European traders will be greeted with a rather bare economic calendar when they get to their desks today, and I reckon that might suit some market players just fine considering what is on the agenda later this week.
In terms of data releases, we only have French consumer confidence for October and the ECB’s survey on euro area lending for September. Otherwise, markets will largely be left to their own devices as traders wait on the central bank bonanza to roll into town.
Wall Street at least provided a more positive lead in overnight trading, with the S&P 500 posting 0.7% gains and the Nasdaq closing 0.8% higher. Tech stocks helped to drive the rebound but caution is very much still up in the air, especially with the recent volatility surrounding the AI trade.
As for geopolitical tensions, we are seeing more of the same old, same old. Fresh diplomatic efforts involving Iran are offering some hope of de-escalation but continued attacks on Saudi Arabia are keeping oil supply risks firmly in the picture.
As such, I wouldn’t be surprised if we see traders take on a more reserved and cautious approach to trading today. After all, the focus now turns to the BOC and Fed decisions tomorrow, followed by the ECB on Thursday and BOJ on Friday. And that is without mentioning big tech earnings with Microsoft, Alphabet, and Amazon all set to put the AI spending debate back under the spotlight.
For today, I would look to bond yields, oil prices and the broader risk mood for clues on what might drive trading sentiment before we get to the bigger events this week. But without any major economic catalyst to latch on to, any notable moves may have more to do with positioning flows ahead of those events rather than any genuine market conviction I would say.
This article was written by Justin Low at investinglive.com.