A graph of the German share price index DAX is displayed at the stock exchange in Frankfurt, Germany, November 24, 2025. REUTERS/Staff

A look at the day ahead in European and global markets from Ankur Banerjee

A risk-on rally spurred by the sudden shift in U.S. rate-cut wagers after dovish comments from policymakers may falter in Europe while currency markets remain wary that Tokyo could intervene to support the yen.

Phone-call diplomacy was also in the spotlight.

U.S. President Donald Trump touted relations with China as "extremely strong" on Monday following a call with Chinese counterpart Xi Jinping.

Trump also told Japanese Prime Minister Sanae Takaichi "call me anytime" in their first phone call since Tokyo's leader sparked a major diplomatic bust-up with China.

Markets though, are laser-focused on U.S. rate developments after Federal Reserve Governor Christopher Waller reiterated the labor market's weakness could justify a further quarter-point rate cut in December. His comments were the latest to help raise investor expectations of a rate cut next month.

Traders are now pricing in an 81% chance of a cut next month versus 42% a week earlier, CME FedWatch showed. That huge swing

underscores the challenge the market faces in pricing in near-term rates in the absence of economic data due to the longest U.S. government shutdown that ended on November 14.

Despite the sharp rise in rate-cut wagers, the U.S. dollar has remained stable.

And so, that leaves the yen languishing near its 10-month lows and perilously close to 160/dollar, with no respite as chatter about intervention from Tokyo officials rages on. In short, the yen vigil is here to stay.

A holiday-curtailed week may provide Tokyo with the perfect opportunity to directly engage with some yen buying, traders say, but ultimately it may have limited impact.

Meanwhile, shares of Novo Nordisk slumped on Monday after the obesity drugmaker announced its Alzheimer's trials for an older oral version of its semaglutide drug failed to help slow the progression of the brain-wasting disease.

Market reaction may extend into Tuesday unless dip buyers intervene, although analysts noted investors had low expectations for the trial's success.

European futures point to a lower opening as the momentum in Asian equities slows. Perhaps last week's worries about AI valuations remain on investor minds.

Key developments that could influence markets on Tuesday:

Germany Q3 GDP data, French consumer confidence data for November, Easyjet earnings