EU and US Stocks Close Higher on Rate Outlook, Dollar’s Decline

In sparse trading, European stocks rose after an ECB official hinted that rate reduction could be considered gradually beginning next month. With US markets closed, Nasdaq 100 futures increased 0.4% to a record high.

A little increase was led by automakers and utilities in the Stoxx Europe 600 index. Due to the US and UK markets being closed for holidays, turnover was less than half of the 20-day average for the time of day. US equities futures increased, and a dollar index declined.

In a retaliation against other monetary authorities who find the prospect of consecutive cuts unsettling, Governing Council member Francois Villeroy de Galhau stated that the ECB shouldn’t rule out reducing borrowing costs at both its June and July meetings. Even after lowering interest rates next month, Chief Economist Philip Lane previously stated that the central bank will need to maintain restrictive policy through 2024.

Although an ECB rate drop in June has been widely anticipated, it is unclear what will happen next due to concerns about wage growth and other issues like the violence in the Middle East. This week’s data might indicate that headline inflation in the euro area increased somewhat in May.

Following a Bloomberg news article after the market closed on Friday indicating that Julius Baer Group Ltd. is considering a possible acquisition of its rival Swiss private bank, EFG International AG saw a 4.7% increase among individual movers in Europe. The Julius Baer fell 0.8%.

The Hong Kong, China, and Japanese stock gauges led the MSCI Asia Pacific index to its largest increase since May 16. At 3:58 PM New York time, S&P 500 futures increased 0.2% to reach their highest level since May 21. Nasdaq 100 futures reached a record high, up 0.4%. The MSCI World Index increased by 0.2%, and futures on the Dow Jones Industrial Average increased by 0.2%, more than any closing rise since May 21. The MSCI Asia Pacific Index saw a 1% increase. By 0.7%, the MSCI Emerging Markets Index increased. Stoxx Europe 600 increased by 0.3%. S&P/BMV IPC increased by 0.1%. Ibovespa Index increased by 0.1%.

A swath of inflation prints from Australia to Japan, the euro region and the US is due this week as traders finesse bets on the outlook for monetary policy. The Federal Reserve’s favorite measure of underlying inflation is due on Friday and is expected to show modest relief. Fed Chair Jerome Powell has stressed the need for more evidence that inflation is on a path to the 2% goal before easing policy.

John Williams, Lisa Cook, Neel Kashkari and Lorie Logan are among the US central bankers due to speak this week.