A look at the day ahead in European and global markets from Rae Wee
Markets in Europe on Thursday will be focused on a raft of preliminary Purchasing Managers’ Index (PMI) readings, particularly from the euro zone, where growth prospects have become a source of concern among investors and policymakers.
Business activity in the bloc is expected to have remained in contractionary territory this month, keeping pressure on the European Central Bank (ECB) to make its next rate cut sooner rather than later.
ECB President Christine Lagarde said on Wednesday the central bank would need to be cautious when deciding on further easing and take its cues from incoming data, although sources have told Reuters that policymakers are already starting to debate whether rates have to go below neutral to stimulate the economy.
Futures pricing shows that traders currently see rates falling below 2% by June next year.
All of that has weighed on the euro, which is down more than 3% for the month thus far and on track for its steepest monthly decline since April 2022.
The common currency struggled to gain momentum on Thursday, languishing near its weakest level since early July.
PMI figures for the UK and the U.S. will also be released later in the day, although growth in those economies is likely to fare much better than in their euro zone counterpart.
The International Monetary Fund said earlier this week that the U.S. economy would continue to be the main driver for global growth through the balance of this year and in 2025, bolstering bullish bets on the dollar.
The U.S. currency has drawn further support from uncertainty over the upcoming U.S. election and rising market bets on a possible win by Republican presidential candidate Donald Trump.
Bears are also beginning to circle the Chinese yuan, which is bound to feel the heat of bigger trade tariffs in the event of a Trump victory.
In other news, Boeing (NYSE:BA) factory workers voted on Wednesday to reject a contract offer and continue a more than five-week strike, in a blow to investor and management hopes of a resolution to the acrimonious dispute.
The union vote against the deal, which offered a 35% rise in wages over four years, reflects years of resentment among workers who felt cheated in talks a decade ago and threatens to deepen a financial crisis at the company.
Key developments that could influence markets on Thursday:
– Euro zone, France, Germany flash PMIs (October)
– UK flash PMI (October)
– U.S. flash PMI (October)
– U.S. weekly jobless claims
– Various speeches from Bank of England, European Central Bank and Federal Reserve policymakers
(By Rae Wee; Editing by Edmund Klamann)