EU Harmonised CPI; UK BOE Quarterly Bulletin/Market Participants
Survey; Italy Foreign Trade EU; ECOFIN meeting of EU finance
ministers; European Investment Bank Board of Governors annual
general meeting; updates from Iberdrola, Tesco PLC
Europe could be set for a steadier opening session, although any
early gains will be limited on worries of a global economic
pullback. In Asia, stocks followed Wall Street lower, the dollar
and gold edged higher and oil prices dipped.
European and U.S. stock futures were slightly firmer early
Friday, although market volatility is likely to continue as fears
mount that drastic interest rate hikes may trigger a global
U.S. equities were hammered Thursday, sending the Dow
Industrials below 30000 for the first time since January 2021, with
Nasdaq shedding 4% as rate-sensitive technology stocks led
"I think this is the realization that we really could be heading
for a recession. I am not sure that had really filtered through to
the mind of the market until now," said Altaf Kassam, head of
investment strategy for Europe, the Middle East and Africa at State
Street Global Advisors.
Read: Wall Street Officially in a Bear Market: What Strategists
Say Investors Should Do
The dollar steadied in Asia after it's slide Thursday on the
notion that other central banks, globally, will need to follow the
Federal Reserve's tightening path.
"The Fed was more aggressive than expected but
counterintuitively the dollar sold off because the next step in the
process is that foreign central banks have to step up their game
and lend support to their currencies," said IGM's US-based FX and
rates fundamental analyst Bruce Clark.
"Negative-rate regimes are going to start playing catch up in
order to prop up their currencies to fight inflation," Clark
The yen weakened sharply after the Bank of Japan maintained its
ultralow interest rates, standing pat on its yield curve control
There was arguably less of an impetus for an immediate move by
the BOJ, given that domestic prices have yet to see runaway
momentum and the economy is still in a fragile state, said
However, there might still be some hawkish hints including
chances for a YCC review going forward if inflation pressures
broaden more sustainably.
Treasury yields extended declines in Asia as nervous investors
continued to flock to bonds, following the Fed's biggest interest
rate hike in 28 years.
"Central bankers are now faced with the no-win scenario of
pushing nominal policy rates higher to chase soaring inflation in a
bid to maintain inflation fighting credibility, regardless of the
spillover effects on financial market stability or economic growth
expectations," said BCA Research.
"'Overtightening' monetary policy is a growing risk, especially
in Europe where the neutral interest rate remains much lower than
in the U.S."
Read: U.S. Economic Growth Shows Signs of Slipping
Crude futures were lower as negative sentiment, spurred by Wall
Street's losses and continued worries over the global economy,
gripped Asian markets.
The oil market remains very tight despite fears of aggressive
central bank tightening and the slower economic growth that will
ensue, said OANDA's Edward Moya, adding that 'buy the dip' should
probably still work for energy traders
Oil prices climbed on Thursday, shaking off early post-Fed
losses, to finish higher after the U.S. announced new economic
sanctions on Iran.
A visit by European leaders to Ukraine, meanwhile, was also
likely supportive for oil prices as it signaled the potential for
more sanctions against Russia's energy sector.
Read: Russia Slashes Gas Flows, Aiming Economic Weapon at
Gold dipped in Asia as the dollar strengthened. However,
risk-off sentiment prevails across markets, with safe-haven assets
such as bullion and government bonds possibly benefiting, said Tina
Teng of CMC Markets.
Base metals pared early gains as sentiment soured in Asia, but
prices remained in positive territory.
However, a stockpiling impulse is no longer countering global
macro headwinds, and prospects of continued Covid-19 flare-ups will
probably constrain China's ability to boost growth in the near
term, said TD Securities.
Chinese iron-ore futures fell close to 3%, extending recent
weakness over worries about sluggish terminal demand.
