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

With the Federal Reserve's highly anticipated rate cut done and dusted, the Bank of England (BoE) is next up in the rate decision spotlight, although Thursday's outcome looks unlikely to be a head-turner.

The BoE doesn't have the luxury of claiming "greater confidence" - as the Fed highlighted in its statement - that domestic inflation is coming to heel. Certainly not with Britain's services inflation running hot at an annual 5.6%.

That all but cements the case for a steady outcome later in the day, with rates likely to be left unchanged at 5.0%.

If anything, policymakers at the BoE are likely to reiterate their "careful" stance against easing too fast or too soon.

Still, stock futures point to a positive open for Europe, with EUROSTOXX 50 futures and FTSE futures up sharply, as the equities markets' exuberance over the outsized Fed rate cut spills over from Asia.

However, the currency market reaction was a classic case of "buy the rumour, sell the fact".

The dollar clawed back its losses against most of its peers, surging more than 1% against the yen at one point.

Thursday's focus may end up less on the BoE's rate decision than on next year's target for reducing its balance sheet of gilts, which became bloated during the pandemic. The market widely expects it to target another 100 billion pound ($132 billion) reduction over the next 12 months.

That could be a potential boon for the bond market, since repeating that target would mean a 75% reduction in active gilt sales due to a large schedule of maturing debt that would run off automatically.

Another area of note on Thursday was a broad fall in Chinese bond yields, on expectations that Beijing could soon announce more policy easing to prop up its ailing economy now that the Fed is out of the way.

Stocks in Hong Kong and China also reversed early losses and traded higher in anticipation of further stimulus measures.

Key developments that could influence markets on Thursday:

- Bank of England rate decision

- U.S. weekly jobless claims