Busy day ahead, with core PCE data and big tech earnings due

European markets have found themselves stuck in the red this morning, as traders feed off the pessimistic market reaction to Meta and Microsoft earnings after the US close. The FTSE 100 in particular has suffered, with the index falling into a 12-week low despite a Labour budget that had initially seen a pop for the domestically-focused FTSE 250. With UK treasury yields pushing sharply higher, we continue to see borrowing costs rise despite the expectation of further easing from the Bank of England next month. However, with treasury yields rising across the board, traders will soon start to look towards the central bankers to see if they deem it necessary to ramp up their pace of easing in a bid to reverse this recent trend. With the US core PCE inflation metric due in the afternoon, traders will be weighing up whether it provides the basis for a more dovish stance from the Federal Reserve as the need to bring down borrowing costs comes into view despite strong ADP payrolls data.

EURUSD has pushed higher for the fourth straight day, with eurozone inflation coming in above expectations at 2%. Digging into the data, it is food, alcohol, and tobacco that has provided a significant upward influence after a 0.7% rise for October alone, driven by a whopping 2.1% rise in unprocessed food. Energy prices do continue to provide a downward effect on inflation, with the -4.6% figure estimated for the month. The rebound in eurozone inflation takes the pressure off the ECB to ramp up their easing process, with the surprisingly strong Q3 GDP figure of 0.4% also helping to strengthen the euro.

The US session promises plenty of fireworks, with the circa 3% post-close declines from Meta and Microsoft kicking in as the await the core PCE inflation figure and numbers from Mag7 giants Apple and Amazon. With both Meta and Microsoft beating on the top and bottom line, investors instead baulked at the expectation of increased AI spending as we go forward. Strong advertising and cloud revenues remain a positive theme for big tech, with Apple and Amazon both looking to take advantage of these trends.