Event-driven markets continue today with the focus on the ECB. As mentioned earlier in the week, the Central Bank is widely expected to cut rates by 25 bps, with the main refinancing operation moving from 4.25% to 4%, and the marginal lending facility from 4.50% to 4.25%. The press conference at 13:45 will be eagerly watched to see how many more cuts may come in this cycle. If BMW's surprise profit warning yesterday highlights broader issues, a weak German economy is not good for the eurozone, and the desire for a growth story is something all governments are hoping for.
Overnight in Japan, the Nikkei index halted a seven-day losing streak as the U.S. inflation print pulled the yen down from its strongest level against the dollar since December. A region-wide gauge of tech stocks rose more than 3% after Nvidia Corp. jumped 8.2% overnight, with Taiwan Semiconductor Manufacturing Co. among the top gainers on the regional index. The S&P 500 closed up 1% after core CPI was slightly stronger than expected (+28 bp m/m), and the market now prices in a 25 bp cut. The U.S. election odds are moving in favor of Vice President Harris after the debate, with ABC fact-checking five of Donald's claims, but none of Kamala's.
In other markets, Bitcoin rose 1% to $58,059.76, the yield on 10-year Treasuries advanced one basis point to 3.66%, and West Texas Intermediate crude rose 1% to $68 a barrel. Data-wise, apart from the ECB, we have U.S. initial jobless claims and PPI.
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