Futures Flat As Tech Storms Higher, ECB Rate Cut Looms

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by Tyler Durden
Thursday, Jun 06, 2024 - 12:03 PM

US equity futures were flat after the S&P 500 notched its 25th closing record on Wednesday, even as global tech shares plowed higher with expectations of more rate cuts adding to the ongoing frenzy around artificial intelligence; With the ECB set to cut rates for the first time since 2019, Nvidia advanced almost 2% in premarket trading, building on its $3 trillion market capitalization after it surpassed AAPL as the 2nd biggest company on Wednesday and may become the world's biggest company if it adds another $150BN to overtake Microsoft - should be quite doable for a stock that has seen the world's biggest gamma squeeze.

As of 7:45am ET, S&P futures were flat at 5,367 and Nasdaq futures rose 0.1%, as investors take a pause following yesterday’s session which saw the SPX have its best session in a month and NDX having its best session since Feb 22. Both indexes traded at all time highs. European stocks also surged to a new all-time high ahead of an ECB meeting that is expected to deliver the first rate cut in five years. Bond yields are +1 – 2 bps with the USD also rising after erasing an earlier loss. Commodities are seeing support, led by Ags and Energy; as base metals continue to underperform. Today’s macro data focus is on jobless claims but unlikely to see this being an investable data point ahead of tomorrow's NFP print

In premarket trading, Nvidia gained 2% after soaring yesterday amid an endless gamma squeeze that has added several hundred billion in market cap in the last week alone, and which saw the company surpass Apple as the 2nd largest company in the world; Nvidia now just needs another $150BN to overtake MSFT as the world's biggest company.

In premarket trading, other US tech firms, including Micron and AMD also rose in premarket trading, while in Europe, ASML Holding NV and ASM International NV surged to record peaks. As an aside, Microsoft, Nvidia and Apple are now worth more combined than China’s stock market. Among individual stock movers outside of technology, Lululemon rose more than 7% in US premarket trade after posting forecast-beating earnings and raising its profit outlook. Here are some other notable premarket movers:

  • EBay shares rise 0.9% in premarket trade after the e-commerce company was upgraded to buy from neutral at Citi, which renewed their rating after a period of suspending it.
  • Lululemon shares jump 8% after the athletic clothing company boosted its earnings-per-share guidance for the year and reported first-quarter profit that topped expectations. The board also approved a $1 billion increase to the stock repurchase program. While the results were better than feared, Morgan Stanley didn’t view the report as sufficient to “debunk” a bear thesis on the stock.
  • Semtech shares are up 8.1% after the semiconductor device company reported first-quarter results that beat expectations. AI is expected to be a growth driver going forward.
  • Smartsheet shares are up as much as 15% after the application software company raised its full-year forecast and reported first-quarter results that beat expectations.
  • Sprinklr shares are down 22% after the social media management software company cut its full-year forecast for both revenue and subscription revenue. Multiple analysts downgraded the stock.
  • StoneCo gains 2.5% following an upgrade to overweight from neutral by JPMorgan, which says the Brazilian payments company offers “appealing” EPS potential.
  • ZIM Integrated Shipping Services shares fall 8% after the stock is downgraded to sell from neutral at Citi following recent rally in its shares and greater exposure to spot freight rates, which analysts expect to come under pressure.

“There is a reason tech companies are doing so well; the earnings are there, companies have been delivering on earnings,” said Guy Miller, chief strategist at Zurich Insurance Company Ltd. “Nvidia is a classic example. It seems extremely expensive but goes on not only meeting, but beating expectations.”

The latest tech euphoria coincides with growing confidence among investors that central banks across the developed world will be able to ease monetary policy this year. The ECB should deliver a 25 basis-point cut on Thursday, a day after the Bank of Canada kicked off its cutting cycle and hinted at more easing to come (see our ECB preview here). Traders have also started to price more Federal Reserve easing this year.  

“With the Bank of Canada cutting rates and the expectation ECB will do so, momentum behind a coordinated global easing cycle is starting to gain some traction,” said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management.

