
European shares could open slightly higher Friday after closing
lower Thursday, as investors reacted to interest-rate hikes by
several European central banks.
U.S. stocks dropped overnight, extending losses after the Fed
decision on Wednesday.
Rhys Williams, chief strategist at Spouting Rock Asset
Management, said markets are going to drift lower in the short term
as "most of the correction is behind us."
"Especially in a time of quantitative tightening, where you've
lost the biggest buyer of assets in the U.S. government, so you
have illiquidity working against you. Williams said.
"But I think the higher the bond rates go, the faster we get
into a recession era, and the quicker the 10 (year Treasury) will
pivot. So maybe we need more pain in the short term, which will be
better for the long term."
The dollar steadied in Asia. There could be calmer
foreign-exchange markets today after all of the central-bank moves
and updates, MUFG Bank said.
However, USD strength may be difficult to avoid in the near
term, MUFG Bank added.
Fed Chair Powell saying rates have to go a lot higher boosted
the dollar, said Scott Colyer, CEO of Advisors Asset
"Powell is a hard liner and he only cares about bringing down
inflation, he said.
"There's a war in Europe driving wealth to safety. The euro
isn't a place people want to keep wealth if war breaks out on the
continent," he added.
"It's almost the stars aligning" for the dollar, Colyer
Japan's forex intervention, if sustained, may be able to keep
USD/JPY from rising above 145, as the headwind for the yen as a
result of U.S.-Japan interest-rate differentials will likely abate
eventually, Capital Economics said.
In the near term, divergent monetary stances seem set to keep
piling downward pressure on the yen, it said.
Yet, with inflationary pressures starting to ease in the U.S.,
Capital Economics expects the Fed to be cutting rates by the end of
next year, and for U.S. yields to begin falling ahead of that as
the Fed turns less hawkish.
Treasury yields mostly advanced in Asia, extending an overnight
surge after foreign governments and central banks rushed to raise
interest rates or otherwise support local currencies pressured by
the dollar's strongest rally in a generation.
While analysts said they couldn't definitively pin Thursday's
move on one particular event, many said it could be broadly
explained by how the Fed's aggressive interest-rate increases are
strengthening the U.S. dollar and putting pressure on other
countries to defend their currencies as they also contend with
The supply of gilts is expected to be much higher than
previously thought due to the government's plan on fiscal
expansion, Capital Economics said following the BOE's rate
The result is likely to be higher gilt yields, higher government
debt and a weakening pound.
"More borrowing comes with more risk in an environment where
interest rates and inflation are rising," Capital Economics said,
adding that "a commitment to fiscal discipline in the medium term
[in the minibudget] will probably be a good start."
The London-based consultancy expects gilt yields to end lower in
2023 than they are now.
Oil futures declined in Asia amid demand concerns and a gloomy
global economic outlook.
"There have also been signs of the physical crude market
weakening over recent months, with activity in the prompt market
slowing alongside sagging futures prices," Fitch Solutions
"In the near term, the outlook is highly uncertain," Fitch
Economic uncertainty is likely to cap any rallies for oil in the
mid $90-to-$100 a barrel range "leaving oil in a sideways trading
pattern near-to-medium term," said Sevens Report Research.
Still, "the geopolitical influences from the war in Ukraine will
remain a tailwind as will OPEC+ badly undershooting their
production targets," Sevens said.
Gold prices edged lower early Friday, after rising overnight as
Russia racheted up the Ukraine war.
The precious metal is clearly going to become a safe-haven as
the global outlook deteriorates and as Wall Street grows confident
that the peak in Treasury yields is approaching, said Oanda's
Gold has huge support at the $1,660/oz level, and if it can
stabilize above there, gold prices could eventually rise above the
$1,700/oz level, Moya added.
Zinc prices edged lower in early Asian trading amid concerns
about weaker demand.
However, continuing supply disruptions will likely be closely
watched as they continue to push inventories lower, ANZ said.
Zinc stockpiles in LME warehouses have slid to their lowest
levels since February 2020, ANZ added.
Data from China's statistics bureau also showed output of
refined zinc fell in August, said ANZ.
Chinese iron-ore futures rose, extending a recent uptrend amid
restocking demand ahead of China's National Day holiday in
There could also be supply-side constraints on the raw material
in the near term, Fitch Solutions said.
