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All eyes on the Bank of England as global stocks fall, with the exception of India

🐮🐻 #9: Hawkish Fed, BoE Base Rate Decision, USDTRY rallies, Gold and Silver falls

TL;DR: Hawkish comments from the Fed’s Chairman and expectations of a BoE base rate hike today weigh on equity markets, with the S&P 500 losing 0.5% and Nasdaq losing 1.4% yesterday, while European markets are poised to open lower (futures down c. 0.50%).

📰 What’s moving markets?

  • The Fed’s Jerome Powell warned that there are more base rate hikes to come because inflation is still “well above” where it should be in the US. This hawkish messaging has been broadly consistent with comments over the past few weeks, nevertheless tech-heavy Nasdaq 100 sold off 1.4% on the comments. The market is pricing a 75% chance of a 25bps hike next month, but no hikes thereafter.

  • The UK’s Office of National Statistics (ONS) revealed that the drivers of high inflation print yesterday (8.7% yoy CPI rise versus 8.4% expectations) was primarily higher prices for flights, live music events, and second-hand cars. Markets expectations are split 50% on whether the BoE will raise rates by 25bps or 50bps at 12pm today.

  • The Turkish Lira has fallen to an all-time low against the dollar, now trading at 23.57 USDTRY.

  • Gold continues to fall, down 8% in the past month, and silver prices fell by 1.2% yesterday on the back of a strengthening dollar.

📊 Chart of the day

India’s stock market has surged 14% the last 3 months as foreign investors are attracted to the robust economic growth of the country (IMF estimates 2023 economic growth of 5.9% versus 5.2% in China and 1.6% in the US). On a market capitalisation basis, India’s stock market is now the 5th largest in the world after the US, China, Japan and Hong Kong (recently overtaking the UK and France).

What is the Sensex index and why is it rallying? 🤔

“The Sensex index, which tracks India’s 30 biggest companies by market capitalisation and is weighted towards financial stocks, has been climbing steadily for the past three months and hit a record 63,588 points on Wednesday, spurred by buying from foreign pension and insurance funds.”

📅 Coming up this week

Monday 19th June

  • US NAHB Housing Market Index expected: 51, last: 50, actual: 55

Tuesday 20th June

  • Japan Industrial Production expected: -0.4%, last: 1.1%, actual: 0.7%

  • Euro Zone Current Account expected: 30.1B, last: 31.2B, actual: 4.0B

Wednesday 21st June

  • UK Core CPI (YoY) expected: 6.7%, last: 6.8%, actual 7.1%

  • UK Headline CPI (YoY) expected: 8.5%, last: 8.7%, actual 8.7%

  • UK Headline RPI (YoY) expected: 10.2%, last: 11.4%, actual: 11.3%

  • Canada Retail Sales expected: 0.2%, last: -1.4%, actual: 1.1%

  • Brazil Interest Rate Decision expected: 13.75%, last: 13.75%, actual: 13.75%

Thursday 22nd June

  • UK BoE Interest Rate Decision expected: 4.75%, last: 4.50%

  • US Continuing Jobless Claims expected: 1,766k, last: 1,775k

  • US Jobless Claims 4-Week Avg. expected: 242.01K, last: 246.75K

  • Japan Core CPI (YoY) expected: 3.1%, last: 3.4%

  • Japan Headline CPI (YoY) expected: 4.1%, last: 3.5%

Friday 23rd June

  • Singapore CPI expected: 5.5%, last: 5.7%

  • Spain GDP (YoY) expected: 3.8%, last: 2.6%

📈 The markets at a glance

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