The Asian stock market was negative with JPN225 down -0.9%, although with the BoJ sticking to its accommodative policy stance and corporate reforms helping to lift sentiment, Japanese markets have outperformed over the past year. China and Hong Kong are on holiday today (Dragon Boat Festival). Markets continue to adjust Fed tightening expectations after Powell repeated yesterday that the fight against inflation is not over yet. US futures are in the red, as markets wait for rate announcements from the BoE. The SNB meanwhile today increased rates by 25 bps.
Higher than expected inflation numbers have left markets pricing in some risk of a 50 bp move from the BoE today. Stagflation risks are back on the agenda and Sterling didn’t benefit from the prospect of aggressive tightening moves.
- FX – The USDIndex corrected yesterday, but today has stabilised, and is at 101.60. EUR meanwhile held above 1.0980 after ECB’s Villeroy tried to tame speculation of a September hike. The EUR also strengthened against the Pound, despite the outperformance of Bunds versus Gilts. USDJPY remains high at 141.80 after BoJ’s Ueda said the BoJ will persistently continue with monetary easing.
- Stocks – GER40 and UK100 are underperforming and down -0.6% and -0.7% respectively. #Amazon down after Federal Trade Commission sues Amazon for enrolling consumers in Prime without consent and #Tesla stock sank 5.5% on Wednesday, its steepest loss in two months. The US100 sank 1.2%, US500 was down about 0.5%, while the US30 fell 0.2%.
- Commodities – USOil and Gold slightly lower but steady at $72.30 and $1929.20.
Today – SNB press conference, BOE rate decision and Press conference, Speeches from Fed’s Powell, Barkin, Bowman & ECB’s De Guindos and Panetta.
Biggest Mover @ (06:30 GMT) UK100 (-1.02%) dipped on the EU open at 7463.67. Fast MAs aligned lower, RSI at 21 and falling and MACD & signal line are negatively configured ATR (H1) is at 13.26 and ATR (D) is at 65.09.
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Andria Pichidi
Market Analyst
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