European stocks rally to a record high ahead of the European Central Bank’s widely-expected first interest-rate cut this cycle. Tech shares are leading gains on the Stoxx 600 which climbs 0.6%; other outperforming sectors include consumer discretionary, financials and health care while utilities and personal care stocks are the biggest laggards. Private bank Julius Baer Group Ltd shed as much as 5.9% on speculation that it could take over rival EFG International AG. Shares in the latter spiked as much as 10%. Here are the biggest movers:

  • SAP shares rise as much as 4.9% after the German software firm maintained its near-term outlook while guiding for an acceleration in revenue growth beyond 2025
  • Remy Cointreau advances as much as 4.6%, with analysts relieved that the cognac maker’s current operating income beat expectations and Jefferies noting that there was “arguably a lot of bad news in the share price” given the weakness into the update
  • Nemetschek shares gain as much as 7.6% after the the software firm said it has signed a definitive agreement to acquire all shares in GoCanvas
  • Getlink rally as much as 3.5% after Barclays upgrades to overweight from equal-weight, saying in note the Eurotunnel operator offers some of the strongest recovery potential within the infrastructure sector
  • Wood Group shares jump as much as 11% after its board decided to engage with Sidara to determine if a firm offer can be made on the same financial terms as its 230p-per-share final proposal
  • Mitie Group shares climb as much as 3.5% after the support services company delivered annual results ahead of expectations. Peel Hunt says the ongoing improvement in margins may help drive a re-rating
  • Euroapi shares rise as much as 9.7% to hit their highest level in three months after the maker of pharmaceutical ingredients was confirmed as one of a group of companies eligible to share a pot of up to €1 billion in funding from the European Commission
  • Ahold shares fall as much as 3.5% after UBS downgraded the Dutch retail store operator to sell from neutral on margin risks, while KBC analysts flag that the firm’s growth ambitions could temporarily put pressure on its margins
  • JSW drops as much as 5.5% to 3.5-year low after Erste cut the stock to sell from hold, citing an unfavorable market for the Polish coking-coal maker amid labor-union pressure and high mining costs

Bond yields across Europe ticked higher ahead of the ECB meeting, as traders waited to see if ECB head Lagarde might offer more guidance on the path for additional easing. Wagers on further ECB cuts have turned more cautious in the wake of data showing stronger-than-anticipated economic growth, inflation and wage increases.

Earlier in the session, Asian stocks advanced, as technology shares drove broad regional gains after Nvidia led a rally in US peers overnight on hopes for US rate cuts and a continued boom in artificial intelligence. The MSCI Asia Pacific Index rose as much as 1.4% to its highest since May 28, snapping a two-day losing streak. Chipmaker TSMC was the biggest boost, climbing to a record high as its share buyback plan added to positive sentiment amid the tech rally. The lack of a material rise in tech volatility suggests the AI rally has not reached a bubble yet, BofA Securities analysts led by Benjamin Bowler wrote in a note. “The question is can we incorporate AI into the economy without an asset bubble ensuing? It may be hard to avoid given the likely significant but unclear way in which AI will impact the global economy.”

In FX, the euro is little changed ahead of the ECB rate cut, while the Bloomberg Dollar Spot Index steadied. The Swiss franc led Group-of-10 gains against the greenback, while the New Zealand dollar led losses

  • EUR/USD rose as much as 0.3% before paring the gain to trade 0.1% up at 1.0877; Traders expect a quarter-point interest rate cut from the ECB today and options markets suggest a big reactionary move in the euro is unlikely
  • USD/JPY reversed an earlier 0.5% decline to trade little changed at 156.05; BOJ board member Toyoaki Nakamura said it’s appropriate to maintain current monetary policy settings for the time being given recent economic data

In rates, treasuries dip, paring some of the prior five-day rally. Bunds are also in the red while gilts outperform across the curve.  Treasuries were slightly cheaper across the curve with futures just below Wednesday’s highs, following similar price action in bunds ahead of European Central Bank meeting at 8:15am New York time, expected to deliver the first rate cut since 2019. US yields cheaper by 1bp-2bp across the curve with long-end lagging, leaving 5s30s spread near session highs; 10-year around 4.31% underperforms gilts by ~5bp in the sector. UK 2-year yields are richer by around 6bp on the day and lowest since May 21. Gilts outperform in sharp bull-steepening move as traders price in more aggressive path of Bank of England rate cuts.

