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EUROPEAN FUTURES EDGES UP AHEAD OF U.S. CPI, EARNINGS IN FOCUS (0645 GMT)
European futures are edging up as investors cautiously await for U.S. inflation data, due later in the day and digest a fresh batch of first quarter earnings results.
April U.S. consumer price data is due at 1230 GMT and economists expect headline CPI to hold steady at an annual 5% and core CPI to moderate very slightly to 5.5%, though anything stickier could soften the conviction that interest rates will fall sharply this year.
In Europe, corporate results are still in focus. Credit Agricole SA, France's second-biggest listed bank, posted better-than-expected earnings as market volatility boosted trading revenue.
British pubs group J D Wetherspoon forecast record full-year sales and its annual profit to be closer to the top end of market expectations.
Travel firm TUI expects strong revenue and higher profit for the full year of 2023 on the back of strong booking momentum.
(Joice Alves)
MARKETS ON HOLD FOR US CPI (0634 GMT)
Sterling and the euro seem to be losing steam as currency markets tuck themselves in for a nap. JP Morgan's G7 FX volatility index stands at a one-year low, with financial markets in holding patterns as they await developments in key areas of focus.
Frontlines in Ukraine remain frozen. U.S. debt ceiling talks are deadlocked.
Today's inflation data, due at 1230 GMT, could offer a jolt if the surprise factor is big enough. Economists polled by Reuters see core CPI steady at a monthly 0.4%.
However, as Joe Capurso at the Commonwealth Bank of Australia notes, Cleveland Fed's 'nowcast' forecasts core CPI going up and if that happens, it could challenge the market's assumption that U.S. interest rate hikes are finished.
Indeed, CME's FedWatch tool shows futures imply better-than-even odds that the Fed cuts rates in September.
Beyond the inflation data, U.S. default risks and banking wobbles loom as the next likely focus. Investors are so far avoiding T-Bills that mature around the "X-date" when the U.S. government runs out of cash, expected to be early in June.
Most analysts and investors think that as in the past, an eleventh-hour resolution will be found. But nerves are starting to fray, especially since the assumption that the U.S. government pays its debt on time is the bedrock of much global market activity.
"While this time might not be different, people are thinking that the politics and individuals are certainly much more ideologically driven and dogmatic ... party rifts are deeper," said ING economist Rob Carnell.
"It's not inconceivable that this goes horribly wrong, whereas in previous occasions it sort of was inconceivable."
Key developments that could influence markets on Wednesday:
U.S. CPI data
(Tom Westbrook)
