© Reuters. FILE PHOTO: A person walks past the Bank of England in the City of London financial district in London, Britain, January 23, 2022. REUTERS/Henry Nicholls // File Photo
Looking back at upcoming dates at the markets from Dhara Ranasinghe.
If you were hoping for calm ahead of the Bank of England and European Central Bank meetings on Thursday, forget it.
US futures are falling sharply in early London trading – Nasdaq futures are sliding 2% with global tech stocks in the doldrums.
Shares of Facebook (NASDAQ:) owner Meta Platforms Inc fell further late Wednesday after posting weaker-than-expected forecasts. In Japan, Sony Shares (NYSE:) and Panasonic (OTC:) fell more than 6%, while stock futures showed a weak European open.
That was all before the BoE looked set to raise its benchmark interest rate by 25 basis points to 0.5% – the threshold at which it said it would begin work on its £895 billion quantitative easing program. (1.2 trillion USD).
For some, the market is underestimating the risk of so-called quantitative tightening, or QT for short. Others noted the BoE’s ability to surprise, noting through November when the market is positioned to raise rates and the BoE keeping rates flat and then December, when the market is expected to have no move and BoE up.
Carried away? The BoE decision at 1200 GMT may not deliver what we all expect.
The ECB meanwhile is expected to leave policy unchanged on Thursday. But ECB President Christine Lagarde may have to concede that inflation could stay high for longer than expected, a signal that could be seen by some as an indication of a quicker exit from stimulus. .
Wednesday’s data showed January inflation was 5.1%, the highest ever for the euro area.
The market tightened prices by 30 bps by year-end; The ECB insists a move in 2022 is unlikely.
If Lagarde admits price pressures have been underestimated, interest rate hike bets could be bought forward, leading to an undesirable tightening of financial conditions.
Meanwhile, data this morning showed Turkey’s annual inflation spiked to nearly 50% and producer prices to more than 90%, putting fresh pressure on the lira.
Oh yes, let the fun begin.
Key developments that will provide further direction for the market on Thursday:
– Nordea’s fourth-quarter net profit exceeded forecasts.
– ING reports Q4 pre-tax profit up 27% to €1.33 billion
– Turkish President Erdogan visits Ukraine
– Services PMI everywhere, US factory orders / ISM Non-Manufacturing PMI / weekly jobless claims
– Income in the United States: Alibaba (NYSE:), Eli Lilly (NYSE:), Merck, Honeywell (NASDAQ:), Estee Lauder (NYSE:), Hersheys, Lazard (NYSE:), Cardinal Health (NYSE:), ConocoPhillips (NYSE:), Amazon (NASDAQ:), Ford, Activision, News Corp (NASDAQ:),
– Income in Europe: Intesa Sanpaolo (OTC:), Dassault, BBVA (MC:), Shell (LON:), Danske Bank, BT, Compass group (LON:), Skanske, ING, Roche, Nokia (NYSE:), Nordea
– Emerging markets: Egypt, Czech central bank meeting LINE: Bank of England set to raise rates again, https://fingfx.thomsonreuters.com/gfx/mkt/gkplgjlmzvb/BoE0302 .PNG