GLOBAL CAPITAL MARKETS OVERVIEW:  

The Dow fell about 100 points on Thursday, while the S&P 500 and Nasdaq each lost about 0.5%, as investors worried about the impact of tightening global monetary policy on the growth momentum. The Federal Reserve raised interest rates for the third time on Wednesday and pledged to keep raising rates to 4.6% in 2023 until inflation is contained. Fed Chairman Jerome Powell said in a post-meeting news conference that prematurely loosening monetary policy while tackling inflation could have consequences while saying something must be done to bring inflation down. Elsewhere, policymakers in the UK and Switzerland raised rates by 50 and 75 basis points, respectively, while the European Central Bank signaled further hikes. On the data front, upbeat U.S. jobless claims reinforced expectations that the labor market remained strong. Canada S&P/TSX Composite edged to 19,200 on Thursday, rebounding slightly from the previous session's sharp losses. Investors continued to assess the outlook for global growth and inflation following yesterday's Fed rate hike. The Fed decided to raise its policy target by 75 basis points for the third time in a row, while a closely watched dot-plot shows borrowing costs are expected to hit 4.6% by March. Heavyweight energy stocks led the Toronto stock market, gaining an average of 2% on the back of a rebound in crude oil prices. The strength of energy producers was more than enough to offset losses in policy-sensitive sectors, with technology shares down nearly 1 percent. Canada's medical sector, largely made up of cannabis growers, is also under pressure from higher interest rates. Finally, property stocks fell sharply after the latest data showed that domestic new home prices rose 0.1%. Major European stock market indexes fell Thursday afternoon as investors digested a wave of central banks raising interest rates to combat soaring inflation. The U.S. Federal Reserve raised interest rates for the third time and signaled further increases in future meetings. In contrast, policymakers in the U.K. and Switzerland raised rates by 50 and 75 basis points, respectively. In addition, European Central Bank board member Isabel Schnabel said that even if the eurozone faces a recession, monetary policy should be further tightened to curb inflation. On the corporate side, Spanish bank Sabadell has received indicative offers for its payments arm from France's Worldline, Italy's Nexi, and US Fiserv, in deals worth up to 400 million euros. Italy's market regulator Consob has approved the group's founding family's proposed takeover of luxury shoemaker Tod's. The FTSE MIB index edged lower on Thursday, hovering around the 22,000 mark, as investors digested the Federal Reserve's rate decision and monitored the deterioration of Russia's invasion of Ukraine. The U.S. central bank decided to raise its fund's rate by 75 basis points for the third time in a row, with Chairman Powell stressing that rates will rise further and remain at restrictive levels to reduce price growth, even as it softens the labor market and weakens growth. Also, on the policy front, the neighboring Swiss National Bank raised interest rates by 75 basis points as expected. Policy-sensitive sectors in Milan were the most volatile, with consumer discretionary and technology stocks down sharply, with STMicroelectronics and Moncler down 2 percent. On the other hand, bank stocks rose sharply, with UniCredit up nearly 5%. Meanwhile, Italy will hold snap elections this weekend, which the right-wing coalition will win by a wide margin.  CAC 40 index fell more than 1% to around 5,950, in line with regional peers, as investors rallied after the Federal Reserve raised interest rates by 0.75 percentage points for the third straight time and signaled the possibility of further sharp hikes at the upcoming meeting. Those who weighed the prospect of worsening economic conditions. Meanwhile, ECB board member Isabel Schnabel warned that central banks should not stop monetary policy tightening at the first sign of easing inflationary pressures, but should advocate "resolute determination" to Quickly bring inflation back to target. On the data front, French business sentiment fell for a third month in September as economic uncertainty spread across the eurozone. Among individual stocks, Unibail Rodamco Real Estate Group and STMicroelectronics were the main drags, down more than 3%. On Thursday, the FTSE 100 fell 1% to a three-week low, tracking losses from its global peers after the Federal Reserve raised interest rates by 75 basis points for a third straight time and signaled further hikes until inflation eased. Investors will also watch for a policy decision by the Bank of England, which is expected to raise interest rates by at least 50 basis points to stem a spike in inflation, which remains near a 40-year high. In corporate news, British retailer Sainsbury's has signed a contract with LXi REIT to sell 18 stores in southern England for £500 million, according to Reuters. Russia's ruble-based MOEX index rose 1% on Thursday, hovering at 2,160, after taking a pause after plunging 12.3% over the past two sessions amid a further escalation in the Ukraine war and new threats from the West. President Vladimir Putin announced plans to formally annex four Ukrainian territories through a weekend referendum, before ordering the country's first military mobilization since World War II and stressing Russia's readiness to use its nuclear weapons arsenal. Many see annexation as a serious escalation, so the Kremlin has reason to believe that Ukraine's latest counterattack is an aggression on Russian territory with Western weapons. Russia's announcement that it will tax exports to boost 3 trillion rubles to cover a looming budget deficit also weighed on Russian financial markets. Polymetals shares fell 8% as the company scrapped a dividend payment on 2021 profits due to a tax surge. Japan Nikkei 225 lost 0.58% to end at 27,154, while the broader Topix index fell 0.2% to 1,917, its lowest level in more than two months and tracking losses on Wall Street as the U.S. The Federal Reserve has sharply raised rates, signaling further rate hikes. Investors also digested the Bank of Japan's policy decision after keeping interest rates ultra-low and its outlook dovish, ignoring a wave of global tightening and risking further yen depreciation and capital outflows. Technology stocks led losses, with SoftBank Group (-2%), Xinzhao Holdings (-2%), and M3 Inc (-1%) down sharply. Other index heavyweights also fell, such as Japan's Eugenics (-1%), and Sony Group (-1%). The Nikkei will be closed on Friday for the autumnal equinox holiday. New Zealand shares rose 19 points, or 0.2%, to close at 11,518.3 on Thursday, trying to shake off more than three-week lows hit in the previous session, as consumer confidence rose in the third quarter, following a record low in the second quarter, with Consumer confidence rose in the third quarter as the economy fully reopened from virus control. Meanwhile, New Zealand's exports grew faster than imports in August, with China being the largest trading partner. Turning to the U.S., Federal Reserve Chairman Powell mentioned that the economy remains resilient while raising interest rates for the third time by 75 basis points and foreshadowing further hikes in the coming months. Among sectors, consumers, technology services and communications led gains, rising between 0.8% and 1.2%. Shares in dairy exporter Fonterra rose 1.4% after the company reported a marginal increase in annual profit on strong demand and higher prices in Europe and the United States. Other notable movers are Geo Limited (11.1%), Savor Limited 5%), and Blis Technologies (3.1%). Hong Kong stocks tumbled 383 points, or 2.1%, to a ten-year low of 18,062 on Thursday, reflecting an overnight rout on Wall Street as the Federal Reserve raised rates again sharply and pledged to keep raising rates through 2023 to cool inflation. Meanwhile, the Hong Kong Monetary Authority (HKMA) raised its benchmark interest rate by 75 basis points, the same amount as the U.S. central bank, hours after the Fed's move, pushing borrowing costs to their highest level since October 2008. Elsewhere, the International Air Transport Association (IATA) said on Wednesday that Hong Kong, which has lost its status as a global aviation hub due to China's zero Covid-19 policy, will work to regain that status. All major sectors fell, with the consumer, basic materials, technology, and financials the biggest bottom movers. Resort developer Sands China fell nearly 5%, while Lenovo Group, Galaxy Entertainment, and JD.com lost nearly 5%. Com fell 4.3%, 4.2% and 3.5%, respectively.

