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The Market News Today: ECB Expected to Cut Rates by 25 Basis Points

By:
James Hyerczyk
Updated: Jun 6, 2024, 08:50 GMT+00:00

Key Points:

  • ECB Poised for First Rate Cut Since 2019
  • Key US Economic Reports: Job Cuts, Unemployment Claims, Productivity, and Trade
  • US Stock Futures Steady Amid Nvidia Surge, Mixed Corporate Earnings
  • U.S. Treasury Yields Rise as Investors Evaluate Economic Data, Rate Outlook
  • Oil Rises, Gold Firms, EUR/USD Stable Amid Rate Cut Speculations
The Market News Today

ECB Poised for First Rate Cut Since 2019

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.

Key US Economic Reports: Job Cuts, Unemployment Claims, Productivity, and Trade

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 Steady Amid Nvidia Surge, Mixed Corporate Earnings

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. Treasury Yields Rise as Investors Evaluate Economic Data, Rate Outlook

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.

Oil Rises, Gold Firms, EUR/USD Stable Amid Rate Cut Speculations

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.

About the Author

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.

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