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A look at the day ahead in European and global markets

By Brigid Riley, Markets Correspondent

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With markets having mostly recovered their composure after the shocking recent developments in the Middle East, some dovishly construed remarks by Federal Reserve officials helped to settle investors’ nerves as they headed into Tuesday.

Top-ranking Fed officials on Monday suggested that rising yields on long-term U.S. Treasury bonds could substitute for formal monetary policy moves in terms of market effect, bolstering expectations that the U.S. central bank may not have to hike rates further.

The U.S. Federal Reserve building is pictured in Washington, March 18, 2008. REUTERS/Jason Reed

European stocks had come under pressure on Monday as news emerged about the conflict in the Middle East but the Euro zone blue chip STOXX 50 futures were up again in the Asian morning.

Meanwhile, 10-year U.S. Treasuries managed their sharpest rally in more than a month at the Tokyo opening on Tuesday, on a combination of the dovish Fed remarks and demand for safe assets.

Markets will have plenty more chances to hear from Fed officials, who will be out in full force at events on Tuesday while minutes of their September monetary policy meeting will be published on Wednesday. Then all eyes turn to U.S. CPI data on Thursday.

Graphics are produced by Reuters.

Elsewhere, the IMF and World Bank annual meetings in Morocco get into full swing, with a range of leading global policymakers set to speak.

European Central Bank President Christine Lagarde makes her appearance at the meetings on Tuesday, speaking after economic data the previous day added fuel to fears of a potential recession in Germany, the euro zone’s largest economy.

In Asia, more bad news emerged from China as the country’s largest private real estate developer, Country Garden, said it might not be able to meet all of its offshore payment obligations when due or within the relevant grace periods.

In corporate earnings news, PepsiCo looks set to post a rise in third quarter revenues later in the day, as consumers down more of the company’s drinks even as prices rise.

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