A look at the day ahead in U.S. and global markets from Mike
Dolan
The U.S. dollar seems to have emerged a clear winner from the
week's magical mystery tour of world central banks - with record
high Wall St and world stocks getting a shot across the bow from
Apple's ( AAPL ) antitrust bust.
A whistle stop look at the week's multiple central bank
readouts shows a surprise rate cut in Switzerland, cuts in
Mexico and Brazil and an unusually dovish Bank of England tilt
that brings a June UK rate cut into view. And there were
promises of more monetary easing to come in China to add to the
mix.
Although the Bank of Japan finally set about 'normalising'
in the other direction, and Taiwan's central bank delivered a
surprise hike too, the overall thrust is a global central bank
cycle that has turned before the Federal Reserve kicks off.
While the Fed held the line on Wednesday, as expected, and
continued to flag three rate cuts later this year, the slightly
hawkish takeaway was that its policymaker projections removed
one cut from next year's 'dot plot'.
And so with other central banks jumping the Fed gun on the
first move and potentially cutting deeper over the coming two
years, the dollar has got a shot in the arm.
The dollar index hit its highest in over a month on Friday
and has now climbed more than 2% from March troughs.
Eye-catching overnight was a swoon in China's offshore yuan
to its weakest level of the year, without any ostensible
trigger beyond the dovish soundings from deputy governor of the
People's Bank of China. China's stocks closed sharply
lower too.
But the dollar was pumped up across the board, hitting 2024
highs against the Swiss franc, Japan's yen and
one-month peaks against sterling.
Reflecting a firmer Fed horizon beyond this year, U.S.
Treasuries stalled - with two-year yields firming up
above 4.60%.
Perhaps strange in an election year, Treasury market
volatility measures subsided to their lowest since
before the Fed began its tightening campaign two years ago.
The latest U.S. economic readouts continued to show brisk
business growth and labor market tightness and markets will now
switch attention next Friday's release of the Fed's favored PCE
inflation gauge.
Buoyant Wall St stocks clocked record closing highs again on
Thursday, but Apple's ( AAPL ) 4% slide dampened the mood as
U.S. antitrust regulators moved in - sending a warning to a
market so heavily concentrated in Big Tech megacaps.
Although its stock stabilised overnight, the U.S. Department
of Justice and 15 states sued Apple ( AAPL ) in a government crackdown on
Big Tech - alleging the iPhone maker monopolized the smartphone
market, hurt smaller rivals and drove up prices.
Apple ( AAPL ) joins competitors sued by regulators, including
Alphabet's Google, Meta Platforms ( META ) and
Amazon.com ( AMZN ) across the administrations of both former
president Donald Trump and President Joe Biden.
Elsewhere, overnight earnings were mixed.
FedEx ( FDX ) shares surged 13% after the bell after the
company narrowed its fiscal 2024 profit forecast and announced
share buybacks that help offset less business from its largest
customer, the U.S. Postal Service.
But Nike ( NKE ) stock skidded 6% after it warned its
revenue in the first half of fiscal 2025 would shrink by a low
single-digit percentage as the world's largest sportswear maker
scales back on franchises to save costs.
Key diary items that may provide direction to U.S. markets later
on Friday:
* Federal Reserve Chair Jerome Powell, Fed Vice Chair Philip
Jefferson, Fed Board Governor Michelle Bowman, Fed Vice Chair
for Supervision Michael Barr and Atlanta Fed President Raphael
Bostic all speak
* European Central Bank President Christine Lagarde attends Euro
Summit in Brussels, ECB chief economist Philip Lane speaks
* Canada Jan retail sales and government budget balance
(By Mike Dolan, editing by Christina Fincher,