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

Wee

The political noise just keeps coming.

Over the span of a few days, British Deputy Prime Minister

Angela Rayner and Japanese Prime Minister Shigeru Ishiba have

resigned, French lawmakers voted to oust Prime Minister Francois

Bayrou, Argentine President Javier Milei's party suffered a

heavy defeat and Indonesia abruptly replaced its long-standing

finance minister.

Investors in Europe will now look out for whom President

Emmanuel Macron appoints as France's fifth prime minister in

less than two years.

Macron has so far resisted the idea of calling a snap

election and appears set on proposing a new prime minister,

possibly turning to the centre-left.

There are no rules governing whom Macron must choose, or how

quickly, but his office said he would appoint one in the next

few days.

The euro has thus far held steady, while French

bond futures barely budged in Asia.

Clearly, political volatility sometimes has next to no

impact on markets. Sometimes, though, it's huge.

Over in Indonesia, the rupiah slid more than 1% and the

yield on the 10-year government bond jumped on

Tuesday after the shock removal of influential finance minister

Sri Mulyani Indrawati, as investors fear hard-fought fiscal

credibility could be eroded by populist spending plans under

President Prabowo Subianto.

The Argentine peso lost as much as 5.6% to the

dollar on Monday following Milei's election drubbing.

But in the broader market, investor sentiment remained

buoyant on the prospect of an interest rate cut by the U.S.

Federal Reserve next week.

With markets already pricing in a 25 basis-point cut, the

question now is whether the Fed could deliver an outsized 50 bp

move.

Clues may lie in the U.S. Labor Department's preliminary

revision estimate to employment for the year through March later

on Tuesday, ahead of readings on consumer and producer price

inflation later this week.

A downside surprise in any of those figures could see

traders price in a greater chance of a 50 bp cut, which

currently stands at just above 11%, the CME FedWatch tool

showed.

Key developments that could influence markets on Tuesday:

* U.S. Labor Department's preliminary revision estimate to

the

employment level for the 12 months through March