A look at the day ahead in European and global markets from Ankur Banerjee
European markets are gearing up for a steady start to the week with the ECB widely expected to stand pat on rates but possibly hint at when rate cuts would likely begin, while investors will parse through the latest reading of the U.S. inflation report.
Markets will also get a chance to assess U.S. PPI data and the minutes of the Fed’s March meeting, while UK GDP data is due at the end of the week. Fed speakers including John Williams, Mary Daly and Raphael Bostic are also due to speak in the week.
Investors see almost no chance of a cut on April 11 when the European Central Bank meet but have fully priced in a move for June, followed by another two or three cuts later this year.
That makes the comments from officials as well as the tone of the statement the point of interest for traders.
Futures indicate European bourses are due for a steady open, with the focus on the continent-wide STOXX 600. The index touched a two week low on Friday.
Ahead of the ECB, however, investors will have to contend with the latest U.S. consumer price index (CPI) report scheduled for April 10, which is expected to show core inflation slowing to 3.7% in March from 3.8% the prior month.
The data will hopefully help provide some answers to a question that has dogged traders this year: when will the Federal Reserve start its interest rate cutting cycle?
What was once pencilled in for March, moved to June and is now slowly being pushed to July or even September in the wake of yet another blockbuster U.S. jobs report, making the inflation report the next all-important data for the markets.
Investors may also be getting accustomed to the idea that a strong U.S. economy is not a bad thing after all.
Elevated U.S. Treasury yields have boosted the dollar but shares have perked up as well, though whether this investor enthusiasm for risk assets in the face of the renewed higher-for-longer U.S. rates narrative persists remains to be seen.
Also, helping risk appetite was a media report that talks on a truce in the Gaza conflict are making progress in Cairo and all parties have agreed on basic points.
Key developments that could influence markets on Monday:
Economic events: Germany trade balance, industrial output, industrial production, export and import for Feb
(By Ankur Banerjee; editing by Shri Navaratnam)