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

Ankur Banerjee

The time for waiting is almost over as inflation reports from

Europe and the U.S. headlines the day's agenda, with any kind of

surprise likely to sway markets as investors weigh the shifting

expectations over global rates.

First up will be the euro zone inflation reading, which is

expected to come in at 2.5% for May after staying stable in the

last couple of months at 2.4%, while core inflation is expected

to be steady at 2.7%, according to a Reuters poll.

Investors will be parsing through the data to gauge the

trajectory the European Central Bank is likely to take on rates.

While a rate cut in June is all but certain, the focus is

squarely on what comes after that.

And so, investors are likely to be extremely sensitive to

even a small beat or a miss.

Markets are pricing in 60 bps of cuts from the ECB this year

but a lot will depend on the inflation and wage growth readings

over the coming months.

Futures indicate European bourses are set for a lacklustre

opening, with the pan-European STOXX 600 index touching

a more than three-week low on Thursday but on course for a 2%

gain in the month.

A downward revision to U.S. GDP on Thursday stoked

expectations that the Federal Reserves has room to cut rates

this year, although investors for a change took the bad news (of

weaker growth) as bad news, taking U.S. stocks, the dollar and

Treasury yields lower.

Markets are pricing in 35 bps of cuts from the Fed this

year, with a 50% chance of a rate cut in September.

The ever-shifting expectations around U.S. rates has taken a

toll on the dollar, which is set for a first monthly loss this

year against the euro, Sterling, Aussie, kiwi and even the yen,

although the yen's miniscule gain is a result of the suspected

intervention earlier this month.

In Asian hours, equities broadly gained, while the dollar

regrouped. China stocks rose even as the data showed the

nation's manufacturing activity unexpectedly fell in May,

according to an official factory survey.

Meanwhile, markets so far have shrugged off the Donald Trump

verdict after he became the first U.S. president to be convicted

of a crime on Thursday when a New York jury found him guilty of

falsifying documents to cover up a payment to silence a porn

star ahead of the 2016 election.

Shares of The Truth Social parent Trump Media & Technology

Group ( DJT ), which is majority owned by Trump, dropped 6.5%

late on Thursday after the verdict.

Key developments that could influence markets on Friday:

Economic events: May inflation report for euro zone and

France, April retail sales data for Germany

(Editing by Muralikumar Anantharaman)