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

Wee

The lack of fresh market moving catalysts on Thursday meant

that the higher-for-longer rates narrative was here to stay, at

least until the next run of economic readings prove otherwise.

It seems unlikely, though, that the highly anticipated data

dump at the end of the week - from euro zone inflation to the

U.S. PCE report - will significantly alter the outlook for

global monetary policy, especially since inflation across major

economies continues to blow hot and cold.

With consumer prices in Germany rising more than forecast,

that puts even more focus on the wider bloc's reading on Friday,

which will come ahead of the European Central Bank's (ECB)

expected rate cut next week.

And though a June cut is pretty much a done deal, the lack

of clarity from ECB policymakers over how far and fast rates

will be lowered thereafter is keeping markets nervous.

Still, ahead of Friday's top-tier releases, investors will

first have to navigate through Thursday, and market waters are

getting increasingly choppy.

European shares are in for a rough start after its Asian

counterparts were left in a sea of red, with rising global bond

yields also denting risk sentiment.

The two-year U.S. Treasury yield flirted with the 5% level

on Thursday while the 10-year yield also stayed near its

strongest level in weeks.

U.S. yield spreads over other jurisdictions may not be

widening much in the dollar's favour, but they are staying wide

enough to ensure the dollar remains investors' currency of

choice.

Elsewhere in companies news, BHP Group ( BHP ) investors

welcomed the top global miner's decision to walk away from a $49

billion plan to take over Anglo American, which rejected

three proposed offers from its bigger rival over the past six

weeks.

While BHP's Australia-listed shares fell nearly 2% on

Thursday, they were in line with its peers.

Key developments that could influence markets on Thursday:

- Euro zone unemployment rate (April)

- Euro zone business climate (May)

- Euro zone economic sentiment (May)

- Euro zone industrial sentiment (May)

- Euro zone services sentiment (May)

(Editing by Muralikumar Anantharaman)