📈 Fed's first cut since 2020: Time to buy the dip? See Tech-focused stock picksUnlock AI Picks

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

Published 09/13/2024, 12:33 AM
Updated 09/13/2024, 12:35 AM
© Reuters. FILE PHOTO: The exterior of the Marriner S. Eccles Federal Reserve Board building is seen in Washington, D.C., U.S., June 14, 2022. REUTERS/Sarah Silbiger/File Photo
STOXX50
-
JP225
-
HK50
-
GC
-

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:

© Reuters. FILE PHOTO: The exterior of the Marriner S. Eccles Federal Reserve Board building is seen in Washington, D.C., U.S., June 14, 2022. REUTERS/Sarah Silbiger/File Photo

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

-Euro zone industrial production (July)

(By Kevin Buckland; Editing by Edmund Klamann)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.