Traders work on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. September 13, 2022. REUTERS/Andrew Kelly
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A look ahead for the day ahead in the US and global markets by Mike Dolan.
The approaching economic “hurricane” that JPMorgan CEO Jamie Dimon warned about in June is starting to blow hard around the world, and global markets are collapsing again.
In a sharp business review late Thursday, global delivery firm FedEx withdrew its financial forecast it released just three months ago, saying the global demand slowdown had accelerated in late August and will worsen in the November quarter. Also missing sales and earnings guidance, FedEx stock fell 16% after the bell. Continue reading
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Adding to the macro gloom, the World Bank warned late Thursday that the global economy was headed for recession as central banks around the world simultaneously hike interest rates to combat persistent inflation. Continue reading
After assessing that the world was in its sharpest relapse from a post-recession recovery since 1970, she saw little or no support from major central banks and said they may raise rates another 2 percentage points past the 2-point increase compared to the 2021 average.
As markets brace for another round of rate hikes by the US Federal Reserve and Bank of England next week, stocks around the world tumbled on Friday. The MSCI index of world stocks (.MIWD00000PUS) was close to its lowest level in two months and faced its worst full week since June. Asian and European stock markets plummeted and US stock futures were down.
With two-year US Treasury yields closing at 4% for the first time in 15 years, Fed fund futures markets now see interest rates as high as 4.5% through March and see no return below 4% for the rest of the year 2023
As global currency markets became increasingly unsettled as a result, the dollar rose again in the last 24 hours – surpassing 7.0 Chinese yuan for the first time in more than two years and hitting its highest level against the British pound since 1985.[FRX/}[FRX/}[FRX/}[FRX/}
In a sign of deteriorating investor sentiment, markets dismissed signs of surprising resilience in China’s retail sales and industrial production numbers for August and instead focused on the fallout from the deepening housing crisis. Continue reading
Home investment fell 13.8% last month, the fastest pace since December 2021. New home prices fell 1.3% year-on-year in August, the fastest since August 2015.
With few signs China will ease significantly on zero-COVID soon, some analysts expect the economy to grow just 3% this year, which would be the slowest since 1976 — excluding the 2.2% Expansion during the first COVID hit of 2020.
Foreign investors continued to exit Chinese bonds over the past month, and with the yuan falling, China’s foreign exchange regulator on Friday urged companies not to speculate on the currency.
Sterling’s last slide was clearer. UK retail sales fell much more than expected in August, another sign the economy is slipping into recession. Continue reading
Oil was higher on Friday, but the year-on-year rise in the price of Brent crude has eased below 20% for the first time since February 2021. Read more
The International Energy Agency forecast near-zero oil demand growth in the fourth quarter on weaker demand prospects for China, while the US Department of Energy said it was unlikely to attempt to replenish the strategic oil reserve until after fiscal 2023.
Key developments that should give more direction to US markets later on Friday:
* US University of Michigan Consumer Sentiment and Inflation Expectations for September; Government bond data in July
* US President Joe Biden meets with South African President Cyril Ramaphosa in Washington
Dollar strengthening against Asian currenciesReuters Graphics
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By Mike Dolan, edited by Susan Fenton [email protected]. Twitter: @reutersMikeD
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