Dhara Ranasinghe gives us a look at what lies ahead for the markets.

Don’t expect calm to prevail before the Bank of England or European Central Bank meeting on Thursday.

U.S. stock futures have fallen sharply in London early trade. Nasdaq futures fell 2%, with global tech stocks in decline.

Meta Platforms Inc, Facebook’s parent company (NASDAQ:), plunged on Wednesday night after it posted weaker than expected forecasts. Japan Sony Panasonic (OTC) shares dropped over 6% while stocks futures pointed to an open weak in Europe.

All that’s left before the BoE plans to increase its key rate by 25 basis points, to 0.5%. This is the level at which the BoE will begin to unwind its quantitative easing program of 895 billion pounds ($1.2 trillion).

Some believe markets underestimate the risk of quantitative tightening. Other observers note that the BoE is capable of surprising, noting how markets were placed for a rate increase in November, but the BoE did not raise rates. In December, markets anticipated a move, while the BoE increased their rates.

What is the takeaway? We may be disappointed by the BoE’s 1200 GMT decision.

On Thursday, the ECB is expected not to alter its policy. However, Christine Lagarde, President of the ECB may need to admit that inflation may remain high longer than expected. This signal may be taken as a sign that there may soon be a quicker exit from stimulative measures.

On Wednesday, data showed that the January inflation print was 5.1%. This is the highest recorded for the euro area.

The market prices tightening at 30 bps per year; however, the ECB believes that a change in 2022 will be unlikely.

Lagarde may admit to underestimating price pressures. Rate-hike bets can be bought ahead, which could trigger an undesirable tightening financing conditions.

Today’s data showed that Turkey saw an increase in its annual inflation to close to 50%, and producers prices rose to above 90%. These increases put more pressure on the Turkish lira.

Let the good times roll!

The following are key developments which should give direction to the markets on Thursday

– Nordea Q4 net profit beats forecast.

ING Reports Q4 Pretax Profit Up 27% To 1.33 Billion Euros

Turkey’s President Erdogan Visits Ukraine

Service PMI all over the US, US Factory Orders/ISM Non-Manufacturing PMs/Weekly Jobless Claims

US earnings Alibaba (NYSE :), Eli Lilly (NYSE :), Merck Honeywell, (NASDAQ 🙂 Estee Lauder (NYSE:), Hersheys (NYSE:), Lazard (NYSE :). Cardinal Health (NYSE:), ConocoPhillips(NYSE:), Amazon(NASDAQ:), Ford Activision News Corp (NASDAQ.

– European earnings: Intesa Sanpaolo (OTC:), Dassault, BBVA (MC:), Shell (LON:), Danske Bank, BT, Compass Group (LON:), Skanske, ING, Roche, Nokia (NYSE:), Nordea

– Emerging markets: Egypt, Czech central bank meeting GRAPHIC: Bank of England set to raise rates again, https://fingfx.thomsonreuters.com/gfx/mkt/gkplgjlmzvb/BoE0302.PNG