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

Ankur Banerjee

Investors will get another chance to see if the global

disinflation story gains more traction with UK inflation data

taking centre stage on Wednesday. Its outcome though may not

significantly affect the Bank of England's policy review the day

after.

Headline inflation in May is expected to be 2% year over

year - back to the BoE's target - after April's 2.3%, with the

easing in prices a result of household energy bills easing.

But the central bank is widely expected to stand pat on

rates as policymakers focus on wage growth and service sector

inflation, which is estimated to come in at 5.5% in May.

Data last week showed British wages picked up more quickly

than forecast, keeping the pressure on the central bank to keep

rates higher for longer.

The inflation reading and the consequent policy decision

will provide investors with some clarity ahead of Britain's

general elections in July, with the blue-chip FTSE 100

sliding 3% since hitting a record high in May.

Markets may be feeling a sense of deja vu.

After all, it was just last week when mild U.S. inflation

readings came in hours before an overall hawkish stance by

Federal Reserve officials, who cut their median projection for

three quarter-point rate cuts to just one for the year.

With U.S. markets closed, trading may be subdued throughout

the day.

Sterling remains muted and was last at $1.2711, while the

dollar wobbled after retail sales data on Tuesday indicated

signs of exhaustion among U.S. consumers.

The data slightly pushed up expectations of a rate cut in

September, although with the Fed being so data dependent those

expectations will be volatile in the near term. At the start of

the year, traders had priced in as much as 160 basis points of

cuts in 2024, but now anticipate 48 bps of easing.

No such worries for Nvidia ( NVDA ) as the AI darling

dethroned tech heavyweight Microsoft ( MSFT ) to become the

world's most valuable company at $3.335 trillion.

The rally in technology stocks continued into Asia taking

regional stocks higher, with tech-focused Taiwan stocks scaling

yet another record high, while South Korean stocks touched their

strongest since January 2022.

Key developments that could influence markets on Wednesday:

Economic events: UK May inflation report, UK PPI data for

May