Tom Westbrook provides an update on the European and global markets for the day ahead.
Markets expect that the release of US inflation figures will not hamper interest rate cuts next week.
None of the economists polled by Reuters expect core CPI to rise above 0.3% in November and a reading below or at that level is unlikely to send prices tumbling.
It is the surprise, that is to say the markets’ anticipation of a 21 basis point easing of American monetary policy next week, which must hold the attention of operators.
Even a base rate of 0.3% would put the three-month annualized rate around 3.6%, which is uncomfortably high, and so a higher rate could give pause to bets on a December cut and indexes US stock markets trading near record highs.
Trading in Asia was cautious, with the dollar easing on the yen and holding steady elsewhere, and stocks holding steady. [MKTS/GLOB]
In one of their most pessimistic statements in more than a decade, Chinese leaders indicated Monday that they were prepared to deploy whatever stimulus measures necessary to counter the impact of expected U.S. tariffs. But after initial gains, markets cooled and Chinese stocks were virtually unchanged.
The Canadian dollar is stuck near a 4-1/2 year low as rising unemployment fueled expectations of a 50 basis point rate cut later on Wednesday.
German stocks also caught their breath after hitting record highs despite a gloomy economic outlook. The benchmark DAX index is up 5.5% in two weeks and some of the biggest gainers have just started to pull away from their recent highs.
Arms giant Rheinmetall is down about 7% in two sessions, although it has more than doubled this year.
Shares of Siemens Energy, which soared more than 35% in November and more than 300% this year, fell more than 4% on Tuesday.
Main developments likely to influence the markets on Wednesday:
– Consumer Price Index (CPI) in the United States
