Morning Bid: It's all about central banks this week

A look at the day ahead in European and global markets from Gregor Stuart Hunter

Sure enough, you wait ages for a central bank meeting, and then they come along all at once.

Okay, yes, fine, we had the ECB last week. But this week sees the U.S. Federal Reserve, the Bank of England, the Bank of Japan and a host of other central banks from Toronto to Taipei deciding on interest rates.

The Fed holds its latest policy meeting with a historic challenge to its leadership pending in the courts and a rushed effort underway to confirm President Donald Trump's nominee to fill an open seat on its Board of Governors, which should provide some resolution to questions over the central bank's independence that have bubbled throughout the summer.

Markets are fully pricing in a 25-basis-point-cut on Wednesday, but have reined in expectations of a jumbo 50 bps reduction to just 3.8%, according to the CME Group's FedWatch tool.

They started the week gently enough, with stocks in Asia floating 0.1% higher with Japanese markets closed for a holiday, and South Korea's Kospi index hitting a new record as the government scrapped plans to hike taxes on capital gains.

In early European trades, the pan-region futures were up 0.11%, German DAX futures were flat, and FTSE futures slipped 0.1%. OAT futures extended declines for a second day after Fitch downgraded France's credit rating on Friday.

The S&P 500 e-minis U.S. stock futures were up 0.1% ahead of Friday's Triple Witching event, which sees the expiry of single-stock options, as well as equity index futures and options.

The U.S. and Britain are preparing to announce agreements on technology and civil nuclear energy during U.S. President Donald Trump's unprecedented second state visit this week, as the UK hopes to finalise steel tariffs under a much-vaunted trade deal.

In other trade news, U.S. and Chinese officials concluded a first day of talks in Madrid on Sunday on their strained trade ties, and will resume them later on Monday.

Trump said he was still negotiating on the divestiture deadline for Chinese short-video app TikTok, with a source telling Reuters the U.S. is expected to again extend a September 17 deadline for China's ByteDance to divest its U.S. assets.

Data on Monday showed the Chinese economy lost some momentum in August, with a slew of activity indicators coming below forecasts. Its industrial output expanded at 5.2%, slowing from the 5.7% pace of the previous month, while retail sales rose only 3.4% from a year ago.

Elsewhere in China, there were worrying signs that the red-hot Labubu bubble may be starting to burst. Plushie-maker Pop Mart shares sank as much as 9% in Hong Kong after J.P. Morgan downgraded the shares to neutral, saying the stock is priced for perfection, and vulnerable to setbacks. 

Analysts from the Wall Street bank expressed disappointment over the lack of visibility for the next iteration of the brand, such as the release timeline for new animations or interactive toys. Give the people what they want, Pop Mart!

Key developments that could influence markets on Monday:

Economic data:

Euro zone trade balance for July

Euro zone reserve assets for August

Debt auctions:

France: 4-month, 5-month, 6-month and 1-year government debt auctions

Germany: 1-year government debt auction

(Editing by Muralikumar Anantharaman)