U.S. Inflation Figures and Market Reactions
A look at the day ahead in European and global markets from Tom Westbrook
Markets head into the release of U.S. inflation figures expecting they won't get in the way of an interest rate cut next week.
None of the economists polled by Reuters see core CPI topping 0.3% for November and anything at that level or below is unlikely to ruffle too many prices.
It's the surprise, to markets pricing 21 basis points of U.S. easing next week, that traders may need to watch out for.
Even a core reading of 0.3% would put the three-month annualised rate around 3.6%, which is uncomfortably high, and so a higher reading might give pause to bets on a December cut and to U.S. share indexes that are trading near record peaks.
Asia trade was wary, with the dollar easing on the yen and steady elsewhere and stocks in a holding pattern. [MKTS/GLOB]
In one of their most dovish statements in more than a decade, Chinese leaders signalled on Monday they are ready to deploy whatever stimulus is needed to counter the impact of expected U.S. trade tariffs. But after initial gains, markets have cooled and Chinese shares were mostly flat.
The Canadian dollar is pinned near a 4-1/2 year low as rising unemployment has fed expectations for a 50 bp rate cut later on Wednesday.
German stocks were also catching their breath after shooting to record peaks despite a dour economic outlook. The benchmark DAX index is up 5.5% in two weeks and some of the top gainers have just started to slip from recent peaks.
Weapons giant Rheinmetall is down about 7% in two sessions, although it has more than doubled this year.
Soaring Siemens Energy shares, which had zoomed up more than 35% in November and are up more than 300% this year, fell more than 4% on Tuesday.
Key developments that could influence markets on Wednesday:
- U.S. CPI data
(Editing by Sam Holmes)