Prices for key commodities edged higher, with oil gaining for a second session after the OPEC+ group rejected increasing crude output. WTI rises 0.2% to near $74.20. Industrial metals rallied after Wednesday’s slide, while palm oil steadied from a one-week low.  Spot gold rises roughly $4 to ~$2,359/oz.

Looking at today's calendar, US economic data includes May Challenger job cuts (7:30am), 1Q final nonfarm productivity, April trade balance and weekly jobless claims (8:30am). Fed officials remain in a quiet period ahead of their June 12 policy announcement. As noted above, we get the first ECB rate cut since 2019.

Market Snapshot

  • S&P 500 futures little changed at 5,368.00
  • STOXX Europe 600 up 0.8% to 525.16
  • MXAP up 0.8% to 180.01
  • MXAPJ up 1.0% to 561.67
  • Nikkei up 0.6% to 38,703.51
  • Topix up 0.3% to 2,757.23
  • Hang Seng Index up 0.3% to 18,476.80
  • Shanghai Composite down 0.5% to 3,048.79
  • Sensex up 0.7% to 74,929.61
  • Australia S&P/ASX 200 up 0.7% to 7,821.77
  • Kospi up 1.0% to 2,689.50
  • German 10Y yield little changed at 2.53%
  • Euro little changed at $1.0875
  • Brent Futures up 0.6% to $78.91/bbl
  • Gold spot up 0.3% to $2,361.45
  • US Dollar Index little changed at 104.30

Top Overnight News

  • Chinese battery firms which are linked with the likes of Ford (F) and Volkswagen (VOW3 GY) should be banned from shipping to the US, via WSJ citing a Republican lawmaker group
  • Mexico Health Ministry said a fatal case of bird flu was detected in a man in Mexico state with chronic kidney disease, type 2 diabetes; bird flu detected in humans in Mexico does not represent a risk to the population. So far no evidence of person-to-person transmission, according to Reuters.
  • Taiwan’s core CPI comes in at +1.84% in May, a bit below the Street’s +2% forecast, while headline climbs to +2.24% (higher than the consensus estimate of +2.1%). BBG
  • BOJ Governor Kazuo Ueda said the central bank should reduce its huge bond purchases as it moves toward an exit from massive monetary stimulus, reinforcing his resolve to steadily scale back its nearly $5-trillion balance sheet. The remarks keep alive expectations the central bank could embark on a full-fledged tapering of its bond buying as early as its policy meeting next week. RTRS
  • The ECB is poised to start lowering interest rates from record highs with a 25-bp cut today. But the real question is where rates go after that. Christine Lagarde probably won’t explicitly signal another move in July at her press conference, but may give a gentle nod to September. BBG
  • Israel risks losing coal supplies from its biggest supplier, Colombia. The trade ministry recommended a limit on shipments with the aim of helping to “end the armed conflict.” Separately, the Israeli military said it struck a Hamas compound embedded in a Gaza school. Hamas said at least 27 people were killed. BBG
  • OPEC+ ministers rejected oil’s bearish reaction to its decision to gradually boost crude production from October and predicted the market will eventually see that the group’s policy is correct. The alliance remains committed to the stability of the oil market and can react quickly to any changes, ministers from the group’s largest producers said at the St Petersburg International Economic Forum in Russia on Thursday. BBG
  • Biden sees a small political benefit in the wake of Trump’s guilty conviction (an updated NYT poll had Trump up 1 point vs. +3 prior to the decision). NYT
  • Trump's VP search is "heavily concentrated on four top prospects": Gov. Burgum, Sen. Rubio, Sen. Scott, and Sen. Vance. NBC News
  • AI industry faces growing antitrust scrutiny: the FTC and DOJ have agreed to divide responsibilities for examining AI-related matters, the FTC has opened a probe into the Microsoft-Inflection deal, and the DOJ plans to take a closer look at sector practices. FT

