A look at the day ahead in European and global markets from Tom Westbrook
Markets are heading towards the release of US inflation numbers, anticipating that they will not stand in the way of an interest rate cut next week.
None of the economists polled by Reuters see the core CPI going above 0.3% for November and anything at or below that level is unlikely to spark much price action.
It’s a surprise to markets pricing in 21 basis points of US easing next week, which traders may need to be wary of.
Even a baseline reading of 0.3% would put the three-month annual rate around 3.6%, an uncomfortably high level, so a higher reading could halt bets on a December cut and US stock indexes trading near record highs.
Trade in Asia was cautious, with the dollar falling against the yen and holding steady elsewhere, while stocks remained in a holding pattern. (MKTS/Globe)
In one of their most pessimistic statements in more than a decade, Chinese leaders indicated on Monday that they were willing to deploy any stimulus needed to counter the impact of expected US trade tariffs. But after the initial gains, markets calmed down and Chinese stocks were mostly flat.
The Canadian dollar is holding near its lowest level in four-and-a-half years, as rising unemployment fuels expectations of a 50 basis point interest rate cut later on Wednesday.
German stocks also caught their breath after rising to record levels despite the bleak economic outlook. The benchmark DAX is up 5.5% in two weeks, and some of the big gainers are just starting to slide off recent peaks.
Shares of arms giant Rheinmetall fell about 7% in two sessions, although they have more than doubled this year.
Shares of Siemens Energy, which rose more than 35% in November and have risen more than 300% this year, fell more than 4% on Tuesday.
Key developments that may impact markets on Wednesday:
– US Consumer Price Index data
(Editing by Sam Holmes)