A look at the day ahead in European and global markets from Asia
markets correspondent Kevin Buckland.
The Reserve Bank of Australia kicked off a string of major
central bank meetings this week by surprising markets with a
quarter-point rate hike, when most had been positioned for a
pause. It even signalled the possibility of more tightening to
come, jolting the Aussie to a one-week high.
The Fed is up tomorrow, followed by the ECB the next day,
all while the Bank of Japan's decision on Friday to remain a
dovish outlier continued to reverberate in FX markets, knocking
the yen to a fresh 15-year low against the euro.
Japan markets will be shut for public holidays for the next
three days, missing not just the Fed and ECB decisions but
Friday's monthly U.S. payrolls report as well.
The ECB is among the most hawkish of the major monetary
authorities and is expected to raise rates for a seventh
straight meeting. The debate among policy makers is whether to
opt for another half-point hike or slow to a quarter-point pace.
The Fed, meanwhile, is widely expected to hike rates by a
final quarter point and then signal a pause. Money markets are
still betting on a Fed rate cut before the end of the year.
Treasury yields were ticking down in Asia with risks from
the debt ceiling standoff ramping up. President Joe Biden has
called for a meeting with top congressional leaders amid
warnings the U.S. may run short of cash around June 1, earlier
than the market had been estimating.
Asian stocks were lower, pressured by weakness in financial
shares in Tokyo, Sydney and Hong Kong after the seizure of First
Republic Bank by regulators rekindled worries about the U.S.
banking sector.
JPMorgan will pay $10.6 billion to the FDIC as part of a
deal to take control of most of First Republic's assets while
gaining access to its coveted wealthy client base.
The White House said the lender was "severly mismanaged",
suggesting problems are not systemic in the second biggest bank
failure in U.S. history. Biden repeated a call for stronger
rules and oversight.
Meanwhile, changes may be in the offing for the Fed's board,
with the New York Times reporting that Biden is likely to
nominate current governor Philip Jefferson to be vice chair and
World Bank economist Adriana Kugler as a governor.
Key developments that could influence markets on Tuesday:
Euro-area CPI data
U.S. JOLTS report
Wall Street earnings including Pfizer ahead of the open, and
Starbucks and Ford after the bell
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(Reporting by Kevin Buckland; Editing by Edmund Klamann)
