Tech stocks point higher as ECB looms By Reuters

A look at the day ahead in European and global markets from Stella Qiu

Asian stock markets were mostly higher as investors regained some of their love for tech stocks and Nvidia (NASDAQ: ) in particular as they look to an almost certain rate cut by the ECB and possible hints of what’s to come.

All of that helped offset a dampener in markets from the rapidly diminishing odds of a half-point rate cut by the Fed next week.

The much-anticipated overnight US inflation report showed that core CPI rose 0.28% in August, just above an expected 0.2% rise, and that was enough for troubled markets to finally decide that the Fed will settle for a 25 bps rate cut on Wednesday. .

This drove short-term yields higher and gave the dollar a much-needed boost against the yen, which retreated from its 2024 high of 140.71 per dollar.

The weaker yen sent it up nearly 3 percent, overshadowing dovish comments from a senior Bank of Japan official that rates must reach 1 percent over time.

Europe is poised for solid gains heading into its high-risk event of the day: the European Central Bank’s policy decision. EUROSTOXX 50 futures rose 1.2% and gained 1%.

A quarter-point cut is all in, but the question remains whether the central bank will cut again in October and December. Inflation-watching hawks are still in the majority, with markets valuing only a move next month at around 40%.

The most likely scenario is that ECB President Christine Lagarde, in her post-meeting briefing, will stick to the recent story that decisions are made on a meeting-by-meeting basis, based on incoming data.

Next, attention will turn back to the US, where weekly jobless claims and producer price data are due.

The jobless claims took on added weight given the Fed’s laser focus on the health of the labor market. A poor number – higher than the forecast of 230,000 – could revive prospects for a 50 bps cut.

Economists expect the PPI to have risen 0.1% last month. Some elements of the data will help analysts refine forecasts for the Personal Consumption Expenditure Price Index, the Fed’s preferred gauge of inflation, due on September 27.

Key developments that could influence markets on Thursday:

— ECB policy meeting, followed by a briefing from President Christine Lagarde

— Weekly US jobless claims

— US PPI

(By Stella Qiu; Editing by Edmund Klamann)