Marketmind: Dovish Fed taper, now hawkish BoE?

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A person walks past the Bank of England, in London, Britain October 31, 2021. REUTERS/Tom Nicholson

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Nov 4 - A look at the day ahead from Danilo Masoni.

Well done Mr. Powell! The Federal Reserve Chair looks to have managed to sell the dialling back of the bank's massive stimulus programme as a dovish taper and investors can now return to the joys of stock markets at record highs.

The U.S. policy package contained no nasty surprises — the $15 billion reduction in monthly purchases was consensual and the inflation is "transitory" message was reiterated.

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As a result, European stock futures point to new all-time peaks after Wall Street notched another record close. And with earnings still squeezing out positive surprises and real yields deeply sub-zero, many see no choice but to keep investing in equities.

With the Fed out of the way, it's D-day for the Bank of England which could become the first of the world's big central banks to raise rates since the coronavirus pandemic hit.

Poland surprised on Wednesday, with its biggest rate hike since 2000, jolting its banking stocks to all-time peaks.

Speaking of banks, Societe Generale saw better-than-expected Q3 profit growth, driven by strong corporate and investment banking revenues and lower bad loans. read more

Credit Suisse, on the other hand, posted a 21% fall in Q3 net profit hit by higher taxes and charges to settle allegations of corruption surrounding loans to Mozambique. read more

Finally, Ether , the world's No. 2 cryptocurrency, scaled another all-time high, rising as high as $4,670.81.

snapshot

Key developments that should provide more direction to markets on Thursday:

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  • Swiss drugmaker Roche agreed to buy a nearly one-third voting stake held by cross-town rival Novartis in itself for $20.7 billion
  • Norway Central Bank meeting
  • Bank of England announces rate decision
  • ECB President Christine Lagarde and board member Isabel Schnable speak – 1245 GMT
  • German industrial output/manufacturing
  • Final services PMI everywhere
  • Euro zone PPI
  • OPEC-plus meeting
  • South Africa's medium term budget statement, Czech National Bank meeting
  • U.S. trade balance/weekly jobless
  • Europe earnings: Amundi, Banco BPM, Commerzbank, BT, Euronext, Hannover Re, ING, Societe Generale, Telefonica, WizzAir
  • U.S. earnings: Uber, AirBnb
Reporting by Danilo Masoni; editing by Sujata Rao

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