Shares and pound splutter ahead of UK budget



*

European stocks drop after early rise

*

Dollar regains strength on hawkish Fed speak

*

Micron gloom frazzles chipmakers

*

Oil and metals sag in commodity markets

By Marc Jones

LONDON, Nov 17 (Reuters) - Nagging recession and interest rate worries had Europe's markets spluttering on Thursday, and the pound started to sag as Britain looked to put last month's disastrous fiscal experiment behind it with an austere-looking budget.

Trading got off to a choppy start as optimism about Siemens' earnings and that the European Central Bank might slow its rate hikes gave way to the selling that dogged Wall Street and Asia overnight.

That was driven by renewed Fed policymaker talk that rates could shoot up further. It meant the dollar was fractionally higher after a recent 7% slump, though Europe's lower government debt yields suggested the bond markets were largely indifferent.

Sterling went from $1.193 to $1.1877 GBP=D3 against the greenback in early trading in London ahead of an 1130 GMT budget plan from the country's new finance minister Jeremy Hunt.

He and Prime Minister Rishi Sunak hope it will restore confidence after former PM Liz Truss' unfunded tax cut plans caused widespread panic, sent the pound to an all-time low and forced Truss to quit after just 50 days in charge.

DoubleLine portfolio manager Bill Campbell said the pound's rebound over the last month meant the budget's likely spending cuts were probably already priced in, though and Britain's experience may well be mirrored elsewhere, especially with recessions looming and an ongoing energy crisis.

"The market has basically told the UK government that it is not gong to accept anything too aggressive on the fiscal stimulus front," Campbell said.

"It seems like we are moving into a fairly risky environment," he added, referring to likelihood that EU countries will try to frontload their borrowings next year. "I think it's highly likely that we could see some repeats of what happened in the UK".

Overnight in Asia grim signals from Micron Technology about excess inventories and sluggish demand sent chipmaker stocks sprawling.

On Wall Street, stronger-than-expected U.S. retail sales had suggested the Federal Reserve was unlikely to relax its battle with inflation.

That fuelled concerns about the economic outlook, with the U.S. Treasury yield curve remaining deeply inverted in Tokyo trading and suggesting that investors are braced for recession.

Hong Kong's Hang Seng Index .HSI fell 1.15%, with its tech stocks .HSTECH slipping more than 4% at one point. Mainland Chinese shares also declined, with blue chips there .CSI300 falling 0.5% having ripped 10% higher this month.

Japan's Nikkei .N225 lost 0.35% and South Korea's Kospi .KS11 dropped 1.4%, each led by declines in heavyweight chip players.

Overnight, the Philadelphia SE Semiconductor Index .SOX slumped 4.3% after Micron MU.O said it would reduce memory chip supply and make more cuts to its capital spending plan.

The tech-heavy Nasdaq .NDX slumped 1.5% while the S&P 500 .SPX slid 0.8%.

However, e-mini futures indicated some respite at the reopen, pointing to barely any movement on the Nasdaq NQc1 or the S&P EScv1 .

FED UP

Traders will also scrutinise speeches from Fed officials on Thursday for hints about rate hikes. Regional Fed Presidents Raphael Bostic, Loretta Mester and Neel Kashkari are all due to speak.

Hawkish remarks from Fed officials overnight added to doubts about a shift in policy, with San Francisco Fed President Mary Daly - until recently one of the most dovish officials - saying a pause was off the table.

The dollar fell 0.2% against the Japanese yen JPY=EBS on Thursday to 139.28 as it continued to trade around its lowest level for three months. It plunged 3.7% on Thursday last week when U.S. consumer inflation data for October came in lower than expected.

The euro EUR=EBS sank 0.14% too, while the risk-sensitive Aussie dollar AUD=D3 slipped 0.4%. and China's yuan CNY=CFXS weakened 0.35% to 7.126 per dollar as new COVID cases caused concerns that officials could order more lockdowns.

Money markets give 93% odds that the Fed will slow to a half-point rate increase on Dec. 14, with a 7% probability of another 75 basis point increase. Traders still see the terminal rate close to 5% by next summer, up from the current policy rate of 3.75-4%.

"Fed commentary, like the resilient spending numbers, gave little succour for anyone looking for an imminent pivot," with caution permeating markets as a result, Ted Nugent, an economist at National Australia Bank, wrote in a client note.

U.S. 10-year Treasury yields US10YT=RR recovered modestly from a six-week low at 3.671% hit overnight in Tokyo trading, last standing at about 3.72%, while the two-year yield US2YT=RR consolidated near its lowest level since Oct. 28 around 4.37%.

Gold XAU= slid 0.6% to about $1,763 an ounce against a firmer dollar.

Crude oil steadied in Europe after settling more than a dollar lower overnight, following the resumption of Russian oil shipments via the Druzhba pipeline to Hungary and as rising COVID-19 cases in China weighed on sentiment.

Brent crude LCOc1 futures were last at $92.30 a barrel have slipped below $92 overnight, while U.S. West Texas Intermediate (WTI) crude CLc1 hovered at $84.85 a barrel.
Additional reporting by Kevin Buckland in Tokyo; editing by Barbara Lewis

Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.

Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.

Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.

Nous utilisons des cookies pour vous donner la meilleure expérience possible de notre site internet. En savoir plus ou modifier vos paramètres de cookies.

Avertissement sur les risques : votre capital est à risque. Les produits à effet de levier ne sont pas recommandés pour tous. Veuillez consulter notre Divulgation des risques