European stock markets are likely to start with caution on Tuesday in anticipation of forthcoming key inflation reports, which will give investors insight into market direction. The inflation reports, due on Thursday, will come from Germany, France, Spain, and the U.S. Additionally, the US Federal Reserve's preferred core measure of personal consumption expenditure prices will be shared.
Following these, Eurozone’s inflation data will be published on Friday – it's anticipated to reveal a core figure slowdown to its lowest since early 2022, at 2.9 percent.
Jeffery Schmid, the President of Kansas City Federal Reserve Bank, stated in his inaugural speech on Monday that the US central bank is not in a hurry to lower interest rates. Speeches by Deputy Dave Ramsden of the Bank of England and Riksbank Governor Erik Thedeen will also be keenly anticipated by investors for further market insight.
The dollar stayed defensive, while Japan's two-year bond yield jumped to its highest level in over ten years, due to stronger-than-expected Japanese inflation data that supports the case for the Bank of Japan to withdraw its negative rate policy by April.
Asian markets, on the other hand, were largely dipping, with gold and oil stability reflecting the increasing tensions in the Middle East.
Key focus points for later in the day will be German consumer confidence figures, comments from the European Central Bank, and U.S. reports on consumer confidence and core durable goods orders.
Stocks in the U.S. closed lower overnight, as investors awaited critical economic readings anticipated later in the week to gauge the outlook on rate changes.
Earlier in the day, data indicated that sales of new U.S. single-family homes in January rose at a lower rate than expected. The Dow ended with a decrease of 0.2 percent, the tech-focused Nasdaq Composite dipped 0.1 percent, and the S&P 500 fell by 0.4 percent.
On Monday, European stocks broadly ended lower as investors awaited the U.S. and Eurozone inflation data. The pan-European STOXX 600 fell 0.4 percent, France's CAC 40 dropped half a percent, the UK's FTSE 100 declined 0.3 percent, while Germany’s DAX secured a slight increase.