AAPL: the WSJ has a long profile article detailing how the firm fell behind in AI, and detailing the revamped Siri set to be unveiled Monday. WSJ

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly firmer as the region largely took its cue from the positive lead on Wall Street, while South Korean markets were closed due to the Memorial Day holiday. ASX 200 saw its upside spearheaded by gold and IT with all sectors in the green but Consumer Staples and Telecoms with the shallowest gains. Nikkei 225 surged at the open and briefly rose above USD 39,000 as industrials and Tech led the gains whilst autos saw another dire session amid the ongoing safety scandal. The index waned off best levels heading into the Tokyo lunch break. Hang Seng and Shanghai Comp varied for most of the session with the former conforming to the positive mood across the region whilst the latter saw subdued and contained trade within a tight range, with news flow on the quieter side ahead of the upcoming risk events.

Top Asian News

  • BoJ Governor Ueda said inflation expectations gradually rising but yet to reach 2%; Inflation expectations must accelerate to 2% and stay there, for actual inflation to move around 2%; proceeding cautiously on interest rates, according to Reuters and Bloomberg.
  • BoJ Board Member Nakamura stated that Japan's economy is recovering moderately, albeit showing some weak signs; Based on current data, it is appropriate to keep policy intact for the time being, according to Reuters. "My view is that inflation may not reach 2% from fiscal 2025 onward if consumption weakens." He said they will focus on whether inflation-adjusted consumption turns positive in deciding future monetary policy, and said the pass-through of wages to inflation remains weak but he is closely monitoring the situation. Nakamura is not confident that wage growth will be sustained and said a cycle of rising prices and wages is beginning to kick off.
  • Japan to raise the cap on state backing for copper mine stakes to 75%, according to Reuters.
  • China Securities Journal noted "Experts said that entering June, it is unlikely that the capital will be significantly tightened, and the central bank will continue to reasonably... to maintain reasonable and abundant liquidity".
  • PBoC injected CNY 2bln via 7-day reverse repos with the rate at 1.80%.
  • US Commerce Secretary Raimondo said Global Infrastructure Partners, KKR, and Indo-Pacific Partners are forming a coalition to fund infrastructure projects; to invest USD 25bln, according to Reuters.
  • UMC (2303 TT) May Sales +3.89% Y/Y vs. +6.9% Y/Y in April

European bourses, Stoxx 600 (+0.6%) began the session on a strong footing, taking impetus from a positive APAC session. As the morning progressed, stocks continued to climb higher, and currently reside just off session highs. European sectors hold a strong positive bias; Tech is the clear outperformer, building on the prior day’s advances, with sentiment also lifted after Nvidia’s market cap surpassed USD 3tln. Optimised Personal Care is found at the foot of the pile. US Equity Futures (ES U/C, NQ U/C%, RTY -0.4%) are mixed, taking a breather from recent strength in the last trading session; the RTY underperforms.

Top European News

  • BoE Monthly Decision Maker Panel: 1-year ahead CPI inflation expectations remained unchanged at 2.9% in May. 3-year ahead CPI inflation expectations remained unchanged at 2.6% in May. Expected year-ahead wage growth fell by 0.3ppts to 4.5% on a three-month moving-average basis in May.
  • ISTAT lifts Italy's 2024 GDP growth forecast to 1.0% (prev. 0.7%)


