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EUROPE’S STOXX SET FOR SECOND WEEKLY DECLINES (0830 GMT)

European stocks sink and are set for a second consecutive weekly declines after the U.S. central bank’s fresh signals it is set to raise interest rates in March.

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Tracking weaker global stock markets, the pan-European STOXX 600 index (.STOXX) is down 0.8% with tech stocks (.SX8P) leading the losses, down more than 1%.

In terms of single stock, the top faller is EDF (EDF.PA). Its shares slump around 20% and are heading for their worst day ever, after being ordered by the government to sell more of its cheap nuclear power to smaller rivals to keep electricity prices down.

(Joice Alves)

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LET’S TALK ABOUT STERLING (0801 GMT)

Let’s take a break from just how quick is the Fed going to slam on the brakes to contain inflation and talk about sterling.

The pound is proving to be one of the best performing major currencies in the early days of 2022. It’s trading near its highest levels in over two months above $1.37 , thanks to signs the Omicron COVID surge is abating and on expectations that UK interest rates could rise again as soon as February.

Data on Friday shows Britain’s economy grew a faster-than-expected 0.9% in November. read more

Yet, as week draws to an end, there’s a question mark over how long the rally will last given rising political uncertainty. Prime Minister Boris Johnson’s leadership is in the balance as he faces calls to resign from some in his party over Wednesday’s admission that he attended staff drinks during the May 2020 lockdown. Fresh revelations about parties in Downing Street were being reported on Friday. read more

If the number of bank research notes this week reminding clients of the rules of a potential leadership challenge to Johnson are anything to go by, sterling bulls be warned.

At the Fed, Governor Lael Brainard became the latest and most senior U.S. central banker on Thursday to signal that rates will rise in March to combat inflation. read more

Asian shares took a beating from rate-hike unease; Japan’s Nikkei fell 1.3% (.N225). European shares are tipped to open lower although U.S. stock futures are moving up .

U.S. 10-year Treasury yields are slightly higher at 1.73% and the dollar index is near two-month lows — a sign that tighter policy is already well priced into the greenback now .

December U.S. retail sales numbers out later in the day is the next focus.

Lastly, China Evergrande shares (3333.HK) edged up after the world’s most indebted developer secured a crucial approval from onshore bondholders to delay payments on one of its bonds as more developers race to avert defaults. read more

Sterling off to a solid start to 2022

Key developments that should provide more direction to markets on Friday:

– China posted a record trade surplus in December and in 2021 read more

– Germany 2021 GDP

– Riksbank Governor Stefan Ingves

– ECB: President Christine Lagarde

– Fed: Philadelphia President Patrick Harker; New York President John Williams

– US retail sales Dec/industrial production/inventories/University of Michigan survey

– US earnings: BlackRock, JPM, Wells Fargo, Citi

(Dhara Ranasinghe)

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EUROPEAN FUTURES SLIP AFTER FED’S FRESH RATE HIKES SIGNALS (0730 GMT)

European shares look set for declines on Friday after Federal Reserve officials signalled that rates will rise in March. read more

Futures on the Euro STOXX 50, DAX and FTSE indices were last trading down between 0.5% and 0.9%.

Asian shares also took a beating as markets brace for tighter monetary conditions.

In the meantime, European companies have started to release quarterly results: German business software group SAP (SAPG.DE) said Q4 revenue from its cloud computing business jumped 28%. read more

While British electricals retailer Currys (CURY.L) edged down its full year profit guidance after what it called a “challenging” technology market at Christmas with uneven customer demand and supply disruption. read more

(Joice Alves)

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