A Look at the Day Ahead in European and Global Markets

By Rae Wee

Markets in Europe on Thursday will focus on preliminary Purchasing Managers' Index (PMI) readings, particularly from the euro zone, where growth prospects concern investors and policymakers.

Business activity in the bloc is expected to remain in contractionary territory this month, increasing pressure on the European Central Bank (ECB) to cut rates sooner.

ECB President Christine Lagarde stated the bank must be cautious in deciding on further easing and will consider incoming data. However, sources told Reuters that policymakers are beginning to debate if rates should go below neutral to stimulate the economy.

Futures pricing suggests traders expect rates to fall below 2% by June of next year.

This news has negatively affected the euro, which is down over 3% this month and is on track for its largest monthly drop since April 2022. The common currency struggled to gain momentum on Thursday, lingering near its lowest level since early July.

PMI figures for the UK and the U.S. will also be released later; however, growth in those economies is expected to be much better than in the euro zone. The International Monetary Fund earlier stated that the U.S. economy would remain the main driver for global growth through this year and into 2025, boosting bullish bets on the dollar.

The U.S. dollar has gained further support amid uncertainty over the upcoming U.S. election and rising market bets on a possible Donald Trump victory. Bears are beginning to cast doubt on the Chinese yuan, which may face pressure from increased trade tariffs in the event of a Trump win.

In other news, Boeing (NYSE:BA) factory workers voted on Wednesday to reject a contract offer, continuing a strike that has lasted over five weeks, disappointing investor and management hopes for a resolution. This union vote against a deal offering a 35% wage increase over four years reflects longstanding resentment among workers, threatening to escalate Boeing's financial crisis.

Key Developments That Could Influence Markets on Thursday:

• Euro zone, France, Germany flash PMIs (October)
• UK flash PMI (October)
• U.S. flash PMI (October)
• U.S. weekly jobless claims
• Various speeches from Bank of England, ECB, and Federal Reserve policymakers

By Rae Wee; Editing by Edmund Klamann