Morning Bid: It’s time for E-C-B
2024.06.06 00:44
A look at the day ahead in European and global markets from Ankur Banerjee
After the Bank of Canada became the first G7 country to cut interest rates, the stage is set for the European Central Bank to lower rates too. But all eyes are sure to be on President Christine Lagarde as traders ponder: what comes next?
While ECB policymakers clearly telegraphed their intention to lower borrowing costs in June, moving well ahead of the U.S. Federal Reserve, the path beyond has become uncertain.
Recent economic data has underscored that inflation could prove perhaps to be stickier than expected in the euro area, as has been the case in the United States.
That has brought the focus squarely on what Lagarde will say once the ECB delivers the widely expected rate cut on Thursday. Markets are pricing in 64 basis points of cuts this year.
Ahead of the policy decision, the euro was 0.23% firmer at $1.08935, just shy of the two-and-half month peak touched earlier this week. [FRX/]
Futures indicate European bourses are set for a higher open, taking their cue from U.S. and Asian stocks as a slew of U.S. labour data firms bets of a September rate cut from the Fed.
Traders are pricing in a 69% chance of a cut in September versus around 50% chance last week.
Non-farm payrolls are due on Friday and will be crucial in dampening or emboldening these renewed policy easing expectations ahead of next week’s Fed meeting where the dot plot and comments from officials will take the spotlight.
Chip stocks across the globe are once again basking in the afterglow of Nvidia (NASDAQ:) after the AI chipmaker become the world’s second-most valuable company and is now valued above $3 trillion.
Meanwhile, Nvidia’s CEO is in Taiwan this week getting pop star treatment. Jensen Huang, touted as the local boy who made good, is the subject of wall-to-wall coverage on Taiwanese television.
No wonder, Taiwan stocks are on a roll, scaling a record high, powered by TSMC, whose major clients include Nvidia and Apple (NASDAQ:).
Key developments that could influence markets on Thursday:
Economic events: ECB policy meeting, euro zone retail sales for April
(By Ankur Banerjee; Editing by Jacqueline Wong)
