(Bloomberg) — European stocks edged up in thin trading after a European Central Bank official suggested policymakers could consider a series of interest rate cuts starting next month. Nasdaq 100 futures rose 0.4% to a record high during the U.S. market holiday.
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Automakers and utilities led a modest gain for the Stoxx Europe 600 index, where volume was less than half its 20-day average during the session as British and U.S. markets were closed for public holidays. U.S. stock futures rose and the dollar benchmark fell.
ECB Governing Council member François Villeroy de Galhau said the ECB should not rule out lowering borrowing costs at both its June and July meetings, echoing other financial officials who have worried about successive rate cuts. Chief economist Philip Lane earlier said the ECB would have to keep policy tight through 2024 after next month's rate cut.
The ECB is widely expected to cut interest rates in June, but any steps after that are unclear given factors including uncertainty over wage growth and fighting in the Middle East. Data due this week may show euro zone headline inflation rose slightly in May.
“European inflation is back,” Credit Agricole SA strategists led by Jean-Francois Palen wrote in a note, but May's spike may be temporary. “While a rate cut in June is not in question, the risk that further cuts at a later date could send prices lower increases.”
Among European individual stocks, EFG International AG rose 4.7% after Bloomberg reported after the market close on Friday that Julius Baer Group AG was considering buying a rival Swiss private bank. Julius Baer Plc fell 0.8%.
The MSCI Asia Pacific Index recorded its biggest gain since May 16, led by stock indexes in Hong Kong, China and Japan.
A flurry of inflation data is due to be released this week from Australia to Japan, the euro zone to the U.S. as traders carefully gauge the outlook for monetary policy. The Federal Reserve's preferred measure of underlying inflation is due to be released on Friday and is expected to show a modest easing. Fed Chairman Jerome Powell has stressed that he needs more evidence that inflation is heading toward his 2% target before easing policy.
U.S. central bank governors scheduled to speak this week include John Williams, Lisa Cook, Neel Kashkari and Laurie Logan.
Read more: About the “T+1” rule for US stocks to be settled on the same day: QuickTake
Trading of physical Treasury bonds was halted. The “T+1” rule, which could cause problems for overseas investors, comes into effect when traders return from the long weekend and will result in U.S. stocks being settled in one day instead of two.
Meanwhile, gold rose and copper futures fell.Crude oil rose after its biggest weekly drop in four weeks as attention shifted to an OPEC+ supplies meeting on Sunday and U.S. demand as the summer driving season gets underway.
Major events this week:
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The IMF will hold talks with Ukrainian authorities on Monday over a review of their economic policies as Ukraine seeks to release the next tranche of $2.2 billion in aid.
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Cleveland Fed President Loretta Mester speaks at a Bank of Japan event in Tokyo. Minneapolis Fed President Neel Kashkari and European Central Bank Governing Council member Klaas Nott speak at the Barclays-CEPR International Monetary Policy Forum on Tuesday.
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South Africa's general election, the most important since the end of apartheid, will be held on Wednesday.
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Fed to release Beige Book economic survey on Wednesday
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South African interest rate decision, US initial jobless claims, GDP, wholesale inventories on Thursday
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New York Fed President John Williams speaks at the Economic Club of New York on Thursday.
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GDP data for Canada, the eurozone and Türkiye was released on Friday.
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Japan unemployment rate, Tokyo consumer price index, industrial production, retail sales, Friday
Some of the key market developments:
stock
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S&P 500 futures were up 0.2% to their highest level since May 21 as of 1:11 p.m. New York time.
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Nasdaq 100 futures rose 0.4% to a record high
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Dow Jones Industrial Average futures up 0.2%
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The MSCI World Index rose 0.2% to its highest since May 21st.
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The MSCI Asia Pacific Index rose 1%.
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MSCI Emerging Markets Index rose 0.7%
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The Stoxx Europe 600 index rose 0.3%
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Ibovespa Brazil's Sao Paulo Stock Exchange Index rose 0.1%
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The S&P/BMV IPC fell 0.4%, its sixth consecutive day of declines and its longest stretch of declines since January 4th.
currency
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The Bloomberg Dollar Spot Index fell 0.1%, to its lowest since May 21.
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The euro rose 0.1% to $1.0858.
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The British pound rose 0.3% to its highest level since March 20th.
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The Japanese yen remained almost unchanged at 156.91 yen to the dollar.
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The Mexican peso rose 0.2% to 16.6591
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The Brazilian real remained unchanged at 5.1684 per dollar
Cryptocurrency
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Bitcoin rose 2.3% to $70,259.35.
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Ether rose 2.1% to its highest level since March 13th.
Bonds
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The yield on the 10-year Treasury note fell 1 basis point to 4.46%.
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German 10-year government bond yields fell 4 basis points to 2.55%.
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UK 10-year government bond yields were little changed at 4.26%
merchandise
This story was produced with assistance from Bloomberg Automation.
–With assistance from Matthew Burgess, Catherine Bosley, and Michael Msika.
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