While that may help "counterbalance the weakness in demand, we
do not expect to see any major revival in prices over the coming
quarters," Fitch said.
TODAY'S TOP HEADLINES
World's Central Banks Race to Raise Rates After Fed Increase
LONDON-Central banks around the world moved Thursday to combat
the effects of a soaring dollar and rising inflation, joining the
Federal Reserve in risking a recession to rein in climbing
In a flurry of central-bank meetings from Norway to South
Africa, many raised rates by larger-than-expected margins in a day
that analysts at ING billed as "Super Thursday."
U.K. Consumer Confidence Hit Record Low in September
U.K. consumers turned more pessimistic in September as high
inflation and rising interest rates outweighed any effect from
recent government measures to freeze households' rising energy
The consumer-confidence barometer compiled by research firm GfK
decreased to minus 49 in September from minus 44 in August, the
lowest level since the survey began in 1974 and missing economists
expectations of a slight improvement.
Audits of Chinese Companies Start to Face U.S. Inspections
U.S. regulators have started inspecting China-based audits,
kicking off a monthslong process that will determine whether
companies from Alibaba Group Holding Ltd. to Yum China Holdings
Inc. can remain listed on American stock exchanges.
The inspection, which is set to last eight to 10 weeks in Hong
Kong, would allow the U.S. audit watchdog to decide by the end of
this year whether China is honoring a landmark agreement to give
U.S. accounting inspectors full access to audit working papers of
New York-listed Chinese companies.
Ukraine Prisoner Exchange Sparks Backlash in Russia
A prisoner exchange between Russia and Ukraine that included
senior Ukrainian commanders was hailed as a victory by Kyiv but
provoked criticism among nationalists in Russia who questioned the
decision to release them.
U.K. Leader Liz Truss's Plan for Tax Cuts and New Spending Takes
a Page From Reaganomics
LONDON-Four decades after Ronald Reagan, new U.K. Prime Minister
Liz Truss is betting that a dose of tax cuts, new spending and
deregulation will do for the British economy what a similar recipe
did in the early 1980s for the U.S.: lead to an economic
On Friday, Ms. Truss' government is expected to announce a
series of tax cuts, including cutting taxes for new home purchases
as well as reversing planned hikes in the corporate tax and cutting
a recent increase in payroll taxes. It will also abolish limits on
bonuses for bankers and allow fracking for shale gas across the
Iran Restricts Internet Access as Women's Rights Protests
Iran restricted access to the Internet in large parts of the
country on Thursday as authorities try to curb a women's rights
protest movement that has relied on social media to express dissent
and rally support, while the U.S. imposed sanctions on Iran's
The death of 22-year-old Mahsa Amini late last week in police
custody for allegedly violating Iran's strict Islamic dress code
has sparked demonstrations across the country. Protesters have
clashed violently with security forces who used tear gas and fired
Tesla Countersues California Agency That Filed Racial
Tesla Inc. has countersued the California agency that filed a
racial discrimination lawsuit against the company, alleging that
the government organization violated state law in bringing about
The electric-vehicle maker, in the suit filed Thursday in
Alameda County Superior Court, said the California Civil Rights
Department-previously known as the California Department of Fair
Employment and Housing-violated state rules by filing the lawsuit
without seeking public comment or holding a public hearing.
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Expected Major Events for Friday
04:30/NED: 2Q GDP - 2nd estimate
06:00/EU: Aug New Commercial Vehicle Registrations in Europe
statistics (EU27 + EFTA3)
06:00/NOR: Aug Credit Indicator C2
07:00/SWI: 2Q Balance of Payments
07:00/SPN: 2Q Final GDP
07:15/FRA: Sep France Flash PMI
07:30/GER: Sep Germany Flash PMI
08:00/EU: Sep Eurozone Flash PMI
08:00/POL: Aug Unemployment
08:30/UK: Sep Flash UK PMI
09:00/MLT: Aug Registered Unemployed
09:00/LUX: Jul Trade
10:00/UK: Sep CBI Distributive Trades Survey
10:00/IRL: Aug WPI
15:59/UKR: 2Q Unemployment
16:59/SPN: 2Q Quarterly Balance of Payments
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(END) Dow Jones Newswires
September 23, 2022 00:16 ET (04:16 GMT)
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