© Reuters. FILE PHOTO: A trader works at the stock exchange in Frankfurt, Germany March 9, 2020. REUTERS/Kai Pfaffenbach
A look ahead for the day ahead in Ankur Banerjee’s European and global markets
Signs of an economic slowdown around the world, ongoing worries about the US debt ceiling and ever-present fears of a deepening crisis in the banking sector have kept investors nervous and risk-averse all week, and Friday was no different.
The MSCI Asia ex-Japan index was down 0.5%, except that it was up 0.8% on the day, consistent with this year. The US dollar held on to Thursday’s gains and looks set to end a two-week losing streak. Gold held steady while short-selling coverage pushed oil prices higher.
Investors will focus on a range of economic data out of Europe, with UK Gross Domestic Product data illustrating the state of the economy and likely to influence the fate of Sterling. The pound was still suffering from Thursday’s decline after the Bank of England hiked interest rates and left the door open for further monetary tightening.
Also on deck are inflation reports from France and Spain, highlighting the impact of European tightening on prices in the region.
US data showed the jobs market may be showing signs of cracking while inflation eased somewhat, leading traders to bet the Federal Reserve is likely to be done tightening.
Meanwhile, sovereign debt concerns linger and Treasury Secretary Janet Yellen is set to discuss the impasse on raising the sovereign debt ceiling with board members of the Bank Policy Institute lobby group next week.
A meeting scheduled for Friday between President Joe Biden and top lawmakers has been postponed, further stoking investor concerns. If the cap is not raised, the federal government could run out of money to pay its bills as early as June 1 — two and a half weeks from now.
Elsewhere, there are no signs that the US regional banking saga is coming to an end. PacWest Bancorp is the latest company to face investor wrath after the Los Angeles-based lender said deposits were down and that it had provided the Fed with more collateral to boost liquidity.
“The headlines increased our customers’ fears about the safety of their deposits,” the bank said.
After all, it looks like Twitter will soon have a new CEO. Elon Musk said (on Twitter, of course) he’d found a new CEO for the social media site but didn’t name the person, while the Wall Street Journal reported that Linda Yaccarino, CEO of Comcast (NASDAQ:) and NBCUniversal, in conversations is work.
Key developments that could impact markets on Friday:
Economic events: UK first quarter GDP data, industrial production, inflation data for France and Spain
Speakers: Huw Pill from the Bank of England, Deputy Governor of the Riksbank Per Jansson
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