 

REVIEWING ECONOMIC DATA: 

Looking at the last economic data:

- EU: Preliminary estimates show that in September 2022, the Eurozone Consumer Confidence Index fell 3.8 points to -28.8, below market expectations of -25.8. It was the lowest reading since the series of reports began in 1985. Consumers fretted about the economic outlook after Russia indefinitely halted energy supplies through Nord Stream 1 and the European Central Bank stepped up monetary policy tightening. Across the EU, consumer confidence fell by 3.5 percentage points to -29.9.

- CA: In August 2022, Canadian new home prices rose 0.1 percent for the second straight month. Prices remained unchanged in most of the 27 census metropolitan areas (CMAs) surveyed; 4 CMAs saw prices rise, and 1 CMA fell. Activity in the new homebuilding sector continued in August despite continued market volatility. Early supply chain disruptions and rising labor costs have led to higher construction costs, driving up new home prices and leaving developers with little flexibility to adapt to market conditions. Year-over-year growth slowed in August, with new home prices rising 6.9%, the slowest gain since January 2021. Calgary (up 14.9%) again recorded the largest year-over-year increase in new home prices, followed by Winnipeg (up 11.4%) and Kitchener-Cambridge-Waterloo (up 11.9%).

- US: New Americans filing for unemployment benefits rose 5,000 to 211,000 in the week ended Sept. 17, missing market expectations of 218,000. That marked a slight increase in last week's downwardly revised jobless benefits readings to the lowest since May, pointing to a tight labor market. On a non-seasonally adjusted basis, initial claims increased by 19,385 to 171,562, with outstanding claims in Michigan (+6,167), Massachusetts (+2,559), and New York (+2,185) Increase. The 4-week moving average, which removes weekly volatility, was down 6,000 points from the previous week at 216,750.

- US: The U.S. current account deficit narrowed to $251.1 billion, or 4 percent of GDP, in the second quarter of 2022, with a record shortfall of $282.5 billion in the first quarter, below the forecast shortfall of $260.6 billion. Still, it was the second-largest current account deficit on record as oil and product imports remained strong. The cargo gap narrowed as exports rose $52 billion to $539.9 billion and imports grew slower ($20.8 billion to $850.4 billion). Services exports rose $8.4 billion to $225.2 billion, and imports rose $10.2 billion to $168.2 billion, driven by personal and passenger air travel. Primary income rose $21.1 billion to $299.1 billion, mostly direct investment, mostly revenue; payments rose $16.2 billion to $255.5 billion.

- TW: In August 2022, Taiwan's seasonally adjusted unemployment rate increased to 3.67% from 3.68% the previous month, the lowest level since February. Compared with the previous month, the number of unemployed decreased by 1,000 to 434,000, and the number of employed persons decreased by 3,000 to 11.199 million. Meanwhile, the labor force fell by 4,000 to 11.833 million.

- HK: Hong Kong's annual inflation rate hit a seven-month high of 1.9% in August 2022, unchanged from the previous month and slightly below market expectations of 2%. Upward pressure came mainly from electricity, gas and water prices (15.2% vs. 15.1% in July); clothing and footwear (5.9% vs. 6.5%); food (3.8% vs. 4.1%) and transportation (1.9% vs. 1.5%) ). Instead, house prices continued to fall (-0.3% vs -0.4%). Durable goods costs also fell sharply (0.6% vs. 1.2%). Meanwhile, underlying inflation fell to 1.8% in August from 1.9% the previous month. While external price pressures are expected to remain significant amid high inflation in some key import sources, a government spokesman said that headline inflation should remain subdued in the near term as domestic cost pressures remain moderate.

