Marketmind: Keep on going

A look at the day ahead in U.S. and global markets from Alun John.

U.S. investors deserve some calm on Friday after a wild week for markets, though if their European counterparts’ experience is anything to go by, they might not have much luck.

The U.S. data calendar for the day is quiet, a relief at the end of a week in which the Federal Reserve hiked rates by 75 basis points, as expected, but jolted markets with a sobering outlook, and Japanese authorities made their first intervention in the foreign exchange market since 1998 to prop up the battered yen.

A public holiday in Japan on Friday, and radio silence so far, means traders hope there should be no more news on that front today.

But market participants waking up in the United States still have plenty to digest over breakfast from across the Atlantic.

British government bond yields surged by the most in a day in 13 years, the pound slid to a fresh 37-year trough against the dollar, and stocks hit two-month lows after UK finance minister Kwasi Kwarteng laid out a series of tax cuts in a bid to boost growth.

Meanwhile, across the channel, the euro fell to a fresh 20-year low and Germany’s DAX stocks index slid to its lowest since November 2020 after data showed a downturn in business activity across the euro zone deepened in September. [.EU]

Sharp interest rate rises this week in the United States, Britain, Sweden, Switzerland and Norway – among other places – are still underpinning the overall risk-off mood, but the survey showing the bloc’s economy is likely entering a recession didn’t help.

Looking to the United States, S&P and Nasdaq futures are both down over 1%, while the two-year U.S. Treasury yield rose as high as 4.2570%, levels last seen in 2007.

Best buckle up, it doesn’t feel like today is going to offer that long-needed rest.

It is quiet on the U.S. data release front today.

(Reporting by Alun John, Editing by Catherine Evans)