European markets head for positive start as investors wait for euro zone inflation and GDP data

Holly Ellyatt

European markets are set to start the new trading week on a positive note after a shaky end to last week as investors digest the European Central Bank’s decision to raise its interest rate by 75 basis points.

On Monday, regional investors will be watching for the latest inflation figures from the euro zone for October, as well as third quarter gross domestic product (GDP) data.

Elsewhere overnight, shares in Asia-Pacific were mostly higher on Monday as China factory activity missed expectations, and markets look ahead to the U.S. Federal Reserve meeting later this week when it will announce its interest rate decision.

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Traders looking for sign of a slowdown from Fed

Wall Street will be watching the Federal Reserve statement closely this week for signs that the central bank will ease up on its rate hike pace.

According to the CME FedWatch tool, traders believe there is an 80% chance that the Fed hikes rates by three quarters of a point on Wednesday.

That would bring the central bank’s target range to 3.75% to 4%.

Beyond that, however, the market looks more uncertain. There is just a 44% probability of another hike of that size in December.

— Jesse Pound

The U.S. dollar has more room to strengthen on rate differentials: Wells Fargo

The U.S. dollar is expected to strengthen further due to rate differentials since central banks around the world are taking a “less hawkish” tone, according to Wells Fargo.

“We’re starting to see some of the foreign central banks … turn a little bit on the less hawkish side,” while the Federal Reserve maintains its hawkish stance, FX strategist Brendan McKenna said on CNBC’s “Squawk Box Asia.”

McKenna said he expects dollar strengthening to continue into the first quarter of next year “at minimum.”

— Jihye Lee

Factory activity in China shrank in October, missing expectations

China’s factory activity shrank in October compared with September, data from the National Bureau of Statistics showed.

The official manufacturing Purchasing Managers’ Index print came in at 49.2, missing expectations for a reading of 50 — the mark that separates monthly growth from contraction.

In September, the PMI reading stood at 50.1. China’s official non-manufacturing PMI came in at 48.7, compared with a print of 50.6 in September.

— Abigail Ng

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European markets: Here are the opening calls

European markets are set to start the new trading week on a positive note after a shaky end to last week as investors digested the European Central Bank’s decision to raise its interest rate by 75 basis points.

London’s FTSE index is expected to open 22 points higher at 7,063, Germany’s DAX up 73 points at 13,313, France’s CAC up 28 points at 6,299 and Italy’s FTSE MIB up 75 points at 22,508, according to data from IG.

Regional investors will be watching for the latest inflation figures from the euro zone for October, as well as third quarter gross domestic product (GDP) data.

Elsewhere overnight, shares in Asia-Pacific were mostly higher on Monday as China’s factory activity missed expectations, and markets look ahead to the U.S. Federal Reserve meeting later this week when it will announce its interest rate decision.

There are no major earnings or data releases.

— Holly Ellyatt

Source : CNBC