-  HK: Hong Kong's current account surplus narrowed to HK$30.9 billion in the second quarter of 2022 from HK$70.4 billion a year earlier, mainly due to a higher goods deficit, partly offset by a higher services surplus. The goods deficit increased to HK$77.7 billion in the second quarter of 2022, compared to HK$29.6 billion in the same period in 2021. During the same period, the services surplus increased from HK$20.8 billion to HK$33.8 billion. Main revenue inflows and outflows were HK$503.9 billion and HK$425.8 billion, respectively, resulting in a net inflow of HK$78 billion in the second quarter of 2022 and a net inflow of HK$84.2 billion in the same quarter of 2021.

- GE: Germany's 10-year bond yield fell below 1.9 percent from an 8-1/2-year high of nearly 2 percent earlier this week. Investors flocked to the safety of government debt as the war in Russia escalated. Russian President Vladimir Putin announced a partial mobilization of 300,000 reservists, pledged to annex territories his forces had already occupied and vowed to use all necessary means to defend Russia. Meanwhile, the U.S. Federal Reserve raised interest rates by 75 basis points for the third time, heralding sharp hikes ahead. Meanwhile, European Central Bank President Christine Lagarde said in a speech on Tuesday that eurozone policymakers will continue to raise interest rates further in the next few meetings to curb the rising Inflation, even if these moves ultimately limit economic growth. Following a 50-basis point hike in July, the ECB raised rates by an unprecedented 75 basis points in September and is expected to increase rates by 50 to 75 basis points in October.

 

LOOKING AHEAD:   

Today, investors will receive:

- NZD: Westpac Consumer Sentiment and Trade Balance.

- JPY: Monetary Policy Statement, BOJ Policy Rate, BOJ Core CPI y/y, and BOJ Press Conference.

- CHF: SNB Monetary Policy Assessment, SNB Policy Rate, and SNB Press Conference.

- GBP: MPC Official Bank Rate Votes, Monetary Policy Summar, Official Bank Rate, and MPC Member Tenreyro Speaks.

- CAD: NHPI m/m.

- EUR: ECB Economic Bulletin and Consumer Confidence.

 

KEY EQUITY & BOND MARKET DRIVERS:

- US: U.S. futures attempted a rebound-on Thursday, with contracts on all three benchmarks up nearly 0.3 percent after a sharp sell-off in the previous session as investors continued to digest the latest decision from the Federal Open Market Committee. The Federal Reserve raised the federal funds rate by 75 basis points for the third straight meeting and set a more hawkish tone, suggesting rates this year, and next will be higher than the market expects. Chairman Powell also said there would be a risk of a recession to lower inflation. Meanwhile, the latest data showed initial jobless claims rose to 210,000 last week, missing expectations. In regular trading on Wednesday, the Dow and S&P 500 both fell 1.7%, while the Nasdaq fell 1.8%

- UK: UK 10-year gilt yields topped 3.3%, the highest level since July 2011, after the Bank of England raised interest rates by 50 basis points to 2.25% in a bid to curb stubbornly high inflation that has pushed borrowing costs to levels not seen since 2008 highest level. Meanwhile, UK finance minister Kwasi Kwarteng is due to release more details on the size of the government's energy support package on Friday.

- UK: The Bank of England raised its key interest rate by 50 basis points to 2.25% at its September 2022 meeting, marking the seventh consecutive rate hike and pushing borrowing costs to the highest since 2008. The central bank also voted unanimously to reduce the stock of UK government bonds bought by £80bn over the next 12 months through the issuance of central bank reserves. Five MPC members voted for a 0.5 percentage point increase, three voted for a 0.75 percentage point increase, as some analysts expected, and one voted for a 0.25 percentage point cut. The bank also noted that uncertainty over the outlook for retail energy prices has eased with the announcement of support measures, including energy price guarantees, which could significantly limit further inflation growth. The Bank of England added that it would conduct a comprehensive assessment of the impact of the energy and additional growth plans on demand and inflation, and determine the further impact of monetary policy.

- FR: French 10-year government bond yields rose to a near nine-year high of 2.508%, following a series of rate hikes by major central banks to stem the price surge. In the U.S., the Federal Reserve decided to raise its fund's rate by 75 basis points for a third straight time, with policymakers saying it will increase further until the "final rate" reaches 4.6% next year. In Europe, the European Central Bank will continue to raise interest rates next year. At its last meeting, the ECB raised its three main interest rates by 75 basis points and its inflation forecasts for 2022 and 2023 to an average of 8.1% and 5.5%, respectively.

- HK: Hong Kong's 10-year government bond yield rose to a 14-year high of 3.449%, tracking U.S. Treasury yields that touched above 3.6% on Wednesday, the highest level since at least February 2011, after the Federal Reserve raised rates by 75 basis points. And said it would continue to raise interest rates until the "final rate" reaches 4.6% next year. Meanwhile, the Hong Kong Monetary Authority (HKMA) raised its benchmark interest rate by the same amount as the Federal Reserve, pushing it to its highest since October 2008. Elsewhere, Goldman Sachs Group Inc cut its 2023 China GDP growth forecast to 4.5% from 5.3%, expecting Beijing to stick to its Covid-19 zero-growth policy through at least the first quarter of next year; while maintaining its outlook for the year at 3%, a far-low against the government's official target of 5.5%.

