A preview of the upcoming day in European and global markets by Tom Westbrook.
Investors are expected to turn their attention momentarily towards monetary policy this week, shifting from their recent focus on trade and politics.
The Federal Reserve will announce its decision first, later today, followed by the ECB, Sweden's Riksbank, and others on Thursday.
Except for the SNB, all are anticipated to maintain rates unchanged, similar to the Bank of Japan earlier in the day. The spotlight will be on any signals regarding policy direction and responses to recent market turbulence surrounding U.S. tariffs and concerns about economic slowdown.
Ten-year Treasury yields have shifted by 25 basis points since the Fed's last meeting in January, shortly after Donald Trump assumed the presidency.
The S&P 500 has dipped around 7%, and gold prices are hitting new highs nearly every day, with the latest recorded at $3,038 per ounce.
Markets are not pricing in any possibility of a rate cut today, but anticipate a 15% chance in May and a 65% chance in June.
The Bank of Japan has maintained interest rates, adopting a wait-and-see approach, with markets exhibiting little immediate response.
Geopolitically, tensions have escalated with Israel breaking the calm in Gaza and causing over 400 fatalities on Tuesday.
Following talks, Trump and Russia's Putin agreed to halt attacks on Ukrainian energy sites, falling short of the 30-day ceasefire the U.S. has been advocating for.
Political developments continue, particularly regarding the prominent sale of CK Hutchison's ports business.
Owned by billionaire Li Ka-shing, the company agreed to sell assets near the strategically vital Panama Canal to a group led by BlackRock, a move praised by Trump but criticized elsewhere.
Indonesian stocks have stabilized after a sudden decline on Tuesday.
Ahead of the Fed decision, final European inflation data will be released today.
Earnings reports are expected from London financial services firms, Tencent, and Ping An – with a focus on China's booming markets.
Key events affecting markets on Wednesday include:
- Earnings: Tencent, Ping An, Hargreaves Lansdown, Prudential, M&G
- Economic Data: Final Eurozone CPI
- Policy Announcement: Federal Reserve monetary policy decision