A look at the day ahead in European and global markets

By Ankur Banerjee, Markets Correspondent

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Investors have hunkered down, unwilling to take on risky bets, ahead of a clutch of economic data from across the globe and central bank meetings in what is shaping up to be an eventful last full week of the year.

The focus of the European session will be trained on UK wage data that comes days ahead of a knife-edge vote on interest rates on Thursday, where Bank of England Governor Andrew Bailey is expected to shift his stance and tip the balance for a cut.

Governor of the Bank of England, Andrew Bailey, attends the Bank of England financial stability report press conference, at the Bank of England, London. Picture date: Tuesday December 2, 2025. Yui Mok/Pool via REUTERS

Manufacturing data for December across Europe, also on the agenda, will provide more insight into the economic picture heading into next year.

After the Federal Reserve cut interest rates last week as expected, market focus has swiftly moved on to its monetary policy path in 2026. While the Fed projects a single rate cut, traders are pricing in at least two rounds of easing.

That divergence will probably be settled by incoming U.S. economic data, including the much-awaited, always important jobs report. In fact, there will be a combined October and November report, long delayed due to a 43-day government shutdown.

The absence of key metrics, such as the unemployment rate, could make interpreting the data more tricky as the shutdown prevented the collection of data from households

With so much volatility expected later this week, it's no wonder that markets have been completely risk-off during Asian hours, with tech stocks taking a beating.

Tech-heavy South Korea (.KS11), opens new tab and Taiwan stocks (.TWII), opens new tab fell more than 1% and European equity futures pointed to a lower open. Bitcoin , often the risk barometer, is hovering near two-week lows and remains under pressure. 

The yen caught a whiff of a safe-haven bid and firmed to 154.80 per dollar ahead of the Bank of Japan's policy meeting on Friday. Markets broadly expect a rate hike, and further down the road, the spotlight is on the timing of subsequent increases.

Graphics are produced by Reuters.

Graphics are produced by Reuters.

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