- US: The 10-year U.S. Treasury bond yield exceeded the 3.61 percent mark for the first time since April 2011, after the Federal Reserve raised the federal funds rate by 0.75 percentage points, intensifying its anti-inflation efforts. The top end of the federal funds rate is now projected at 4.6%, with policymakers expecting a rate cut in 2024 and an extension to 2025. Officials also slashed their growth forecasts for 2022, with GDP expected to grow just 0.2%, down from 1.7% in June.

 

STOCK MARKET SECTORS:

- High: Energy, Health Care, Communication Services, Consumer Staples.

- Low: Industrials, Consumer Discretionary, Real Estate, Financials.

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

- JPY: The yen fell to a 24-year low on Thursday as the Japanese and U.S. monetary policy divergence widened further, with the Japanese government intervening to support the yen for the first time since 1998. The Bank of Japan kept its key short-term interest rate at -0.1%, and Governor Haruhiko Kuroda said the central bank would not raise rates for some time. Meanwhile, on Wednesday, the Federal Reserve raised interest rates by 75 basis points for the third time and said further increases would follow. The yen strengthened to 142 against the dollar shortly after the intervention, having touched 145.9 earlier in the session.

- EUR: The euro was hovering below $0.99, not far from its lowest level since 2002, as investors tried to assess how the ECB would curb inflation without hurting the economy too much. The Federal Reserve raised interest rates by 75 basis points for the third time in a row, widening the interest rate gap with the eurozone. Investors increased bets on how much the European Central Bank will raise interest rates. Money markets are now pricing a 3% deposit rate by June, implying a cumulative tightening of 225 basis points. Since July, the ECB has raised interest rates by 125 basis points to ease a record annual inflation rate of 9.1%. The eurozone has been dealing with an unprecedented energy crisis, and analysts see a recession as inevitable, although the central bank has not signaled a possible tightening. The region is under increased pressure after President Vladimir Putin announced a partial military mobilization in Russia, a move seen by the West as an escalation.

- CNY: The offshore yuan weakened to 7.1 against the dollar, its lowest level since June 2020, dragged down by a rebound in the dollar. The Federal Reserve raised interest rates by 75 basis points for the third time and offered a tough rate outlook to reduce inflation. Meanwhile, the People's Bank of China kept its benchmark lending rate unchanged in September. A widening policy divergence between China and the United States raised the risk of further yuan depreciation and capital outflows. The gloomy domestic outlook has also weighed on China's currency, with Goldman Sachs slashing its 2023 economic growth forecast and predicting Beijing will stick to its strict zero-crown strategy well into next year, according to Bloomberg.

- NZD: The New Zealand dollar fell more than $0.585 to its lowest level since May 2020, weighed down by the U.S. Federal Reserve's (Fed's) aggressive plan to curb inflation, which weighed on the global growth outlook and weighed on commodities and other risky assets bring stress. Despite solid domestic data, New Zealand's economy remains weak, growing by 1.7% quarter-on-quarter in the second quarter of 2022, rebounding sharply from a contraction of 0.2% in the previous quarter and beating expectations for 1% growth. Last month, the Reserve Bank of New Zealand raised interest rates for the seventh time in a row by a consensus forecast of 50 basis points to 3%, and said it wanted to keep rates at the 4% limit before the pause.

- AUD: The Australian dollar fell more than $0.66 to its lowest level since May 2020, weighed down by the U.S. Federal Reserve's (Fed's) aggressive plan to curb inflation, which weighed on the global growth outlook and weighed on commodities and other risky assets. come under pressure. The Australian dollar weakened after Reserve Bank of Australia deputy governor Michele Bullock reiterated that the central bank was looking for opportunities to slow the pace of interest rate hikes at some point, noting that domestic wage growth was not as strong as in some other developed countries. After raising the cash rate by 225 basis points to a seven-year high of 2.35%, markets remain divided on whether the RBA will raise rates by 50 or 25 basis points next month.

- CAD: The Canadian dollar fell below 1.34 per dollar, its lowest level since August 2020, after the Federal Reserve raised its rate forecast by 75 basis points and foreshadowed sharp hikes ahead. At home, weaker-than-expected inflation slightly eased expectations for how aggressively the Bank of Canada will extend its path to rate hikes. Consumer prices in Canada rose 7% on a yearly basis in August, below expectations for a 7.3% increase and well below the 39-year peak of 8.1% two months ago. Disappointing employment data for August, with Canadians' unemployment rate rising to 5.4 percent from a projected 5 percent, added incentive to slow rate hikes.

 

CHART OF THE DAY:

The U.S. dollar index rose above 111.5 on Thursday, its highest level in 20 years, after the Federal Reserve raised interest rates by 75 basis points for the third straight time and took a hawkish tone on the rate outlook. Fed officials expect interest rates to peak at 4.6% next year with no cuts until 2024, contradicting speculation that the central bank may ease policy in 2023 to manage the economy. The dollar also benefited from safe-haven flows after President Vladimir Putin announced a partial military mobilization in Russia and a sharp escalation in the Ukraine conflict. The dollar climbed to multi-decade highs against the euro and sterling while hovering above two-year highs against the Australian and New Zealand dollars. Meanwhile, the yen fell to a fresh 24-year low against the dollar as the Bank of Japan maintained its ultra-easy policy, remaining an outsider amid a wave of global central bank tightening. 

