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A look at the day ahead in U.S. and global markets from Mike Dolan.
The approaching economic 'hurricane' that JPMorgan boss Jamie Dimon warned about in June is starting to blow hard around the world and global markets are hunkering down again.
In a stark business readout late Thursday, global delivery firm FedEx withdrew the financial forecast it issued just three months ago because it said the global demand slowdown had accelerated at the end of August and was on pace to worsen in the November quarter. Missing revenue and profit forecasts too, FedEx shares dropped 16% after the bell.
The World Bank added to the macro gloom and warned late Thursday that the global economy was headed toward recession as central banks across the world simultaneously hike interest rates to combat persistent inflation.
Estimating that the world was in its sharpest relapse from a post-recession recovery since 1970, it saw little or no support from major central banks and said they may need to raise interest rates by a further 2 percentage points on top of the 2-point increase already seen over the 2021 average.
With markets bracing for another round of interest rate rises from the U.S. Federal Reserve and the Bank of England next week, stocks tumbled across the world on Friday. MSCI's index of world stocks was on the verge of its lowest for two months and set for its worst full week since June. Asia and European bourses tumbled and U.S. stock futures were in the red.
As two-year U.S. Treasury yields closed in on 4% for the first time in 15 years, Fed funds futures markets now see policy rates as high as 4.5% by March and don't see a return back below 4% for the rest of 2023.
With world currency markets getting increasingly restive as a result, the dollar zoomed higher again over the past 24 hours - topping 7.0 Chinese yuan for the first time in more than two years and hit its highest level against the British pound since 1985. [FRX/}
In a sign of the darkening investor mood, markets dismissed signs of surprising resilience in Chinese retail sales and industrial output numbers for August and focused instead on the fallout from the deepening property slump.
Property investment last month fell 13.8%, the fastest pace since December 2021. New home prices fell 1.3% year-on-year in August, the fastest since August 2015.
With few signs China will significantly ease zero-COVID soon, some analysts expect the economy to grow just 3% this year, which would be the slowest since 1976 - excluding the 2.2% expansion during the initial COVID hit in 2020.