A look at the day ahead in European and global markets from Ankur Banerjee

UK labour market data on Tuesday will take centre stage as Europe wakes up, with traders trying to gauge just how much inflationary pressure remains in Britain’s economy ahead of a Bank of England meeting on Thursday.

The spotlight will then turn to U.S. inflation later in the day as the Federal Reserve kick starts its two-day policy setting meeting that will make or break expectations around rate cuts next year.

Wages in Britain, excluding bonuses, in the three months to October are expected to slow to a 7.4% rise, analysts estimate, compared with a 7.7% rise in September. The data will likely keep the central bank on guard for inflationary pressures.

While the BOE is expected to keep rates steady on Thursday, the focus is on when and how fast it will cut rates. Traders expect the British central bank to cut rates at a slower pace than the Fed.

Investors have slightly dialled back their expectations of the Fed cutting rates early next year. Markets are now pricing in a 45% chance of a rate cut in March compared with 57% a week earlier, according to CME FedWatch tool.

And that brings us to 2023’s final central bank bonanza, with investors bracing for policy decisions from the European Central Bank, Norges Bank and the Swiss National Bank apart from the BOE and the Fed.

All that has meant investors have been cautious this week, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.5%, while the dollar drifted lower, with the yen recouping some of its steep overnight losses. [FRX/]

Futures indicate European bourses are set for a muted start.

In corporate news, “Fortnite” maker Epic Games has prevailed in its high-profile antitrust trial over Alphabet (NASDAQ:)’s Google in a ruling that if it holds could upend the entire app store economy.

French drugmaker Sanofi (NASDAQ:) will be in focus after it announced it was terminating a deal to exclusively license a drug that Maze Therapeutics is developing to treat Pompe disease because of objections from the U.S. government.

Key developments that could influence markets on Tuesday:

Economic events: UK ILO unemployment rate for Oct; data on UK average earnings in the three months to October