A look at the coming day in the European and international markets of Ankur Banerjee
Investors settled into Asian trading hours as stocks drifted while the dollar clung to overnight gains. The prevailing mood of anxiety is likely to continue as we head into the critical next few weeks of central bank meetings.
A Reuters poll of economists showed that the Fed is expected to offer a final increase of 25 basis points in May and then keep interest rates steady for the rest of the year. Markets are also anticipating this rise, but expect some reductions towards the end of 2023.
On the other hand, the Bank of England is likely to need to stay on its hawkish track, as data for the week showed that UK inflation remained hot. According to data released on Wednesday, Britain was the only country in Western Europe to report double-digit inflation in March, after falling slightly more than expected.
Investors are now fully pricing in a quarter-point rate hike to 4.25% on May 11 at the Bank of England’s next meeting and expect rates to peak at 5% by September, according to futures markets.
Various strategies on both sides of the Atlantic have recently pushed the pound and the euro to multi-month highs and which direction the European currencies will head next is likely to remain investor interest.
Meanwhile, consumer inflation in New Zealand came in below expectations in the first quarter but remained near historic highs, boosting bets of another rate hike in May.
The RBA will get a new specialist monetary policy board, which will be chaired by the governor but have independent expert members with more power over setting interest rates.
Elsewhere, Tesla shares fell after the electric vehicle maker posted its lowest quarterly gross margin in two years, below estimates. Elon Musk doubled down on the price war he launched at the end of last year, saying Tesla would prioritize sales growth over profit in a weak economy.
Key developments that may affect the markets on Thursday:
Economic Events: German Producer Price Index for March, Eurozone Consumer Confidence for April, Industry Confidence in France for April
Reporting by Ankur Banerjee in Singapore; Edited by Edmund Kellman
Our standards: Thomson Reuters Trust Principles.
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