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MORNING BID-Soothing hands

·2 min read

A look at the day ahead from Karin Strohecker

It's back to steady waters after a choppy few days thanks to Fed chief Jerome Powell reassuring markets that inflation fears alone won't be enough to drive rate hikes after the Fed's hawkish tilt at a meeting last week caught markets by surprise.

Global stocks are grinding higher in the wake of last night's record close of the rate sensitive Nasdaq , and U.S. futures are pointing to more gains ahead.

But European stocks look more cautious, with futures indicating flat ahead of a raft of PMI data in the region, providing fresh hints to the markets on the economic impact of re-opening measures.

U.S. 10-year Treasury yields clung to Tuesday's lows while the dollar remained on the back foot, staying below last week's two month peak. Oil prices are advancing as well thanks to U.S. crude inventories falling more than expected.

Japan kicks off PMI readings on a sober note: Factory activity expanded at the slowest pace in four months in June with output shrinking fast, flagging that momentum in the world's third-largest economy was levelling out with the Tokyo Olympics exactly four weeks away.

Markets are hoping for some good news on the post-Brexit standoff between London and Brussels dubbed "sausage war" on the fifth anniversary of the referendum with EU officials meeting today to chart the way ahead.

The Czech central bank is expected to raise rates, hot on the heels of Hungary delivering the first benchmark hike for a European Union country in recent times on Tuesday.

Some relief on the pandemic front with a study showing that AstraZeneca's COVID-19 vaccine is effective against Delta and Kappa variants first identified in India. Key developments that should provide more direction to markets on Wednesday: -Euro zone, France, Germany, UK and U.S. June flash PMIs -ECB speakers' corner: Lagarde, De Guindos -German finance minister presents updated budget plan -Czech central bank could hike rates -Canada April retail sales -U.S. new home sales for May -Emerging markets: South Africa May CPI, Russia May industrial output -U.S. Treasury 2-year & 5-year auctions -5th anniversary of Brexit vote

(Reporting by Karin Strohecker, editing by Saikat Chatterjee)