 

 

- U.S. dollar index (DXY) - D1, Resistance around ~ NONE Support (consolidation) around  ~ 108.680

GLOBAL CAPITAL MARKETS OVERVIEW:   The Dow fell about 100 points on Thursday, while the S&P 500 and Nasdaq each lost about 0.5%, as investors worried about the impact of tightening global monetary policy on the growth momentum. The Federal Reserve raised interest rates for the third time on Wednesday and pledged to keep raising rates to 4.6% in 2023 until inflation is contained. Fed Chairman Jerome Powell said in a post-meeting news conference that prematurely loosening monetary policy while tackling inflation could have consequences while saying something must be done to bring inflation down. Elsewhere, policymakers in the UK and Switzerland raised rates by 50 and 75 basis points, respectively, while the European Central Bank signaled further hikes. On the data front, upbeat U.S. jobless claims reinforced expectations that the labor market remained strong. Canada S&P/TSX Composite edged to 19,200 on Thursday, rebounding slightly from the previous session's sharp losses. Investors continued to assess the outlook for global growth and inflation following yesterday's Fed rate hike. The Fed decided to raise its policy target by 75 basis points for the third time in a row, while a closely watched dot-plot shows borrowing costs are expected to hit 4.6% by March. Heavyweight energy stocks led the Toronto stock market, gaining an average of 2% on the back of a rebound in crude oil prices. The strength of energy producers was more than enough to offset losses in policy-sensitive sectors, with technology shares down nearly 1 percent. Canada's medical sector, largely made up of cannabis growers, is also under pressure from higher interest rates. Finally, property stocks fell sharply after the latest data showed that domestic new home prices rose 0.1%. Major European stock market indexes fell Thursday afternoon as investors digested a wave of central banks raising interest rates to combat soaring inflation. The U.S. Federal Reserve raised interest rates for the third time and signaled further increases in future meetings. In contrast, policymakers in the U.K. and Switzerland raised rates by 50 and 75 basis points, respectively. In addition, European Central Bank board member Isabel Schnabel said that even if the eurozone faces a recession, monetary policy should be further tightened to curb inflation. On the corporate side, Spanish bank Sabadell has received indicative offers for its payments arm from France's Worldline, Italy's Nexi, and US Fiserv, in deals worth up to 400 million euros. Italy's market regulator Consob has approved the group's founding family's proposed takeover of luxury shoemaker Tod's. The FTSE MIB index edged lower on Thursday, hovering around the 22,000 mark, as investors digested the Federal Reserve's rate decision and monitored the deterioration of Russia's invasion of Ukraine. The U.S. central bank decided to raise its fund's rate by 75 basis points for the third time in a row, with Chairman Powell stressing that rates will rise further and remain at restrictive levels to reduce price growth, even as it softens the labor market and weakens growth. Also, on the policy front, the neighboring Swiss National Bank raised interest rates by 75 basis points as expected. Policy-sensitive sectors in Milan were the most volatile, with consumer discretionary and technology stocks down sharply, with STMicroelectronics and Moncler down 2 percent. On the other hand, bank stocks rose sharply, with UniCredit up nearly 5%. Meanwhile, Italy will hold snap elections this weekend, which the right-wing coalition will win by a wide margin.  CAC 40 index fell more than 1% to around 5,950, in line with regional peers, as investors rallied after the Federal Reserve raised interest rates by 0.75 percentage points for the third straight time and signaled the possibility of further sharp hikes at the upcoming meeting. Those who weighed the prospect of worsening economic conditions. Meanwhile, ECB board member Isabel Schnabel warned that central banks should not stop monetary policy tightening at the first sign of easing inflationary pressures, but should advocate "resolute determination" to Quickly bring inflation back to target. On the data front, French business sentiment fell for a third month in September as economic uncertainty spread across the eurozone. Among individual stocks, Unibail Rodamco Real Estate Group and STMicroelectronics were the main drags, down more than 3%. On Thursday, the FTSE 100 fell 1% to a three-week low, tracking losses from its global peers after the Federal Reserve raised interest rates by 75 basis points for a third straight time and signaled further hikes until inflation eased. Investors will also watch for a policy decision by the Bank of England, which is expected to raise interest rates by at least 50 basis points to stem a spike in inflation, which remains near a 40-year high. In corporate news, British retailer Sainsbury's has signed a contract with LXi REIT to sell 18 stores in southern England for £500 million, according to Reuters. Russia's ruble-based MOEX index rose 1% on Thursday, hovering at 2,160, after taking a pause after plunging 12.3% over the past two sessions amid a further escalation in the Ukraine war and new threats from the West. President Vladimir Putin announced plans to formally annex four Ukrainian territories through a weekend referendum, before ordering the country's first military mobilization since World War II and stressing Russia's readiness to use its nuclear weapons arsenal. Many see annexation as a serious escalation, so the Kremlin has reason to believe that Ukraine's latest counterattack is an aggression on Russian territory with Western weapons. Russia's announcement that it will tax exports to boost 3 trillion rubles to cover a looming budget deficit also weighed on Russian financial markets. Polymetals shares fell 8% as the company scrapped a dividend payment on 2021 profits due to a tax surge. Japan Nikkei 225 lost 0.58% to end at 27,154, while the broader Topix index fell 0.2% to 1,917, its lowest level in more than two months