Steel demand appears softer, and steel mills are restocking on
the raw material according to their needs, said Huatai Futures,
adding that Beijing looks set to push ahead with its policy to
control crude steel output.
On the supply side, Australian and Brazilian iron ore exports
should return to high levels as weather conditions improve.
TODAY'S TOP HEADLINES
Bank of Japan Maintains Ultralow Interest Rates
TOKYO-The Bank of Japan maintained ultralow interest rates on
Friday, confirming that it won't join the Federal Reserve and other
major global central banks in tightening monetary policy.
The Japanese central bank kept its target for short-term
interest rates at minus 0.1% and its target for the 10-year
Japanese government-bond yield at around zero.
Russia Slashes Gas Flows, Aiming Economic Weapon at Europe
Moscow's move to slash natural-gas exports to Europe has pitched
the continent's energy crisis into a dangerous new phase that
threatens to drain vital fuel supplies and kneecap the continent's
Russia's state-owned gas giant Gazprom PJSC throttled deliveries
via the Nord Stream pipeline to Germany this week, blaming missing
turbine parts that were stuck in Canada due to sanctions.
U.S. Economic Growth Shows Signs of Slipping
The U.S. economy is starting to slow under the combined weight
of soaring inflation and climbing interest rates-including the
highest mortgage rates since 2008.
Recent reports show sharp declines in key sectors, raising the
prospects of a stalled economic recovery and possibly a recession.
Home construction across the U.S. fell sharply in May, the Commerce
Department said Thursday. Factories in the mid-Atlantic region
reduced activity for the first time in two years this month, the
Federal Reserve Bank of Philadelphia said. And Americans broadly
cut spending at retailers for the first time this year in May, the
Commerce Department said earlier this week.
Fintech Giant Klarna Slashes Fundraising Ambition
Klarna Bank AB is considering raising fresh funds at a
significantly lower valuation than it achieved a year ago,
according to people familiar with the situation, a sign of the
punishing environment for tech companies.
The Swedish payments firm is in talks with investors about a
deal that could value the company at around $15 billion, the people
said, less than it was seeking just last month. The Wall Street
Journal reported Klarna was in talks to raise up to $1 billion at a
low $30-billion-range valuation. One of the people said the current
talks could yield at least $500 million. There is no guarantee a
deal will take place.
AB InBev Is Trying to Catch Up With Inflation in Some Countries,
Anheuser-Busch InBev SA/NV says some of its beverages are going
to get pricier and come in variable sizes as the maker of Corona
and Bud Light looks to catch up with inflation in the U.S. and
Leuven, Belgium-based AB InBev found that despite regular
updates to its pricing, the company is lagging on cost increases in
certain markets, including the U.S. and Brazil, as inflation
accelerated since the beginning of the year.
France, Germany, Italy, Romania Back Ukraine's Bid for EU
Adobe Stock Is Falling After Hours. Earnings Guidance Was
Adobe stock is losing ground in late trading Thursday after the
provider of software for creativity, marketing, and documents
provided softer-than-expected guidance for both the August quarter
and the full fiscal year ending in November. Adobe is feeling the
effects of both intensifying headwinds from negative
foreign-exchange rates and the fallout from the war in Ukraine.
Adobe (ticker: ADBE) stock is down 4.4%, to $349 in late
trading. In the regular session Thursday, shares fell 3.1%.
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Expected Major Events for Friday
06:00/ROM: 1Q Employment and unemployment
07:00/SVK: May Harmonized CPI
07:00/AUT: May CPI
08:30/UK: 1Q Bank of England statistics on UK banks' external
09:00/CYP: May Harmonised CPI
09:00/MLT: May Harmonised CPI
09:00/EU: May Harmonised CPI
09:00/ITA: Apr Foreign Trade EU
10:00/POR: May PPI
11:00/UK: 2Q Bank of England Quarterly Bulletin
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(END) Dow Jones Newswires
June 17, 2022 00:37 ET (04:37 GMT)
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