A look at the future of European and global markets from Ankur Banerjee
Another day, another warning from Tokyo kept the yen’s fall in check, with the Asian currency so close to the 34-year low of 151.975 hit last week, prompting repeated warnings for intervention.
These warnings have worked to some extent with the yen now falling at a glacial pace, even as the dollar/yen ratio remains above 151 levels. It was last recovered at 151.745 per dollar.
Japanese Finance Minister Shunichi Suzuki reiterated his warning to yen bears on Tuesday as Tokyo tries to prevent a destabilizing decline in the currency.
After the initial shock from stronger-than-expected U.S. manufacturing data, which cast doubt on the timing of the Federal Reserve’s interest rate cuts, markets appear to be taking the growing evidence of the economy’s strength in stride.
And while investors remain wary of a return to a long-term bullish strategy, most analysts suspect the Fed is more concerned about inflation, which has eased, and the job market, with data on wages expected later in the week.
Futures indicate that European stocks are set for a higher open, with the region’s stock markets reopening after the holidays on Friday and Monday.
The focus will be on the pan-European market, which closed last week at a record high and will look to start the second quarter on the right foot after posting a 7% gain in the January-March quarter.
A raft of data on manufacturing activity across Europe along with inflation data for Germany will also be in focus as investors assess the health of the region’s economy.
Euro zone manufacturing activity is likely to contract in March, according to a Reuters poll, although the spotlight will be on companies’ optimism for next year. March production data from France, Germany and the United Kingdom will also be released during the day.
Investors will be analyzing data to gauge when the European Central Bank may begin its interest rate cutting cycle.
A growing number of ECB policymakers have supported cutting rates, with the June meeting shaping up to be the most likely time to act.
All 77 economists in a Reuters poll conducted last week expected the ECB to keep the deposit rate unchanged at 4.00% on April 11. About 90%, 68 respondents, predicted the first cut would come in June.
Key developments that could affect markets on Tuesday:
Economic events: March manufacturing PMI data for France, UK, Germany and eurozone and preliminary German inflation data for March
Debt auctions: Germany – Reopening of the 2-year public debt auction; France: reopening of 3-month, 5-month, 6-month and 1-year public debt auctions
(This story has been refiled to correct grammar to “has,” not “have,” in paragraph 6)
(By Ankur Banerjee; Editing by Muralikumar Anantharaman)