and tracking losses on Wall Street as the U.S. The Federal Reserve has sharply raised rates, signaling further rate hikes. Investors also digested the Bank of Japan's policy decision after keeping interest rates ultra-low and its outlook dovish, ignoring a wave of global tightening and risking further yen depreciation and capital outflows. Technology stocks led losses, with SoftBank Group (-2%), Xinzhao Holdings (-2%), and M3 Inc (-1%) down sharply. Other index heavyweights also fell, such as Japan's Eugenics (-1%), and Sony Group (-1%). The Nikkei will be closed on Friday for the autumnal equinox holiday. New Zealand shares rose 19 points, or 0.2%, to close at 11,518.3 on Thursday, trying to shake off more than three-week lows hit in the previous session, as consumer confidence rose in the third quarter, following a record low in the second quarter, with Consumer confidence rose in the third quarter as the economy fully reopened from virus control. Meanwhile, New Zealand's exports grew faster than imports in August, with China being the largest trading partner. Turning to the U.S., Federal Reserve Chairman Powell mentioned that the economy remains resilient while raising interest rates for the third time by 75 basis points and foreshadowing further hikes in the coming months. Among sectors, consumers, technology services and communications led gains, rising between 0.8% and 1.2%. Shares in dairy exporter Fonterra rose 1.4% after the company reported a marginal increase in annual profit on strong demand and higher prices in Europe and the United States. Other notable movers are Geo Limited (11.1%), Savor Limited 5%), and Blis Technologies (3.1%). Hong Kong stocks tumbled 383 points, or 2.1%, to a ten-year low of 18,062 on Thursday, reflecting an overnight rout on Wall Street as the Federal Reserve raised rates again sharply and pledged to keep raising rates through 2023 to cool inflation. Meanwhile, the Hong Kong Monetary Authority (HKMA) raised its benchmark interest rate by 75 basis points, the same amount as the U.S. central bank, hours after the Fed's move, pushing borrowing costs to their highest level since October 2008. Elsewhere, the International Air Transport Association (IATA) said on Wednesday that Hong Kong, which has lost its status as a global aviation hub due to China's zero Covid-19 policy, will work to regain that status. All major sectors fell, with the consumer, basic materials, technology, and financials the biggest bottom movers. Resort developer Sands China fell nearly 5%, while Lenovo Group, Galaxy Entertainment, and JD.com lost nearly 5%. Com fell 4.3%, 4.2% and 3.5%, respectively.   REVIEWING ECONOMIC DATA:  Looking at the last economic data: - EU: Preliminary estimates show that in September 2022, the Eurozone Consumer Confidence Index fell 3.8 points to -28.8, below market expectations of -25.8. It was the lowest reading since the series of reports began in 1985. Consumers fretted about the economic outlook after Russia indefinitely halted energy supplies through Nord Stream 1 and the European Central Bank stepped up monetary policy tightening. Across the EU, consumer confidence fell by 3.5 percentage points to -29.9. - CA: In August 2022, Canadian new home prices rose 0.1 percent for the second straight month. Prices remained unchanged in most of the 27 census metropolitan areas (CMAs) surveyed; 4 CMAs saw prices rise, and 1 CMA fell. Activity in the new homebuilding sector continued in August despite continued market volatility. Early supply chain disruptions and rising labor costs have led to higher construction costs, driving up new home prices and leaving developers with little flexibility to adapt to market conditions. Year-over-year growth slowed in August, with new home prices rising 6.9%, the slowest gain since January 2021. Calgary (up 14.9%) again recorded the largest year-over-year increase in new home prices, followed by Winnipeg (up 11.4%) and Kitchener-Cambridge-Waterloo (up 11.9%). - US: New Americans filing for unemployment benefits rose 5,000 to 211,000 in the week ended Sept. 17, missing market expectations of 218,000. That marked a slight increase in last week's downwardly revised jobless benefits readings to the lowest since May, pointing to a tight labor market. On a non-seasonally adjusted basis, initial claims increased by 19,385 to 171,562, with outstanding claims in Michigan (+6,167), Massachusetts (+2,559), and New York (+2,185) Increase. The 4-week moving average, which removes weekly volatility, was down 6,000 points from the previous week at 216,750. - US: The U.S. current account deficit narrowed to $251.1 billion, or 4 percent of GDP, in the second quarter of 2022, with a record shortfall of $282.5 billion in the first quarter, below the forecast shortfall of $260.6 billion. Still, it was the second-largest current account deficit on record as oil and product imports remained strong. The cargo gap narrowed as exports rose $52 billion to $539.9 billion and imports grew slower ($20.8 billion to $850.4 billion). Services exports rose $8.4 billion to $225.2 billion, and imports rose $10.2 billion to $168.2 billion, driven by personal and passenger air travel. Primary income rose $21.1 billion to $299.1 billion, mostly direct investment, mostly revenue; payments rose $16.2 billion to $255.5 billion. - TW: In August 2022, Taiwan's seasonally adjusted unemployment rate increased to 3.67% from 3.68% the previous month, the lowest level since February. Compared with the previous month, the number of unemployed decreased by 1,000 to 434,000, and the number of employed persons decreased by 3,000 to 11.199 million. Meanwhile, the labor force fell by 4,000 to 11.833 million. - HK: Hong Kong's annual inflation rate hit a seven-month high of 1.9% in August 2022, unchanged from the previous month and slightly below market expectations of 2%. Upward pressure came mainly from electricity, gas and water prices (15.2% vs. 15.1% in July); clothing and footwear (5.9% vs. 6.5%); food (3.8% vs. 4.1%) and transportation (1.9% vs. 1.5%) ). Instead, house prices continued to fall (-0.3% vs -0.4%). Durable goods costs also fell sharply (0.6% vs. 