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Global markets face their biggest test so far this year as the Federal Reserve appears poised to hint of an end to interest rate hikes at its meeting on Wednesday.

Investors are pricing in a quarter-of-a-percentage-point increase in the Fed’s benchmark interest rate, which would mark the smallest hike since US central bankers kicked off their tightening cycle 10 months ago with one the same size.

Still, there’s an air of caution, with markets leaving little scope for any nasty surprises.

In Europe, the region’s central bank is expected to deliver 50-basis-point rate rises at each of its next two meetings, with the first one taking place on Thursday.

But the forecasts still risk lagging behind policymakers’ guidance on how high rates will go.

The Bank of England is also expected to raise its interest rates by half a percentage point to 4% on Thursday.

For today, European markets will focus on euro zone January flash PMI data, while results are due from Vodafone , GSK and Novartis.

While the euro zone unexpectedly managed to avoid a recession in the fourth quarter, high energy costs, waning confidence and rising interest rates are expected to take a toll on the economy this year.

Germany and Italy figured among the biggest euro zone countries that recorded negative growth rates for the quarter but France and Spain expanded.

Surveys published on Wednesday showed Asia’s factory activity contracted in January as the boost from China’s COVID reopening had yet to offset headwinds from slowing US and European growth, underscoring the fragility of the region’s economic recovery.

Asian stock markets held steady, supported by signs of a slowdown in US wages that buoyed Wall Street overnight.

Meanwhile, European Union banking regulators on Tuesday launched a stress test to check how banks could cope with a long period of high inflation and interest rates just as the European Central Bank is expected to raise borrowing costs further.

Bayer BAYGn.DE came under pressure after a top-10 shareholder called on the group’s supervisory board to replace CEO Werner Baumann quickly, in a move aimed at restoring investor trust and reviving the German drugmaker’s sagging share price.

Key developments that could influence markets on Wednesday:

Economic data: Euro zone Jan flash PMI

Europe results: Vodafone, GSK, Novartis, Banco Bilbao

Fed rate decision at 1900 GMT followed by news conference at 1930 GMT

US economic data: Jan ISM

US results: eBay

(Reporting by Anshuman Daga; Editing by Jacqueline Wong)