  • USD is showing varying performance vs. peers which has left the DXY flat. For now, DXY is capped by the 200 and 100DMAs at 104.40 and 104.42 respectively.
  • EUR is modestly firmer vs. the USD on ECB day which is set to see the ECB deliver its first rate cut since September 2019. With a cut so widely expected, focus will be on any hints over what comes next. For reference, the next 25bps cut is priced by October with 63bps of cuts seen by year-end. EUR/USD currently within a busy 1.0869-1.0895.
  • Cable briefly sat on a 1.28 handle overnight, though has since slipped lower and currently holds around 1.2785; UK-specific newsflow has been light today.
  • JPY is losing marginal ground vs. the USD following cautious comments from officials overnight. USD/JPY is attempting to close the gap on Monday and Tuesday's risk-induced selling which took the pair from circa 157.47 to a weekly low of 154.52.
  • Antipodeans are both a touch softer vs. the USD with AUD/USD continuing to pivot around the 0.6650 mark having been stuck on a 0.66 handle throughout the week.
  • PBoC set USD/CNY mid-point at 7.1108 vs exp. 7.2436 (prev. 7.1097)

Fixed Income

  • USTs are consolidating between five and ten ticks from Wednesday's 110-12+ WTD peak. Specifics light thus far with the macro focus firmly on the ECB, with US Challenger Layoffs and Initial Jobless Claims also on the docket.
  • Bunds are a slightly softer and was unreactive to the miss in German Industrial Orders; Supply from Spain passed with no issue while the chunky French tap sparked some choppiness and an incremental new low for Bunds at 131.15.
  • Gilt price action is in-fitting with EGBs. However, the BoE DMP sparked a turnaround in fortunes for the UK benchmark lifting it by around 20 ticks to a 97.72 peak, driven by the moderation in wage growth expectations within the survey.
  • Spain sells EUR 5.865bln vs exp. EUR 5-6bln 2.50% 2027, 0.10% 2031, 4.00% 2054 Bono & EUR 0.51bln vs exp. EUR 0.25-0.75bln 2.05% 2039 I/L.
  • France sells EUR 12bln vs exp. EUR 10.5-12bln 3.00% 2034, 1.25% 2038, 3.25% 2055 OAT


  • Crude benchmarks were grinding higher throughout the European morning, though the upside has since dissipated (now flat), despite a lack of clear catalysts. Brent holding around USD 78.50/bbl.
  • Precious metals are contained after the strength seen in the prior session. Rangebound action which currently sees XAU hold around the lower-end of USD 2354-2374/oz bounds.
  • Base metals are firmer and continuing the turnaround in fortunes for the likes of copper that occurred yesterday alongside the broader risk-on trade.
  • OPEC SecGen says demand for oil is still good, fundamentals drove their decisions. Adds, as travel is picking up, demand for oil should be strong.
  • Qatar has set July Marine crude OSP at Oman/Dubai plus USD +1.10bbl; land crude OSP at Oman/Dubai plus USD +0.35bbl, according to a pricing document.
  • Goldman Sachs says US retail gasoline prices in October could rise to nearly USD 4/gal if the hurricane season is extreme and positioning normalises.
  • Canada Energy Regulator said it is updating an order that will allow Nova Gas to temporarily increase operating pressure by 5% in a section of the Grande Prairie mainline.
  • JP Morgan price outlook calls for Brent to average USD 75/bbl in 2025; sharply down from UD 83/bbl in 2024, with prices exiting the year at USD 64/bbl

Geopolitics: Middle-East

  • Israel's cabinet has cancelled their planned meetings amid reports that Hamas has rejected the truce proposal, according to Israeli media cited by journalist Elster
  • Heavy Israeli bombardment of South Lebanon was reported, according to Al Monitor Senior Correspondent Karam.

Geopolitics: Russia-Ukraine

  • Russian President Putin said he has no intention to attack NATO, according to Reuters.
  • US officials have notified relevant Congressional committees about expected Russian activity, according to a senior US official cited by Reuters. The temporary Russian deployment is likely to include combat vessels but is not seen by the US as a threatening move. The US is expecting Russian naval and air exercises in the Caribbean this summer with port calls likely in Cuba and possibly Venezuela.

