View in Browser

Sign up for Reuters newsletters

A look at the day ahead in European and global markets

By Ankur Banerjee, Asia Finance & Markets, Breaking News Correspondent

Data refreshes every time you open this email. For more European market news, click here. Please send any feedback to morningbid@thomsonreuters.com” style=”text-decoration: underline; color: #404040;” rel=”noopener”>morningbid@thomsonreuters.com.

After German inflation bucked the trend and rose more than expected in June, the spotlight will firmly be on euro zone and French inflation reports, with investors wondering if the German data was just a blip or something worse.

Economists polled by Reuters expect the euro zone inflation rate to fall to 5.6% in June from 6.1% in May.

Price tags are seen on fruits as a woman shops at a local market in Nice, France, April 26, 2023. REUTERS/Eric Gaillard

While German consumer prices – harmonised to compare with other European Union countries – rose by a higher-than-anticipated 6.8% on the year in June, inflation slowed sharply in Spain and Italy.

ING economists said a bit of a divergence might be developing in terms of inflation in the region, leading to some disagreement on the best path forward for interest rates.

“Though one suspects that the response will be, if in doubt, hike,” they said.

European Central Bank President Christine Lagarde pretty much cemented expectations earlier this week for a ninth consecutive rise in euro zone rates in July, saying the central bank was still not seeing enough evidence that underlying inflation has turned a corner and is on a path to deceleration.

The hawkish rhetoric was shared by other major central banks including U.S. Federal Reserve Chair Jerome Powell, who signalled the U.S. central bank was ready to resume its rate-hike campaign.    

Rate-hike jitters kept equities in check in Asian hours, with European stocks set for a moderately higher open. Investors are also watching for the U.S. Personal Consumption Expenditures index, the Fed’s favoured inflation gauge, later on Friday.

Meanwhile, the yen broke beyond 145 a dollar, a proverbial ‘line in the sand’, resulting in fresh warning from Japan’s finance minister. “We will respond appropriately if the moves become excessive,” Shunichi Suzuki said.

The yen’s slide has put authorities under pressure as market participants remain wary of a potential intervention. The intervention launched in September, when the yen weakened past 145 per dollar, was the first in 24 years.

In the corporate world, Nike’s dour earnings forecast underscored the challenge facing the footwear maker as cost-conscious consumers in North America cut back on discretionary spending in the face of still high inflation rates.

Graphics are produced by Reuters.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Sponsors are not involved in the creation of newsletters or other Reuters news content.

Morning Bid is sent every morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.

Want to stop receiving this newsletter? Unsubscribe here.
To manage which newsletters you’re signed up for, click here.

Reuters Terms & Conditions and Privacy Statement