A look at the day ahead in European and global markets from Ankur Banerjee
Political upheaval is jolting governments from South Korea to Germany to Canada, but for now investors are keeping cool and Europe's markets are set for a sedate open, waiting patiently for cues from this week's slate of central bank meetings.
The markets' eyes on Tuesday will be fixed on German assets after the German parliament accepted Chancellor Olaf Scholz's invitation to withdraw its confidence in his government and cleared the way for an early election in February.
The euro initially rallied after the no-confidence vote but was little changed during Asian hours, last fetching $1.051 and holding close to the two-year low of $1.03315 it hit last month. The single currency is down nearly 5% this year.
While Germany's government may be floundering, its stock market has been on a tear this year, up 21% so far and widely outperforming the pan-European STOXX 600 index, which is up 7%. A major driver of that rise has been the surging shares of software firm SAP.
Futures point to a lower open for the DAX index, ahead of surveys that could offer clues on the state of the ailing economy. Data on Monday showed that Germany's economic downturn eased slightly in December but business activity still contracted for a sixth month running.
UK labour data will also be in the spotlight, with market pricing for the Bank of England to stand pat on rates later this week.
Central banks in the United States, Japan, Sweden, Norway, Indonesia and Thailand also meet this week, with the Bank of Japan, Norges Bank and Bank of Thailand also expected to keep policy unchanged, while the Riksbank is seen cutting rates.
The Fed will be the main focus for most, with traders seeking clues on what might come next after the expected 25 basis-point cut this week.
With so many major policy decisions on the horizon, investors have been hesitant to place bets - and market moves have been muted.
So while they'll be closely watching political dramas around the globe - from South Korean President Yoon Suk Yeol's impeachment to Canadian Finance Minister Chrystia Freeland's resignation - they'll likely, for now, keep watching from the sidelines.
Key developments that could influence markets on Tuesday:
Economic events: UK wage data for October; Germany Ifo expectations for Dec; Germany ZEW economic sentiment for Dec
(By Ankur Banerjee; Editing by Edmund Klamann)