The European Central Bank is expected to cut interest rates by 25 basis points on Thursday, despite ongoing inflation concerns in the euro zone. This anticipated move, the first since 2019, follows Canada, Sweden, and Switzerland’s recent rate reductions. Markets predict one more ECB cut this year, with economists forecasting two. Investors will closely watch ECB President Christine Lagarde’s remarks and the new economic projections during the press conference.
Today’s reports will include Challenger Job Cuts, expected to show a 3.3% year-over-year decrease, and Weekly Unemployment Claims forecasted at 220K. Revised Nonfarm Productivity and Unit Labor Costs are predicted at 0.1% and 4.8%, respectively. Additionally, the Trade Balance is anticipated to reflect a deficit of $76.2 billion. These indicators will provide insights into labor market conditions, productivity, inflation pressures, and international trade health.
US stock futures held steady Thursday after the S&P 500 hit a record high, driven by Nvidia’s AI chip rally. Nvidia soared over 5%, surpassing a $3 trillion market valuation. Lululemon shares jumped 10% on strong earnings, while Five Below fell nearly 15% on disappointing results. Investors await Friday’s nonfarm payrolls report for May, looking for signs of labor market weakness. Earnings from J.M. Smucker and jobless claims reports are also due Thursday.
U.S. Treasurys rose slightly Thursday with the 10-year yield up over one basis point to 4.3006%, and the 2-year yield up to 4.7449%. Investors are assessing recent economic data, including the ADP report showing a lower-than-expected increase in private payrolls for May and job openings at a three-year low. The ISM services PMI rose to 53.8, signaling expansion. The upcoming Federal Reserve meeting will be closely watched for rate cut indications later this year.
Crude oil prices rose for a second session on Thursday, driven by expectations of Federal Reserve rate cuts in September, though gains were limited by higher U.S. inventories and an OPEC+ supply increase. Gold prices firmed despite slightly higher Treasury yields and a stronger U.S. Dollar, as investors bet on imminent U.S. rate cuts. The EUR/USD remained nearly flat, with the euro inching up 0.1%, as markets awaited the European Central Bank’s anticipated rate cut.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.