Marketmind: Risk appetites sour, with inflation on the menu
A look at the day ahead in European and global markets from Wayne Cole.
It's been a typically cautious start to the week in Asia, made all the more muted by a holiday in Japan, with Chinese stocks again dragging on regional markets. A drop in Chinese 10-year bond yields to four-year lows says a lot about how investors rate the economy and the need for more stimulus.
European and U.S. stock futures were also in the red, although losses were minor as yet.
Geopolitics has hardly helped, as Israeli strikes against Hezbollah in Lebanon led Washington to warn of a wider conflict in the Middle East.
Attacks on shipping in the Red Sea forced Maersk to divert all container vessels around Africa's Cape of Good Hope, which could lead to higher shipping costs that slow the process of global disinflation.
On the other hand, oil was easing again after Saudi Arabia slashed prices for Asia to 27-month lows, offsetting the risk of supply disruptions in the Red Sea. U.S. crude slipped 1%, undoing some of last week's 3% bounce.
Inflation will be front and centre this week with CPIs out from the United States and China, as well as Tokyo — which is so large it counts as a proxy for all of Japan these days.
The core Tokyo CPI on Tuesday is seen easing to 2.1% and thus closer to the Bank of Japan's 2% target, making it easier for the central bank to maintain its ultra-easy policy at its Jan. 23 meeting.
China's CPI, due on Friday, is expected to have fallen at a slightly slower pace in December than in the previous month, although recent PMIs point to barely any pricing power for manufacturers.
For markets, the main event will be Thursday's U.S. CPI, with investors counting on the core rising by a tame 0.2% month-on-month and dragging the
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