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

Westbrook

Gilts and London stocks were poised to catch up with global

gains, following Monday's market holiday. Fed Chair Jerome

Powell downplaying the risk of rate hikes and

weaker-than-expected U.S. labour data has renewed confidence in

rate cuts.

FTSE futures suggest the cash index is

heading higher into record territory at the open, following

gains in Asia and on Wall Street.

German factory orders are the highlight of the economic

calendar, along with European retail sales numbers. UBS reports

earnings.

In currencies, there is talk that speculators who have been

heavily long dollars are paring back and maybe even preparing

for the dollar's much-anticipated fall alongside U.S. rates.

However in price terms, the greenback has so far turned only

to meandering rather than outright dropping. Indeed, it

continued to rise for a second straight session on the yen, even

as the spectre of official intervention hangs over the currency.

Australia's central bank left interest rates on hold, as

expected, though it said the inflation rate remains high and is

falling slower than expected.

Large flows from mainland China into Hong Kong's equity

market have put downward pressure on the yuan. While the

Hang Seng was set to snap a 10-day winning streak on

Tuesday with a modest drop, it is nearly 15% above last month's

lows.

The MSCI Asia ex-Japan index hit a 15-month

high.

Commodities may pose another challenge to the comfort on the

interest rate path. Oil has steadied while a ceasefire deal

proves elusive in the Middle East.

Chicago corn climbed for a fifth session in a row, touching

its highest for the year so far and wheat touched a nine-month

high as adverse weather roils the outlook.

Late frosts have hit Russia on the cusp of harvest season.

Wet weather in the U.S. corn belt has planting behind schedule.

Brazil is flooded and in Argentina leafhoppers are spreading a

harmful bacteria that stunts growth and loosens corn kernels.

Key developments that could influence markets on Tuesday:

Economics: Eurozone retail sales, German factory orders

Earnings: UBS, Disney