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

Ankur Banerjee

Optimism over looming U.S. interest rate cuts have been

tempered by nervousness over what economic data will show in the

coming weeks, sky-high expectations from earnings of AI darling

Nvidia and evolving tensions in the Middle East.

That has left markets on edge and taking a breather, with

the yen hovering near three-week highs, the dollar steady but

close to 13-month lows and Asian stocks down 0.42% on Tuesday

after touching its highest in a month on Monday.

Oil prices eased after surging in the previous session due

to supply concerns, while gold was hovering close to a record

peak touched last week on safe haven flows.

Futures indicate European stock markets are set for a

subdued open as well, with London stocks returning from a

holiday on Monday.

Investors await key economic data this week, including EU

inflation on Friday, for signals on the policy path for the

European Central Bank, which meets on Sept. 12, where traders

have broadly priced in a 25 basis point rate cut.

Nvidia's earnings on Wednesday will set the tone for a

potential AI rally and improved risk appetite now that markets

are braced for rate cuts.

Anything other than an eye-watering growth forecast will

likely unnerve investor confidence, but until then, markets will

be jittery and choppy. Focus will be on Europe's technology

stocks, after the tech index slid 1% on Monday.

Another thing to watch for will be how European markets

react to lacklustre earnings from Temu-owner PDD Holdings

that underscored weak demand from Chinese consumers,

wiping out $55 billion in market capitalisation.

European luxury companies have also been hit by reduced

spending from Chinese consumers.

The U.S. personal consumption expenditure price index - the

Fed's preferred gauge of inflation - is due on Friday and will

be closely scrutinised especially after Fed Chair Jerome Powell

all but confirmed a rate cut in September.

Markets are only concerned about the size of the cut - will

it be a 25 bp cut or a bigger 50 bp cut next month. Traders are

pricing in 100 bps of easing for the rest of the year's three

Fed meetings. Data will decide where the Fed heads.

Key developments that could influence markets on Tuesday:

Economic events: Germany detailed GDP data for Q2