Global markets have been shaken by two consecutive sessions of losses in the U.S., with Asian equities mixed Friday on the back of a 500-point drop for the Dow Jones Industrial Average at the close of Thursday’s session. Traders have got increasingly nervous about the prospect of rising interest rates and a tightening Federal Reserve, alongside warnings from the International Monetary Fund about risks to global economic growth.
U.S. bond markets have attracted much attention, with Treasury yields hitting multi-year highs this week — higher yields mean higher borrowing costs, seen as negative for corporates and their stock prices. Meanwhile, President Donald Trump has continually criticized the Fed for raising rates too high too fast, on Thursday claiming the U.S. central bank had directly caused the stock market correction over the past couple of days.
Back in Europe, Italy and the U.K. remain in the spotlight in terms of political news. While excessive spending concerns continue to weigh on Italy’s government, the pressure to strike a European Union withdrawal deal is a big challenge for Britain.
On Thursday, the European Central Bank was reported to be unable to intervene in the event of an Italian crisis situation unless the country first seeks a bailout from the EU. In Brexit affairs, British Prime Minister Theresa May on Thursday said that negotiations between the U.K. and the EU on a so-called Irish backstop — a key alternative to a hard Irish border — were likely to continue through to November.
In corporate news, Anglo-Dutch oil major Royal Dutch Shell is in talks to sell its stake in a Venezuelan joint venture with French firm Maurel & Prom, Reuters reported Thursday, citing three sources. Meanwhile, some of the largest U.S. lenders, including J.P. Morgan, Wells Fargo and Citi are due to report results on Friday, figures which will likely set the tone for earnings season.
On the data front, German September inflation numbers are to be released Friday, along with euro zone industrial production figures.