Last checked at 
* European Stoxx 600 down 0.5%
* Bank stock index jumps after Hawkish Fed, up 2.1%
* Insurers up 0.8%
* Wall Street futures in the red
June 17 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
NO RATE HIKE IN 2023 IF... (0854 GMT)
"inflation simply does not clear the bar for liftoff, the
pullback in fiscal support causes the economy to decelerate
enough naturally to make a hike seem excessive, or financial
conditions tighten enough on their own to make a hike
unnecessary," Goldman Sachs economists write in a note.
The investment bank sees odds of a hike by the end of 2023
as only modestly better than 50% given the chances of one of the
above scenarios playing out by then.
The Fed accelerated timetable for interest rate hikes on
Wednesday, with 13 of 18 policymakers foreseeing a "liftoff" in
borrowing costs in 2023 compared to 2024 previously.
What's particularly striking on the shift is perhaps a lower
tolerance for inflation, analysts say. Because the 2023 core PCE
inflation forecast remained steady at 2.1% and that's like
lowering the inflation bar for liftoff.
That and a higher possibility of dialling back stimulus
measures pushed stocks lower overnight, though the reaction was
quite limited with losses capped at 0.5%.
"We continue to expect the first hint about tapering in
August or September, followed by a formal announcement in
December that would begin the tapering process at the start of
next year, though the risks lean toward an earlier start," says
Goldman.
(Thyagaraju Adinarayan)
*****
STOXX 600: FED SMASHES HOPES OF 10TH SESSION UP (0845 GMT)
Among the collateral damage inflicted by the Fed's sudden
hawkish tone, the STOXX 600 is down about 0.3% and on course to
miss out on a big benchmark.
The pan-European index had closed on gains for nine straight
sessions and regularly reaching new record highs.
As pointed out by Deutsche Bank's Jim Reid, that was its
best run since October 2017.
Writing ahead of the market open, Reid said that "if we get
a 10th day in the green today, that would be the longest stretch
of gains all the way back to 2006, so quite a milestone
potentially".
With Wall Street futures losing between 0.35% and 0.5% at
the moment, it does feel unlikely that sentiment will make a
sudden turnaround but then again, there's still close to seven
hours of trading to go through!
Here are the last 10 sessions of the STOXX 600:
(Julien Ponthus)
*****
BANKS SURGE ON FED'S HAWKISH TONE (0726 GMT)
European stocks dipped lower this morning after nine
straight sessions of gains as Fed's sudden hawkish turn sent
recent winners such as basic resources sharply lower.
Banks were the top sectoral gainers (+2.1%) as Fed officials
on Wednesday penciled in two potential rate hikes in 2023.
T&L and insurance stocks were other big winners.
The travel index was led by Easyjet and Premier-Inn
owner Whitbread. Whitbread said it saw strong forward
booking trends in tourist locations.
The sector and airlines were also supported by news that
Britain is looking at easing travel restrictions, including
allowing those who are double vaccinated against COVID-19.
BA owner IAG, easyJet and Ryanair were up 3%-3.5%.
UK rail operator Trainline was also among the top gainers
after reporting strong Q1 ticket sales.
(Thyagaraju Adinarayan)
*****
TALKING ABOUT TALKING ABOUT THE BIG T BEGINS AT THE FED
(0635 GMT)
And just like that the U.S. Federal Reserve lit a fire under
markets by suggesting it may well raise interest rates at a much
faster pace than many believed.
Asian equities hit a three-week low, 10-year Treasury yields
-- which jumped to almost 2-week highs after Thursday's Fed
statement -- remain near those levels early in London
.
The dollar is sailing at near two-month highs versus major
peers, having posted its strongest single day gain in 15
months.
Fed officials on Wednesday pencilled in two potential rate
hikes in 2023 - sooner than policymakers had previously
projected - and Chair Jerome Powell edged closer to unveiling
plans to taper the Fed's $120 billion a month of bond purchases.
Powell even described the two-day gathering as the "talking
about talking about meeting," a glib reference to his
protestations earlier this year that the Fed was not even
"talking about talking about" tighter policy.
That hawkish shift is likely to resonate on Thursday --
European shares are expected to open lower, U.S. stock futures
are in the red.
And watch the signals from other major economies too. The
Bank of Japan may be able to start debating ways to phase out
its extraordinary stimulus, says former central bank executive
Eiji Maeda.
Australian job creation blew past expectations in May, a
major upside surprise that will test policy makers' commitment
to keeping rates at historic lows for another two years or more.
In corporate news, TikTok owner ByteDance's total revenue
more than doubled last year to $34.3 billion but its net loss
widened to $45 billion, according to a company memo.
Key developments that should provide more direction to
markets on Thursday:
- Sources say China market regulator begins antitrust probe
into ride-hailing giant Didi Chuxing, as it pushes ahead with
what could be the largest IPO in the United States this year
- NZ Q1 GDP rose 1.6%, beats all estimates
- ECB TLTRO allotment due
- China May new home prices up 0.6% m/m vs 0.6% in April
- ECB's Christine Lagarde, Fabio Panetta speak at Eurogroup
meeting; ECB Board member Frank Elderson speaks at 1400 GMT;
chief economist Philip Lane 1230 GMT
- U.S. jobless claims/Philly Fed
- SNB, Norges Bank meet
- Indonesia, Egypt, Ukraine, Turkey, Taiwan central banks
(Dhara Ranasinghe)
*****
FED MORE HAWKISH THAN EXPECTED (0533 GMT)
European stock futures are lower as the Federal Reserve was
more hawkish than expected at yesterday's policy meeting,
sending the U.S. bond yields higher and Wall Street lower.
The central bank moved their first projected rate increases
from 2024 into 2023, with seven of 18 policymakers foreseeing
rates moving higher next year and opening the possibility of
even more aggressive action. Chair Jerome Powell said there had
also been initial discussions about a bond-buying tapering.
Now analysts wonder if a ‘buying the dip’ strategy could
still work today or in the next few days, as the price reaction
in Asia suggests investors are nervously cautious rather than
panicking for the exit door.
(Stefano Rebaudo)
*****
