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

Ankur Banerjee

While stock markets shrugged off the dim start to 2025, the

higher-for-longer U.S. rates theme has left the dollar's

dominance intact, leaving the euro and sterling near multi-month

lows.

Beyond the worries of the U.S. central bank's measured rate

cut path for 2025, investors are also grappling with how

President-elect Donald Trump's policies will play out regarding

inflation, growth and tariffs.

European stock markets are set for a mellow open after Asian

equities ended the week on a high, buoyed by South Korean shares

. Japan remains closed for a holiday.

Focus will be on whether the pan-European STOXX 600 index

can build on its steady start to 2025 after clocking a

6% rise last year.

European markets and the euro have been hampered

in the past few months by uncertainty around diverging interest

rate paths for Europe and the United States as well as the

political quagmire in France and Germany.

The threat of tariffs from the incoming Trump administration

has also weighed on sentiment.

That has left the euro wallowing at levels not seen since

November 2022 after the single currency fell over 6% last year.

Traders anticipate deep rate cuts from the European Central

Bank in 2025, with markets pricing in at least four 25 basis

point cuts, while not being certain of even two such moves from

the Federal Reserve.

The pound though has fared a lot better than other

G10 currencies against the greenback's rise, declining just 1.7%

against the dollar in 2024. It touched a nine-month low to kick

off the New Year and remained rooted near those levels on

Friday.

All hail King Dollar?

In company news, Tesla reported its first fall in

annual deliveries as lucrative year-end incentives failed to

lure customers wary of high borrowing costs.

Meanwhile, U.S. President Joe Biden, with less than three

weeks left in his tenure, has decided to block Nippon Steel's ( NISTF )

proposed purchase of U.S. Steel, the Washington

Post reported.

Key developments that could influence markets on Friday:

Economic events: German unemployment data for Dec; UK

mortgage lending data for November

(by Ankur Banerjee in Singapore)