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

Johann M Cherian

Markets have been dealing with the steep selloff in

Treasuries worried about the U.S. fiscal health, and in Europe

the next test will be how businesses have been faring in the

face of an uncertain trade environment.

Manufacturing and services sector surveys for May will grab

the spotlight on Thursday, and forecasts indicate that business

activity in the eurozone and Germany has broadly been steady

from the previous month.

European earnings so far show that corporate health has been

better than initially feared and stocks have been riding the

tide of the temporary U.S. tariff pause and signs that China, a

top customer for European firms, is striving to revive

consumption.

That has left the pan-European STOXX 600

outperforming the S&P 500 and the Nasdaq this

year. The export-heavy German benchmark closed at a

record high on Wednesday and is the best performing major stock

market in the world.

However, the path ahead would depend on whether European

Union leaders can manage to negotiate trade deals with the U.S.

and on the impact of the highly anticipated German fiscal

stimulus package.

European futures indicated a dour start to the day

as risk sentiment was shrouded by lingering worries of how the

U.S. could manage to finance its ballooning fiscal debt as

investors exit U.S. assets.

President Donald Trump's massive tax and spending bill

cleared an important procedural hurdle in the

Republican-controlled House of Representatives, setting it up

for a vote that could take place within hours.

Also worrying investors was the lacklustre auction of

Treasury bonds that reinforced the "Sell America" narrative,

weighing on not just the dollar but Wall Street as well, with

traders already jittery after Moody's cut the U.S. triple-A

credit rating last week.

The yield on 30-year Treasury bonds US30YT=RR stayed above

5% after hitting a 1-1/2 year high earlier in Asian hours.

However, not all assets were taking it on the chin. Bitcoin

prices touched a fresh record high on improving sentiment

around digital assets. The world's most valuable cryptocurrency

has gained nearly 50% from the early April selloff, breaking

above the $100,000 mark.

Prices of gold were also making a comeback from a

recent slip, given that investors perceive the precious metal to

be a safe-haven favourite in times of uncertainty.

Key developments that could influence markets on Thursday:

Data:

- Business activity surveys out of the eurozone, UK and the

U.S. along with weekly jobless claims out of the United States

- Remarks from European central bank policymakers including

Philip Lane, Luis de Guindos expected

- Bank of England Deputy Governor Sarah Breeden and Chief

Economist Huw Pill to speak later in the day

- Comments from U.S. Federal Reserve's Thomas Barkin due

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