1.2%). Meanwhile, underlying inflation fell to 1.8% in August from 1.9% the previous month. While external price pressures are expected to remain significant amid high inflation in some key import sources, a government spokesman said that headline inflation should remain subdued in the near term as domestic cost pressures remain moderate. -  HK: Hong Kong's current account surplus narrowed to HK$30.9 billion in the second quarter of 2022 from HK$70.4 billion a year earlier, mainly due to a higher goods deficit, partly offset by a higher services surplus. The goods deficit increased to HK$77.7 billion in the second quarter of 2022, compared to HK$29.6 billion in the same period in 2021. During the same period, the services surplus increased from HK$20.8 billion to HK$33.8 billion. Main revenue inflows and outflows were HK$503.9 billion and HK$425.8 billion, respectively, resulting in a net inflow of HK$78 billion in the second quarter of 2022 and a net inflow of HK$84.2 billion in the same quarter of 2021. - GE: Germany's 10-year bond yield fell below 1.9 percent from an 8-1/2-year high of nearly 2 percent earlier this week. Investors flocked to the safety of government debt as the war in Russia escalated. Russian President Vladimir Putin announced a partial mobilization of 300,000 reservists, pledged to annex territories his forces had already occupied and vowed to use all necessary means to defend Russia. Meanwhile, the U.S. Federal Reserve raised interest rates by 75 basis points for the third time, heralding sharp hikes ahead. Meanwhile, European Central Bank President Christine Lagarde said in a speech on Tuesday that eurozone policymakers will continue to raise interest rates further in the next few meetings to curb the rising Inflation, even if these moves ultimately limit economic growth. Following a 50-basis point hike in July, the ECB raised rates by an unprecedented 75 basis points in September and is expected to increase rates by 50 to 75 basis points in October.   LOOKING AHEAD:    Today, investors will receive: - NZD: Westpac Consumer Sentiment and Trade Balance. - JPY: Monetary Policy Statement, BOJ Policy Rate, BOJ Core CPI y/y, and BOJ Press Conference. - CHF: SNB Monetary Policy Assessment, SNB Policy Rate, and SNB Press Conference. - GBP: MPC Official Bank Rate Votes, Monetary Policy Summar, Official Bank Rate, and MPC Member Tenreyro Speaks. - CAD: NHPI m/m. - EUR: ECB Economic Bulletin and Consumer Confidence.   KEY EQUITY & BOND MARKET DRIVERS: - US: U.S. futures attempted a rebound-on Thursday, with contracts on all three benchmarks up nearly 0.3 percent after a sharp sell-off in the previous session as investors continued to digest the latest decision from the Federal Open Market Committee. The Federal Reserve raised the federal funds rate by 75 basis points for the third straight meeting and set a more hawkish tone, suggesting rates this year, and next will be higher than the market expects. Chairman Powell also said there would be a risk of a recession to lower inflation. Meanwhile, the latest data showed initial jobless claims rose to 210,000 last week, missing expectations. In regular trading on Wednesday, the Dow and S&P 500 both fell 1.7%, while the Nasdaq fell 1.8% - UK: UK 10-year gilt yields topped 3.3%, the highest level since July 2011, after the Bank of England raised interest rates by 50 basis points to 2.25% in a bid to curb stubbornly high inflation that has pushed borrowing costs to levels not seen since 2008 highest level. Meanwhile, UK finance minister Kwasi Kwarteng is due to release more details on the size of the government's energy support package on Friday. - UK: The Bank of England raised its key interest rate by 50 basis points to 2.25% at its September 2022 meeting, marking the seventh consecutive rate hike and pushing borrowing costs to the highest since 2008. The central bank also voted unanimously to reduce the stock of UK government bonds bought by £80bn over the next 12 months through the issuance of central bank reserves. Five MPC members voted for a 0.5 percentage point increase, three voted for a 0.75 percentage point increase, as some analysts expected, and one voted for a 0.25 percentage point cut. The bank also noted that uncertainty over the outlook for retail energy prices has eased with the announcement of support measures, including energy price guarantees, which could significantly limit further inflation growth. The Bank of England added that it would conduct a comprehensive assessment of the impact of the energy and additional growth plans on demand and inflation, and determine the further impact of monetary policy. - FR: French 10-year government bond yields rose to a near nine-year high of 2.508%, following a series of rate hikes by major central banks to stem the price surge. In the U.S., the Federal Reserve decided to raise its fund's rate by 75 basis points for a third straight time, with policymakers saying it will increase further until the "final rate" reaches 4.6% next year. In Europe, the European Central Bank will continue to raise interest rates next year. At its last meeting, the ECB raised its three main interest rates by 75 basis points and its inflation forecasts for 2022 and 2023 to an average of 8.1% and 5.5%, respectively. - HK: Hong Kong's 10-year government bond yield rose to a 14-year high of 3.449%, tracking U.S. Treasury yields that touched above 3.6% on Wednesday, the highest level since at least February 2011, after the Federal Reserve raised rates by 75 basis points. And said it would continue to raise interest rates until the "final rate" reaches 4.6% next year. Meanwhile, the Hong Kong Monetary Authority (HKMA) raised its benchmark interest rate by the same amount as the Federal Reserve, pushing it to its highest since October 2008. Elsewhere, Goldman Sachs Group Inc cut its 2023 China GDP growth forecast to 4.5% from 5.3%, expecting Beijing to stick to its Covid-19 zero-growth policy through at least the first quarter of next year; while maintaining its outlook for the year at 3%, a far-low against the government's official target of 5.5%. - US: The 10-year U.S. Treasury bond yield exceeded the 3.61 percent mark for the first time since April 2011, after the Federal Reserve raised the federal funds rate by 0.75 percentage points, intensifying its anti-inflation efforts. The top end of the federal funds rate is now projected at 4.6%, with policymakers expecting a rate cut in 2024 and an extension to 2025. Officials also slashed their growth forecasts for 2022, with GDP expected to grow just 0.2%, down from 1.7% in June.   