.
Sentiment in the morning auction market remains subdued.
UK labor and wage data will likely be the focus of market attention as traders analyze these reports to determine when the Bank of England will start its rate-cutting cycle. On the other hand, the Fed may not be in a hurry to start the easing cycle, as retail sales in March were higher than expected, the latest evidence of the vitality of the U.S. economy. Mary Daley, president of the Federal Reserve Bank of San Francisco, was the latest to say that the Fed is in no hurry to cut rates.
Ankur Banerjee's outlook for the day ahead in European and global markets
Worsening tensions in the Middle East and a return to "higher and higher" US interest rates have weakened risk appetite, causing Asian stocks to tumble, the dollar to climb to a five-month high, and the fragile yen to close at levels last seen in the mid-1990s.
Futures indicate that European stocks will open sharply lower, and this downturn will continue in Europe. UK labor and wage data will likely be the focus of attention as traders analyze these reports to determine when the Bank of England will begin its rate-cutting cycle.
The market believes that easing is most likely to begin in August, with a 49 basis point rate cut expected for the year.
On the other hand, the Fed may not be in a hurry to start the easing cycle, as retail sales in March were higher than expected, the latest evidence of the dynamism of the U.S. economy.
Markets are now expecting less than two rate cuts this year, compared to the six expected in early 2024 (yes, you read that right). The start of the easing cycle is now September, pushed back from June, which in turn was pushed back from March.
Comments from Fed officials have also led traders to lower their expectations, with San Francisco Federal Reserve Bank President Mary Daly the latest to suggest the Fed is in no hurry to cut rates.
"The worst thing you can do is to take emergency action when no emergency is needed," Daley said.
As the world waits to see how Mr. Benjamin Netanya, the Prime Minister of Arbitration, will react to the first direct attack in the history of Iran, safe-haven funds continue to flee from gold and the US dollar. The yen, which is often considered as a safe asset, has further weakened to a 34-year low as the interest rate differential between the US and Japan continues to widen.
Meanwhile, China's gross domestic product (GDP) significantly exceeded expectations, but weak data for March has investors worried about China's economic recovery.
The world's largest luxury goods group LVMH (LVMH) will release its financial results, China will also become the focus of attention of the business community, investors are worried that low demand in China will lead to a sharp slowdown in luxury sales.
Key dynamics likely to affect Tuesday's market:
Economic indicators: Change in employment in the UK in February, average weekly earnings in the UK in the three months to February
FINANCIAL: LVMH, UnitedHealthcare, Johnson & Johnson, Bank of America, and Morgan Stanley.
(Reporting by Ankur Banerjee; Editing by Jacqueline Wong)
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