The Bank of Japan intervenes to prop up the yen for the first time in 24 years. Rate hikes from the Philippines to Switzerland (and probably the U.K.) follow another 75 basis point increase from the Federal Reserve, but U.S. stocks are set to open flat after Wednesday’s wild ride. Darden Restaurants and Costco report earnings, and a wave of protests and emigrations hit Russia as Vladimir Putin tries to round up fighters to fill his depleted ranks in Ukraine. Here’s what you need to know in financial markets on Thursday, 22nd September.<\/p>\n
1. BoJ props up yen for first time since 1998<\/strong><\/p>\n The Federal Reserve\u2019s\u00a0latest<\/a><\/span>\u00a0interest rate<\/a><\/span>\u00a0hike triggered the first direct intervention in foreign exchange markets by the Bank of Japan since 1998, briefly dragging the\u00a0yen<\/a><\/span>\u00a0off a 24-year low against an unstoppable dollar.<\/p>\n The\u00a0BoJ intervened<\/a><\/span>\u00a0to prop up the currency despite leaving its own policy settings unchanged at its meeting overnight, Governor Haruhiko Kuroda repeated that he expected\u00a0inflation<\/a><\/span>\u00a0to come down of its own accord next year due to the underlying weakness in Japan\u2019s domestic demand.<\/p>\n The dollar had surged above 145 yen prior to the BoJ\u2019s intervention after the Fed widened the interest rate differential between the two central banks\u2019 policy rates with another 75 basis point hike on Wednesday.<\/p>\n 2. Central bank hikes from Manila to Zurich\u2026and probably London<\/strong><\/p>\n One central bank that did \u2013 finally \u2013 match the Fed step for the step was the\u00a0Swiss National Bank<\/a><\/span>, sending the\u00a0Swiss franc<\/a><\/span>\u00a0more than 1% higher against the dollar. The SNB also introduced a tiering regime on how it remunerates bank reserves, incentivizing banks to whittle down their own excess liquidity and thus help to tighten financial conditions.<\/p>\n The central banks of\u00a0Norway<\/a><\/span>,\u00a0Indonesia<\/a><\/span>\u00a0and the\u00a0Philippines<\/a><\/span>, all opted for slightly smaller steps of 50 basis points, Norges Bank echoing the BoJ in predicting a relatively quick decline in\u00a0inflation<\/a><\/span>\u00a0next year.<\/p>\n That leaves decisions from the\u00a0Bank of England<\/a><\/span>\u00a0and the central bank of Turkey still outstanding. The BoE is expected to raise its key rate by 50 basis points, with markets also on tenterhooks to see if it will press ahead with plans to start selling bonds from its QE portfolio just as a new government faces a big jump in borrowing to fund its\u00a0energy subsidy programs<\/a><\/span>.<\/p>\n 3. Stocks set to open flat; jobless claims, Costco earnings due<\/strong><\/p>\n U.S. stock markets are set to open flat after the roller-coaster ride that followed the Fed\u2019s decision on Wednesday. While the 75 basis point hike was the milder of the two outcomes seen as possible from the meeting, the dot-plot of policymakers\u2019 expectations for rates indicated that the central bank isn\u2019t done tightening yet, not by a long shot.<\/p>\n By 06:15 ET (10:15 GMT),\u00a0Dow Jones futures<\/a><\/span>\u00a0were up 28 points or 0.1%, while\u00a0S&P 500 futures<\/a><\/span>\u00a0were down less than 0.1%, and\u00a0Nasdaq 100 futures<\/a><\/span>\u00a0were down by a fraction more.<\/p>\n Weekly jobless claims<\/a><\/span>\u00a0and\u00a0U.S. current account<\/a><\/span>\u00a0data for the second quarter are due at 08:30 ET but are unlikely to have much effect while Fed Chair Jerome Powell\u2019s hawkish guidance is still ringing in the market\u2019s ears.<\/p>\n Accenture (NYSE:ACN<\/a><\/span>), FactSet (NYSE:FDS<\/a><\/span>) and Darden Restaurants (NYSE:DRI<\/a><\/span>) are all due to report earnings before the open, while Costco (NASDAQ:COST<\/a><\/span>) reports after the close.<\/p>\n 4. Protests, emigration wave hits Russia after mobilization call<\/strong><\/p>\n Over 1,000 people were arrested after a wave of protests across Russia to protest the mobilization of reservists to fight in Ukraine. Social media footage and flight booking sites indicated that men of fighting age sought to flee the country in droves, creating lines stretching back dozens of miles at Russia\u2019s border with Finland, Georgia, and even Mongolia.<\/p>\n The written decree ordering mobilization made no reference to the exemptions and qualifications that President Vladimir Putin had made in his address to the nation, suggesting that the authorities will aim to raise much more than the 300,000 increase announced.<\/p>\n Meanwhile, in Ukraine, Russia fired a salvo of missiles at residential buildings and civilian infrastructure in the city of Zaporizhzhia, where it intends to stage a referendum on joining the Russian Federation at the weekend.<\/p>\n 5. Oil stabilizes after dollar-led fall<\/strong><\/p>\n Crude oil prices stabilized overnight after following other risk assets down in the wake of the Fed\u2019s decision. In making the\u00a0dollar<\/a><\/span>\u00a0more expensive, the Fed also made oil and any other commodity priced in dollars more expensive for the rest of the world, something that is increasingly weighing on analysts\u2019 forecasts for demand.<\/p>\n By 06:30 ET,\u00a0U.S. crude<\/a><\/span>\u00a0futures were up a modest 0.3% at $83.20, having bounced from support levels overnight without making a new low for the week.\u00a0Brent crude<\/a><\/span>\u00a0was up 0.3% at $90.07 a barrel.<\/p>\n