Morning Bid: U.K. labor data takes the stage before U.S. inflation—Ankur Banerjee’s outlook for the upcoming day in the European and international markets. As Europe awakens, traders will focus on U.K. labor market data on Tuesday to determine how much inflationary pressure remains in the British economy before a Bank of England meeting on Thursday.
Later in the day, when the Federal Reserve begins its two-day policy-setting meeting to determine whether or not rate reductions will occur next year, the focus will shift to U.S. inflation.
Analysts predict that wages in Britain, excluding bonuses, will increase by 7.4% in the three months leading up to October, down from a 7.7% increase in September. The central bank will probably continue to monitor the statistics for signs of inflation.
The focus is on the BOE’s timing and speed of rate cuts, even though rates are anticipated to remain unchanged on Thursday. Investors anticipate a slower rate reduction from the British central bank than from the Fed.
Investors’ hopes that the Fed will lower rates early in 2019 have been slightly tempered. According to the CME FedWatch tool, markets are currently pricing in a 45% likelihood of a rate drop in March, down from 57% a week earlier.
And that takes us to the last central bank fiesta of 2023, where investors expect the European Central Bank, the Swiss National Bank, and Norges Bank to make policy announcements in addition to the Fed and the BOE.
Due to all of that, investors have been cautious this week. The yen has recovered some of its sharp overnight losses, while the dollar has slid lower. MSCI’s broadest index of Asia-Pacific shares outside of Japan (.MIAPJ0000PUS) is up 0.5%.
Futures suggest that trading on European exchanges will begin quietly.
In business news, in a well-publicized antitrust trial, Alphabet’s Google (GOOGL.O) has lost to “Fortnite” creator Epic Games. Should the decision stand, this may completely alter the dynamics of the app store market.
Sanofi (SASY.PA), a French pharmaceutical company, will come under scrutiny after it said it was ending an agreement to exclusively license a medication developed by Maze Therapeutics to treat Pompe illness due to opposition from the U.S. government.
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