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A look at the day ahead in Asian and global markets

By Lewis Krauskopf, U.S. markets correspondent

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Asian markets will be waking up to a jolt of central bank rate hikes and looking ahead to a big round of macro data on Friday.

The Bank of England surprised many investors on Thursday by raising interest rates by a bigger-than-expected half a percentage point, lifting its main interest rate to 5%, the highest since 2008.

England wasn’t alone: The Swiss National Bank raised its policy rate and signaled more tightening was likely, while Norway’s central bank raised its key policy rate to a 15-year high.

A file photo shows people outside the Bank of England in the City of London financial district in London, Britain May 11, 2023. 

In the U.S., Federal Reserve Chair Jerome Powell told a Congressional hearing that the central bank would move interest rates at a “careful pace” from here after pausing hikes at its last meeting.

The hawkish moves seemed to dent risk appetite. In Europe, the STOXX 600 index briefly hit its lowest point in nearly three months. On Wall Street, the S&P 500 and Nasdaq ended higher, but stocks broadly were on pace to tally weekly losses.

Oil prices fell sharply as the BoE’s bigger-than-expected hike prompted worries about the economy and fuel demand.

Graphics are produced by Reuters.

The U.S. dollar advanced after Powell’s rate comments, with the greenback rising to its strongest level against the yen in more than seven months.

The mood could shift on Friday, as data will give a glimpse into how much central bank tightening is weighing on global growth.

The release of Purchasing Managers’ Indexes (PMIs) from around the world will offer a fresh look into demand trends and evidence of the health of the manufacturing sector in the United States, Europe and Japan so far in June.

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