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

Ankur Banerjee

With markets still in recovery mode after an action-packed

week that has left risk momentum intact, the spotlight has

shifted to the smattering of private economic data this week

that may shed light on the health of the U.S. labour market.

The U.S. shutdown, now the second-longest ever behind the

2018-2019 shutdown that lasted 35 days, is set to continue and

that means there will be no government economic data.

So, no nonfarm payrolls, no JOLTS job openings. Investors

will instead parse through private employment data from ADP to

gauge the direction of U.S. monetary policy. The ADP data is due

later in the week.

A divided Federal Reserve has left investors searching for

clarity. Fed Chair Jerome Powell surprised markets last week

with a hawkish tone, suggesting the recent rate cut could be the

last one for the year.

But influential Fed Governor Christopher Waller made the

case on Friday for more policy easing to shore up a weakening

labour market. Traders are pricing in a 69% chance of a rate cut

in December, down from 90% a week earlier, CME FedWatch tool

showed.

The afterglow of the widely expected trade truce between

China and the U.S. has well and truly simmered down as Chinese

stocks grind lower. It is a classic case of buy the rumour, sell

the fact.

On Monday, data showed China's factory activity in October

expanded at a slower pace as new orders and output both waned

amid tariff anxiety, while big manufacturing hubs across the

region also struggled to fire up in October.

Similar reports from Europe will be scrutinised by markets

later in the session. European futures point to a

higher open, while the euro was loitering at a

three-month low.

Powell's hawkish tone has helped lift the dollar although

analysts don't expect the greenback to stay strong for long,

suggesting data will soon show cracks in the world's largest

economy.

Key developments that could influence markets on Monday:

Economic events: Manufacturing data for October