pwshub.com

Morning bid: Super-sized Fed cut climbs back on the table

A look at the day ahead in European and global markets from Kevin Buckland

European traders who went to bed thinking a quarter-point Fed rate cut was a lock for next week may well have had a rude awakening on this Friday the 13th, with the odds for a super-sized half-point reduction back at nearly a coin toss.

It started with separate reports in the Financial Times and the Wall Street Journal that both said the Sept. 18 decision remained "a close call". Then former New York Fed President Bill Dudley, who remains highly influential, said at an event in Singapore that there's "a strong case" for a 50 bps reduction.

That put the dollar on the defensive, as it slipped back towards its lowest level this year against the yen and lost additional ground on the euro. Two-year Treasury yields were back below 3.6% in Asian hours.

Gold pushed to a new all-time peak at $2,570.

Reactions in the equities markets were mixed. Hong Kong's Hang Seng was up more than 1% and Australian stocks were also higher.

But for the Nikkei, a decline was pretty much a given with the yen that much stronger. South Korea also slumped and mainland Chinese stocks struggled. It's worth noting that all three of those markets are heading into a long holiday weekend, with South Korean traders not back at work until next Thursday.

A very early look at pan-European STOXX 50 futures was positive, pointing up 0.3%.

There's little on the data docket in Europe on Friday to distract from Fed-focused speculation, which has boosted the chance of a 50 bps cut to 43% versus 28% early in the Asian morning. Some CPI prints are continuing to roll in, including from France and Greece. Data is also due on the euro region's industrial production.

No central bank speeches are on the calendar, with the Fed and the Bank of England - which will announce policy next Thursday, with no change expected - in blackout periods. Meanwhile, the ECB has moved mostly into the rear-view mirror after Thursday's well-telegraphed rate cut, and no clear guidance from President Christine Lagarde on when to expect the next one.

Key developments that could influence markets on Friday:

-France, Greece, Poland, Slovakia CPI (August)

-Euro zone industrial production (July)

(By Kevin Buckland; Editing by Edmund Klamann)

Source: finance.yahoo.com

Related stories
3 days ago - Apple saw more than $116bn (£88bn) wiped off its valuation in early trading after analysts warned about weaker than expected demand for its new iPhone as its push into artificial intelligence disappointed fans.
2 weeks ago - Volkswagen is considering closing factories in Germany for the first time in its 87-year history as the carmaker battles to cut costs and survive the transition to electric cars.
1 month ago - The global sell-off in stock markets deepened as US unemployment hit a three-year high amid growing fears that the US Federal Reserve has left it too late to begin cutting interest rates.
14 hours ago - After a typical skittish first-day reaction, world markets are on Thursday embracing the new Federal Reserve stance as insurance on the holy grail of a soft economic landing. Fed boss Jerome Powell described Wednesday's outsize...
3 weeks ago - This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:The chart of the dayWhat...
Other stories
5 minutes ago - The Fed's cutting cycle in 1995 sparked an economic boom, with the stock market more than doubling in value by the end of the decade.
5 minutes ago - There's nothing like a potentially massive government contract to win the hearts of both investors and analysts.
1 hour ago - Shares of Truth Social’s parent company fell Thursday, extending the latest round of declines for Trump Media & Technology Group.
1 hour ago - European Union officials are taking new steps to ensure that Apple Inc. complies with the bloc’s DMA tech industry regulation. The European Commission, the EU’s executive arm, announced the initiative today. The DMA is a piece of...
1 hour ago - Shares in automotive chip maker Mobileye Global Inc. jumped nearly 15% today after its majority shareholder, Intel Corp., said that it has no plans to divest its interest in the company. Reports earlier this month suggested that Intel...