A look at the day ahead in European and global markets from
Ankur Banerjee
Another day, another surprise hike. After the Reserve Bank
of Australia’s surprise earlier this week, it was the Bank of
Canada’s turn to stun markets with a 25 basis-point hike that
led traders to dial back expectations of the U.S. Federal
Reserve standing pat next week and sweat over the policy
outlook.
Broader consensus is that the Fed will do at least one more
hike. The question is whether it comes next week or in July. The
CME FedWatch tool showed the probability of the Fed hiking by 25
bps next week is 36%, it was 22% a day earlier.
More than 90% of economists, 78 of 86, polled by Reuters
said the policy-setting Federal Open Market Committee would hold
its federal funds rate at 5.00% to 5.25% next week. More than a
third though expect the Fed to raise rates at least once more
this year.
And so, investors are in a tetchy mood, with the MSCI Asia
ex-Japan a bit lower, the U.S. dollar index
flattish and U.S. Treasuries holding on to gains in Asian
trade.
With a light data calendar and futures pointing to a mixed
open in Europe, markets could drift on Thursday. Next week’s
series of central bank meetings will remain at the forefront of
market minds.
Meanwhile, revised data showed Japan’s economy grew more
than initially thought in January-March, helping the yen
strengthen.
In the corporate world, GameStop ousted its CEO and
made Ryan Cohen, the billionaire investor whose bet on the video
retailer made him popular among meme stock traders, its
executive chairman.
Coinbase CEO Brian Armstrong hit back at U.S.
Securities and Exchange Commission Chair Gary Gensler over the
agency’s lawsuit against the crypto exchange, calling him an
“outlier” while reassuring customers their funds were safe.
Key developments that could influence markets on Thursday:
Economic events: euro zone Q1 GDP and employment data
(Reporting by Ankur Banerjee in Singapore; Editing by
Christopher Cushing)