Geopolitics: China-Taiwan

  • US State Department has approved the possible sale of F-16 parts to Taiwan for USD 80mln, according to the Pentagon
  • Taiwan Defence Ministry said in the past 24 hours, 1 Chinese Air Force plane was detected operating around Taiwan.

Geopolitics: Other

  • White House said Indian PM Modi and US President Biden discussed National Security Adviser Sullivan's upcoming travel to New Delhi, according to Reuters.

US Event Calendar

  • 07:30: May Challenger Job Cuts YoY -20.3%, prior -3.3%
  • 08:30: 1Q Nonfarm Productivity, est. 0%, prior 0.3%
  • 08:30: 1Q Unit Labor Costs, est. 4.9%, prior 4.7%
  • 08:30: June Initial Jobless Claims, est. 220,000, prior 219,000
  • 08:30: May Continuing Claims, est. 1.79m, prior 1.79m
  • 08:30: April Trade Balance, est. -$76.5b, prior -$69.4b

DB's Jim Reid concludes the overnight wrap

Today is a first for me. I'm taking part in a ribbon cutting ceremony. No not for a new supermarket but for Deutsche Bank's wonderful new building at Moorfields in the City, here in London. The ceremony is full of dignitaries from the City, politics, the world of finance and the Lord Mayor of London. One fact to blow your mind is that the new building contains twice the amount of steel as the Eiffel Tower and yet has won many sustainability accolades. I would be confident of saying that our buildings in NY and London are now two of the nicest work buildings I've ever been in, and I get to go in many around the world. For balance I should probably say that this statement would certainly have not applied to our old buildings!

The ribbon was also cut for a brand new all time high in the S&P 500 (+1.18%) last night, the 25th so far this year. The last week has seen the index at the bottom and now the top of the (relatively narrow) one-month range. The advance yesterday came as good economic news was seen as good news for markets again, while renewed tech optimism saw Nvidia (+5.16%) become the third company to reach a $3trn market cap. So normal service for 2024 has returned.

Yesterday’s advance was initially supported by the US ISM services for May, which surprised on the upside at 53.8 (vs 51.0 expected). That was significant as the previous month had seen the index fall to a contractionary 49.4, so the bounceback suggests that was just a blip rather than the start of a more concerning trend. This reading was also the index’s highest level since last August, and the largest monthly increase since January 2023. That said, a few of the details weren’t quite as strong. For example, the employment component was still in contractionary territory at 47.1 in May (vs 47.2 expected), and therefore in line with the wider narrative of a slackening labour market. The prices paid index fell back from 59.2 to 58.1 (vs 59.0 expected), as inflationary pressures came off a tad. Supporting the employment story, the ADP payroll numbers for May also undershot expectations, rising +152k (vs +175k expected), which is its slowest pace since the start of the year.

These softer elements meant investors priced in more rate cuts for a sixth day in a row. For instance, the amount priced in by the Fed’s December meeting was up +4.7bps to 50bps. In turn, 2yr yields ended the day down -4.8bps to 4.72%, whilst 10yr Treasury yields saw their fifth decline in a row, down -5.1bps to 4.28%, their lowest since March. That move has stabilized overnight however, with 10yr yields (+1.9bps) back up to 4.29% as we go to print.

The rates rally and the upside data surprise supported the rally in equities, but it was tech optimism that was the largest driver. There were a few triggers for this, including the news that semiconductor equipment manufacturer ASML will ship its most advanced chipmaking machine to TSMC this year. ASML’s stock gained +8.10% yesterday, surpassing luxury company LVMH as the second largest company in Europe. This backdrop saw the NASDAQ (+1.96%) and Magnificent Seven (+2.24%) post new record highs. Nvidia spearheaded this rally, as the AI and semiconductor heavyweight (+5.16%) moved above $3trn market cap and overtook Apple as the second most valuable company in the world (even as the latter posted an eighth consecutive advance).

