What's in store for stocks when rate hikes end?
STOXX 600 down 0.18%
Construction names drag, miners lift
BOJ keeps ultra-loose policy
Traders digest cenbank activity
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at email@example.com
WHAT'S IN STORE FOR STOCKS WHEN RATE HIKES END? (1010 GMT)
It's the question on every stock market trader's mind; what's in store when central banks stop hiking rates?
The query is even more pertinent this week, after the Fed and the Bank of England both held rates steady. BofA equity strategists have cast a glance to the past for an answer.
"The historical evidence suggests this crucially depends on the subsequent performance of the economy," they write.
Over the last 50 years, European equities tended to rise when hiking stopped in a non-recessionary economy and wasn't followed by a recession, they say. On the other hand, when monetary tightening resulted in a recession, equities corrected by 20% or, with cyclicals underperforming defensives by 30% on average.
So what do they expect from the economy?
"Every hiking cycle over the past 50 years that saw a 300bps+ year-on-year rise in the Fed Funds rate resulted in a sharp downturn."
This time around, that figure reached a peak of 450bps.
Even so, the U.S. economy has held up. They attribute this to a positive fiscal impulse and support from companies running down pandemic-era order backlogs.
But with PMIs already rolling over, credit conditions tightening, the fiscal impulse fading and such backlogs ending, BofA sees a loss of growth momentum ahead, and it will only intensify.
They remain negative on European equities and underweight cyclicals versus defensives.
Their outlook points to a 15% downside for the STOXX 600 .STOXX by early 2024, and an 8% further downside for cyclicals versus defensives, and a 12% underperformance for value verus growth.
STOXX HEADS FOR BIGGEST WEEKLY DROP IN A MONTH (0741 GMT)
The STOXX 600 .STOXX is headed for its biggest weekly drop in around a month, as traders digest signals that global interest rates may have peaked.
The index is off 0.4% today, which if maintained would spell a weekly decline of 2%.
Only basic resources .SXPP and tech names .SX8P are flirting with positive territory, up about 0.3% and 0.1% respectively. The construction and materials .SXOP sector is down 0.9% and telecoms .SXKP are not far behind, off 0.7%.
Ubisoft is near the top of the STOXX 600, up 3.9% after Britain's antitrust regulator said on Friday that Microsoft's MSFT.O restructured acquisition of Activision Blizzard ATVI.O "opens the door" to the deal being cleared.
The FTSE 350's .FTLC biggest riser is ASCL.L, up 10.4%, after some well-received first-half results, which showed rises in revenue and Ebitda compared to the previous half.
Insurer Phoenix Group PHNX.L meanwhile is among Europe's biggest fallers, down 3% after taking a stake in Hambro Perks.
STOXX SET FOR SOFT START AS TRADERS MULL PEAK RATES (0625 GMT)
European stocks are heading for a soft start to Friday, as traders digest the flurry of central bank activity that has dominated the last two weeks.
A jam-packed week of rate decisions has culminated in The Bank of Japan maintaining ultra-low interest rates on Friday, amid a wider chorus of "higher for longer" for other central banks that are nearing the end of their respective hiking cycles.
EuroSTOXX50 .STXEc1 futures are off 0.2%, while FTSE futures .FDXc1 and DAX futures .FDXc1 are down 0.3%.
French vaccine maker Valneva VLS.PA has reported a smaller half-year loss, as a rebound in global tourism boosted sales of its travel shots Ixiario and Dukoral.
Friday marks the deadline for a possible expansion of the United Auto Workers (UAW) strikes, as the union rallies against the Detroit Three automakers in multiple states.
London-listed Aquis Stock Exchange AQX.L said on Thursday that EU plans to provide data on share transactions across multiple trading platforms in the European Union will boost its earnings.
BANK OF JAPAN ALSO HOLDS POLICY AND STAYS DOVISH (0611 GMT)
The odds the Bank of Japan would tweak its super-loose policy settings or guidance were long to begin with, and sure enough the BOJ stuck to script with a no-change decision on Friday.
The yen JPY= fell in response, even as Finance Minister Shunichi Suzuki spoke of the urgency to contain its fall.
Focus now shifts to what BOJ Governor Kazuo Ueda says in his news briefing, given that the uncertainty over when this laggard in a global monetary cycle will move - torn between opposing domestic and global forces - is gnawing at Japanese markets and global investors.
A majority of economists polled by Reuters expect the central bank will abolish the 10-year yield control scheme by the end of 2024. More than half reckon that the negative interest rate policy will end next year, too.
The 10-year Japanese Government Bond yield JP10YTN=JBTC hit a 10-year high of 0.745% on Thursday, while the yen is fast heading back towards the new 2023 low of 148.45 per dollar, also hit on Thursday.
World stocks and risk assets had tumbled for a second day on Thursday and U.S. bond yields soared to multi-year highs, as investors adjusted to the Fed's revised rate outlook that hammered home its "higher for longer" stance on interest rates.
MSCI's World Index .MIWD00000PUS plunged 1.5% overnight for its biggest fall in six weeks, while its fifth daily decline in a row marked its worst run since March. MSCI's Asia ex-Japan index is flat after Thursday proved to be its worst day since early August, and Wall Street slumped to a three-month low.
Further complicating the picture for investors, however, were the surprisingly dovish decisions from the Bank of England and the Swiss National Bank. Both kept rates on hold on Thursday, confounding expectations they would hike.
In another interesting development for fixed income investors, JPMorgan said it will include India in its widely tracked emerging market debt index, setting the stage for billions of dollars of inflows into the world's fifth-largest economy.
Speculation that Tokyo will intervene in the FX market to support the yen is unlikely to cool. Prime Minister Fumio Kishida said on Thursday that no option is ruled out in addressing "excessive volatility", and that Japan is communicating with other currency authorities.
European markets have the first purchasing managers index reports for September on Friday, which were kicked off by Australia and Japan, while Germany, France and Britain will join in later in the day.
Key developments that could influence markets on Friday:
UK retail sales
UK, US, Euro zone Flash Sept PMIs, Service PMIs
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.