Ankur Banerjee's outlook on the European and worldwide markets for the coming day


A solid start to the earnings season and a softening U.S. core inflation figure that rekindled expectations for Fed rate reduction this year gave global markets and non-dollar currencies some relief from their inflation-related fears.


However, the relief rally might not last long because U.S. inflation is still a little too warm and could rise if the new Trump government adopts strict tax and tariff policies.

As luxury companies place their hopes on U.S. consumers while downturn continues in China, the big event during European hours will be Richemont's (SIX:CFR) sales report on Thursday, which will provide the first indication of the health of high-end demand.

Investors will also closely monitor events in the Middle East after Israel stepped up its attacks on Gaza just hours after a ceasefire and agreement to free hostages was announced to put an end to warfare that started 15 months ago.

The December U.S. core inflation rate, which was just about mild, improved confidence, pushing Treasury yields lower and boosting stocks. However, analysts warned that the annual rate of 3.2% was still a little high and that the Fed would probably remain on hold for some time.

Strong results from American banks Goldman Sachs, JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), and Citigroup (NYSE:C) also helped to improve sentiment. The upcoming U.S. administration is expected to be business-friendly and beneficial for banks, according to Wall Street CEOs.


Results from Morgan Stanley (NYSE:MS) and Bank of America will be released on Thursday.

Taiwan Semiconductor Manufacturing Co.'s results report, which revealed profits that largely surpassed projections, may also serve as a model for European chipmakers. Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA) are among TSMC's clients, and the company is constantly monitored for signs of chip demand for AI.


Following remarks by Bank of Japan Governor Kazuo Ueda that bolstered market wagers on a rate hike next week, the yen was the most active currency on Thursday, rising to a one-month high in Asian hours.

At one of the two meetings this quarter, the vast majority of economists polled by Reuters anticipate that the BOJ will raise interest rates, with the majority pointing to a January move.

The markets remaining stable when Donald Trump returns to the White House on Monday would be a prerequisite for a BOJ raise. Politicians and decision-makers worldwide will be focusing on his inaugural speech to predict his likely course of action.

According to analysts, Trump's policies will increase inflationary pressures while also boosting growth, which will keep the dollar strong. In fact, hopes that the Fed will maintain higher interest rates for a longer period of time have caused the dollar index to rise 5% in the two months after the U.S. election.

In prepared testimony before the U.S. Senate Finance Committee, Trump's pick to lead the Treasury Department, Scott Bessent, outlined a vision for a "new economic golden age" and pledged to keep the dollar as the global reserve currency.

In other news, South Korea's central bank abruptly decided not to lower its policy interest rate, indicating that it must wait for the domestic political unrest that is affecting the currency to subside before implementing any more rate reduction.

Important events that might affect Thursday's markets:


Germany's December inflation data

- UK GDP forecast for November

November's Euro Zone trade balance