- Equity markets continue to slide.
- Wall Street futures fell 0.30% on average after sharp declines on Wednesday.
- Central banks: raise rates all except Japan (unchanged) and Turkey (low).
The climate in the equity markets continues to be dominated by pessimism. In Europe and on Wall Street falls dominate. The Fed’s rate hike on Wednesday was followed by several central banks on Thursday. Japan tries to stop the fall of the yen and intervenes in the market.
At a lower rate, but the drops in the bags continue
In Europe, the main markets are falling by an average of 0.75%. The S&P 500, after falling 1.70% on Wednesday, is retreating 0.13% on Thursday. Stocks continue to be affected by monetary tightening around the world and the weak economic outlook. To this must be added the new risks of the war in Ukraine, aggravated by the statements of Russian officials who continue to warn that they will even use nuclear weapons to defend their territory.
After the decisions of several central banks, the economic calendar shows ahead for Thursday the weekly report of requests for unemployment benefits in the US. On Friday, the preliminary PMI report for Europe and the US will be released on activity in the month of September.
Among the companies that will present results on Thursday is Costco,Accenture, FedEx and Factset.
The sovereign bonds continue to slide. Treasury bond yields remain near their highest in years, although they are down modestly, with the 10-year bond above 3.50% and the 2-year bond above 4.05%. The Fed’s decision on Wednesday to raise interest rates by 75 basis points did not generate any major surprises.
Everyone goes up except Japan, which reaches into the market
Hours ago, the Japanese government intervened in the foreign exchange market by buying yen and selling dollars. This sent the dollar lower throughout the market and led to a pullback in USD/JPY from levels above 145.00 to fall below 142.00. Before the announcement of the intervention, the Bank of Japan held the monetary policy meeting in which it decided to keep its accommodative stance unchanged.
DXY fell from decade highs above 111.80 to fall below 111.00. The movements generated from Japan they even had an impact on metals that recovered and erased daily losses. Gold went from testing lows for the year at $1655 to rally towards $1680, and silver returned above $19.50.
The Swiss National Bank raised the interest rate as expected by 75 basis points. The data did not generate surprise. The Swiss franc was affected after the decision and strong gains are recorded in the USD/CHF and in the EUR/CHF. Central banks also raised interest rates Norway, Taiwan, Philippinesand Indonesia.
The Bank of England raised the interest rate by 50 basis points to 2.25%, the highest level since 2008. The monetary authority estimates that the economy will contract in the third quarter. The pound fell modestly after the decision was known. GBP/USD is in positive territory for the day, attempting to pull away from its lows in decades.
The central bank of Turkey cut interest rates by 100 basis points, sending USD/TRY to record highs near 18.40.
Technical levels
Source: Fx Street
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