The tech advance helped the S&P 500 index (+1.18%) post its fourth consecutive gain, and its largest in over a month. But the rally was not confined to tech, and the Russell 2000 index of small caps was up +1.47%. This risk-on sentiment spread to global equities more broadly. In Europe the STOXX 600 jumped +0.81%, while the MSCI EM index gained +1.03%. Notably, Mexican equities recovered by +1.73%, following on from the +3.24% gain on Tuesday. So they’ve now recovered three-quarters of the -6.11% fall seen on Monday after the landslide victory in Sunday’s election for Claudia Sheinbaum of the ruling left-wing party.

Looking forward to today, all eyes will be on Europe with the ECB rate decision out later. This is a significant one, as it’s widely expected that the ECB will cut rates for the first time this cycle, and our European economists are looking for a 25bps cut in the deposit rate to 3.75%. See their full preview here. As we go to press, overnight index swaps are now fully pricing in a cut today, so the bigger question will be what the ECB signals moving forward, and how quickly future cuts might happen. For now at least, investors don’t think the cuts will happen every meeting, as there’s currently only 62bps of cuts priced by the December meeting (which encompasses 5 meetings including today). So if that market pricing is realized, that would be equivalent to between two and three 25bp cuts at the remaining five meetings. 10yr German bund yields traded down ahead of the meeting, falling -2.2bps, while OATs (-2.7bps) and BTPs (-4.8bps) outperformed.

When it comes to central bank rate cuts, there was another milestone yesterday after the Bank of Canada became the first G7 country to cut rates this cycle. They cut their interest rate by 25bps to 4.75% as expected, and there was a dovish tone from Governor Macklem, who explicitly mentioned additional cuts, saying it was “reasonable to expect further cuts” if inflation continued to ease. Macklem also mentioned the Bank of Canada does not “need to move in lockstep with the Federal Reserve”, although “there are limits to divergence”. So several central banks aren’t hesitating to begin rate cuts even as the Fed elects to hold its rate steady for now. Markets are currently pricing a further 55bps of cuts by the BoC this year.

This morning in Asia, the optimistic mood for global markets has continued, with gains across the major equity indices. That includes advances for the Hang Seng (+0.59%) the Nikkei (+0.58%), and the CSI 300 (+0.37%), although the Shanghai Comp (-0.08%) is currently lower. Meanwhile, markets in South Korea are closed for a holiday. Outside of Asia, US equity futures are pointing to a positive start, with those on the S&P 500 (+0.05%) and NASDAQ 100 (+0.11%) trading slightly higher.

After a material retreat in commodities in the first part of the week, oil bounced back yesterday as prices continue to be volatile in the days after the most recent OPEC meeting. Brent crude rose +1.15% to $78.41/bbl, ending five days of consecutive declines, while WTI rose +1.12% to $74.07/bbl. Copper similarly gained +1.52% yesterday, to $460.60/lb, after having retreated by -11.4% from its peak two weeks ago.

Turning to politics, in India, Prime Minister Modi’s Bharatiya Janata Party has managed to secure the backing from two key allies, the Janata Dal (United) and Telugu Desam Party (TDP), to form a coalition in the Indian government. The Nifty 50 rose +3.36% yesterday and closed at around last Friday's levels (before the exit polls) after a volatile week. This morning the index has opened up +0.74%.

Staying on politics, the European Parliamentary election begins today, before concluding on Sunday when we'll see the first exit polls and the results start to come through. See DB's preview here from Marion Muehlberger. I'll likely do a CoTD on this this morning so watch out for it around lunchtime. Meanwhile in the UK, the general election is now just 4 weeks away, and yesterday saw YouGov publish the first poll since Nigel Farage’s announcement earlier in the week he was becoming leader of the right-wing Reform UK party. The poll put the opposition Labour Party on 40%, the governing Conservatives on 19%, and Reform UK just two points behind them on 17%.

Now to the rest of the day ahead. In terms of data releases, we have the US April trade balance and initial jobless claims, the UK May construction PMI, Germany May construction PMI, April factory orders, Italy and Eurozone April retail sales and Canada April international merchandise trade. From central banks, we have the ECB decision and the BoE’s DMP survey, and we will have earnings from Nio.