A look at the day ahead in European and global markets from Rae Wee
The light economic data calendar in Europe on Thursday means the focus stays on rates, with European Central Bank President Christine Lagarde the latest to pour cold water on bets for rate cuts until policymakers can be sure inflation is in retreat.
No victory yet, she said - a view that her counterparts at the Bank of England are likely to share after Britain's annual inflation rate sped up for the first time in 10 months in December.
U.S. economic activity also continues to surprise with its resilience, another reason for policymakers to move slowly.
Global markets this week are on the defensive, pounded by the sharp rise in bond yields as traders rein in some of the extreme dovishness priced into the 2024 interest rate outlook.
Emerging market stocks are having their worst start to a calendar year since 2016, and the yawning performance gap between emerging Asia and the rest of the world in recent years appears to be only widening.
China's blue-chip stock index sank to its lowest since 2019 while Hong Kong's Hang Seng Index touched a more than 14-month low on Thursday, as a patchy recovery in the world's second-largest economy continues to pummel already-fragile investor sentiment.
Even the tearaway Nikkei is feeling the strain as it eases from a 34-year high, although it is probably only a matter of time before a wave of profit-taking arrives.
Geopolitics too, is on investors' minds.
The U.S. returned the Yemen-based Houthi rebels to a list of terrorist groups, as the militants attacked their second U.S.-operated vessel in the Red Sea region this week and the U.S. military carried out fresh strikes.
Shipping rates have climbed as freighters divert to an alternate route around the Cape of Good Hope.
In corporate news, Apple (NASDAQ:AAPL) ended Samsung Electronics (KS:005930)' 12-year run as the largest seller of smartphones in the world, a report showed - a boost after losing its crown to Microsoft (NASDAQ:MSFT) as the world's most valuable company.
Key developments that could influence markets on Thursday:
- ECB December minutes; Lagarde speaks
- BoE credit conditions survey
- France: Reopening of 4-year, 5-year, 6-year, 11-year, 12-year and 15-year government debt auctions
- U.S. building permits and housing starts