EUROPEAN FUTURES STEADY AHEAD OF PIVOTAL INFLATION DATA (0630 GMT) European equity futures are little changed on Friday, with inflation data back in the spotlight after recent troubles in the financial system.
Euro area consumer price growth is expected to slow on an annual basis, but the core measure is seen hitting a record high of 5.7%, putting pressure on the ECB to push on with further rate hikes. The Fed's preferred measure of inflation, personal consumption expenditures (PCE), is also released today. Economists polled by Reuters expect the core measure to hold steady at 4.7% annually.
Euro STOXX 50 futures are down 0.05% with negligible moves seen in DAX , CAC and FTSE 100 futures, a very different picture from the previous Friday when worries about Deutsche Bank sent global shares reeling.
Wall Street futures are little changed, while MSCI's broadest index of Asia-Pacific share excluding Japan is notching a 0.5% gain.
(Samuel Indyk)
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Q1 WAS HARD TO GET A HANDLE ON, AND A CHOPPY Q2 BECKONS (0557 GMT)
A lot of investors went in to this year expecting the U.S. interest rate outlook to reveal itself, and for clarity on that front to inform pricing for pretty much everything else. Three months have gone by and it hasn't quite worked out that way. Pulling in one direction is a bank collapse that set interest rate expectations diving. Pulling in the other is persistently high inflation. After a month of wild swings for bonds and interest rate futures, rate expectations are settling around a peak in the Fed funds rate near 5% and then steady downhill from there. Traders reckon policymakers will need to be careful while the effects of fragile bank confidence roll through the economy. The outlook remains far from clear while the sentiment on banks and lending is so delicate. One piece of clarity is the contrast with Europe, where markets have priced in another 50 basis points in hikes this year and inflation is running hot. Euro zone inflation data later in the day can reinforce that, if it echoes stronger-than-expected German figures published on Thursday. The euro is up 1.8% on the quarter. Sterling is up 2.5%. Nerves on banks and lower U.S. Treasury yields have delivered investors into the arms of profitable, big cap technology companies. The Nasdaq , is eying its best quarter in more than two years. Elsewhere, there are positive signs - China's manufacturing activity expanded again in March, albeit at a slowing pace, and there are growing signs of an end to the regulatory storm there. E-commerce firm JD.Com is planning to spin off its property and industrial units, sources told Reuters, following in the footsteps of similar plans at rival Alibaba , which markets have taken as a broadly encouraging signal. On the flipside, Japan's government said on Friday it plans to restrict exports of 23 types of semiconductor manufacturing equipment, aligning its technology trade controls with a U.S. push to curb China's ability to make advanced chips. The second quarter may prove as difficult to navigate as the first.
Key developments that could influence markets on Friday:
Economics: Euro zone inflation, U.S. core PCE
(Tom Westbrook)
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