Marketmind: Hunkering down

Just as China faces a testing time over its dramatic COVID-19 policy pivot, financial markets are on full alert ahead of interest rate decisions coming out this week from the world’s top central banks.

Initial market enthusiasm over China’s easing of its stringent “zero-COVID” measures has now switched to worries over a wave of infections likely disrupting the economy.

European stock markets are set for a weaker start on Monday, dragged by declines in Asian stocks, with the spotlight on a series of central bank meetings even as expectations rise that euro zone inflation is peaking.

The European Central Bank is set to take its deposit rate up by 50 basis points to 2%, despite the euro zone economy almost certainly being in recession, as it battles inflation running at five times its target, a Reuters poll found.

It’s a Super Thursday this week, with the ECB, Bank of England, and the Swiss and Norwegian central banks also expected to jack up borrowing costs. What markets are keen to find out is whether they are nearly done.

On Sunday, U.S. Treasury Secretary Janet Yellen forecast a substantial reduction in U.S. inflation in 2023, barring an unexpected shock.

Whether inflation is responding to the most aggressive Fed hiking cycle since the 1980s will be evident in this week’s U.S. consumer price index report.

On the corporate front, while French health group Sanofi (EPA:SASY) announced it had dropped its bid for biotech company Horizon Therapeutics, the Wall Street Journal reported that Amgen (NASDAQ:AMGN) is in advanced talks to buy Horizon.

Meanwhile, a consolidation is shaping up in the food delivery market as Turkish delivery company Getir bought German rival Gorillas in a deal worth $1.2 billion, merging two of the remaining companies in Europe promising groceries in minutes.

Key developments that could influence markets on Monday:

Economic data: UK October GDP and industrial output