STOCK MARKET SECTORS: - High: Energy, Health Care, Communication Services, Consumer Staples. - Low: Industrials, Consumer Discretionary, Real Estate, Financials.   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  - JPY: The yen fell to a 24-year low on Thursday as the Japanese and U.S. monetary policy divergence widened further, with the Japanese government intervening to support the yen for the first time since 1998. The Bank of Japan kept its key short-term interest rate at -0.1%, and Governor Haruhiko Kuroda said the central bank would not raise rates for some time. Meanwhile, on Wednesday, the Federal Reserve raised interest rates by 75 basis points for the third time and said further increases would follow. The yen strengthened to 142 against the dollar shortly after the intervention, having touched 145.9 earlier in the session. - EUR: The euro was hovering below $0.99, not far from its lowest level since 2002, as investors tried to assess how the ECB would curb inflation without hurting the economy too much. The Federal Reserve raised interest rates by 75 basis points for the third time in a row, widening the interest rate gap with the eurozone. Investors increased bets on how much the European Central Bank will raise interest rates. Money markets are now pricing a 3% deposit rate by June, implying a cumulative tightening of 225 basis points. Since July, the ECB has raised interest rates by 125 basis points to ease a record annual inflation rate of 9.1%. The eurozone has been dealing with an unprecedented energy crisis, and analysts see a recession as inevitable, although the central bank has not signaled a possible tightening. The region is under increased pressure after President Vladimir Putin announced a partial military mobilization in Russia, a move seen by the West as an escalation. - CNY: The offshore yuan weakened to 7.1 against the dollar, its lowest level since June 2020, dragged down by a rebound in the dollar. The Federal Reserve raised interest rates by 75 basis points for the third time and offered a tough rate outlook to reduce inflation. Meanwhile, the People's Bank of China kept its benchmark lending rate unchanged in September. A widening policy divergence between China and the United States raised the risk of further yuan depreciation and capital outflows. The gloomy domestic outlook has also weighed on China's currency, with Goldman Sachs slashing its 2023 economic growth forecast and predicting Beijing will stick to its strict zero-crown strategy well into next year, according to Bloomberg. - NZD: The New Zealand dollar fell more than $0.585 to its lowest level since May 2020, weighed down by the U.S. Federal Reserve's (Fed's) aggressive plan to curb inflation, which weighed on the global growth outlook and weighed on commodities and other risky assets bring stress. Despite solid domestic data, New Zealand's economy remains weak, growing by 1.7% quarter-on-quarter in the second quarter of 2022, rebounding sharply from a contraction of 0.2% in the previous quarter and beating expectations for 1% growth. Last month, the Reserve Bank of New Zealand raised interest rates for the seventh time in a row by a consensus forecast of 50 basis points to 3%, and said it wanted to keep rates at the 4% limit before the pause. - AUD: The Australian dollar fell more than $0.66 to its lowest level since May 2020, weighed down by the U.S. Federal Reserve's (Fed's) aggressive plan to curb inflation, which weighed on the global growth outlook and weighed on commodities and other risky assets. come under pressure. The Australian dollar weakened after Reserve Bank of Australia deputy governor Michele Bullock reiterated that the central bank was looking for opportunities to slow the pace of interest rate hikes at some point, noting that domestic wage growth was not as strong as in some other developed countries. After raising the cash rate by 225 basis points to a seven-year high of 2.35%, markets remain divided on whether the RBA will raise rates by 50 or 25 basis points next month. - CAD: The Canadian dollar fell below 1.34 per dollar, its lowest level since August 2020, after the Federal Reserve raised its rate forecast by 75 basis points and foreshadowed sharp hikes ahead. At home, weaker-than-expected inflation slightly eased expectations for how aggressively the Bank of Canada will extend its path to rate hikes. Consumer prices in Canada rose 7% on a yearly basis in August, below expectations for a 7.3% increase and well below the 39-year peak of 8.1% two months ago. Disappointing employment data for August, with Canadians' unemployment rate rising to 5.4 percent from a projected 5 percent, added incentive to slow rate hikes.   CHART OF THE DAY: The U.S. dollar index rose above 111.5 on Thursday, its highest level in 20 years, after the Federal Reserve raised interest rates by 75 basis points for the third straight time and took a hawkish tone on the rate outlook. Fed officials expect interest rates to peak at 4.6% next year with no cuts until 2024, contradicting speculation that the central bank may ease policy in 2023 to manage the economy. The dollar also benefited from safe-haven flows after President Vladimir Putin announced a partial military mobilization in Russia and a sharp escalation in the Ukraine conflict. The dollar climbed to multi-decade highs against the euro and sterling while hovering above two-year highs against the Australian and New Zealand dollars. Meanwhile, the yen fell to a fresh 24-year low against the dollar as the Bank of Japan maintained its ultra-easy policy, remaining an outsider amid a wave of global central bank tightening.      - U.S. dollar index (DXY) - D1, Resistance around ~ NONE Support (consolidation) around  ~ 108.680