world markets and the value of the global dollar experience a rebound this Wednesdaywith investors eyeing European Central Bank policy meetingafter discouraging data on the US labor market reinforced expectations of a reduction in interest rates in September by the Federal Reserve.
Despite this, concerns about the slowdown in the US economy kept risk appetite in check, and many stock indices remained below the highs reached this year.
The ECB has its meeting scheduled for Thursday, and money markets practically take a first rate reduction for granted. However, uncertainty remains about the future path in the euro zone.
Carlo Franchini of Banca Ifigest said: “I have a positive view on tomorrow’s cut, as it marks the end of an era of rate hikes that began two years ago. It will now be interesting to watch the impact the rate reduction will have in domestic demand and economic recovery”.
Rates and markets: what investors see
Data released Wednesday showed that business activity in the Euro zone advanced in May at its fastest pace in a year, driven by growth in the services sector, despite the contraction in the manufacturing sector.
On the other side of the Atlantic, the Bank of Canada is expected to begin its easing cycle later on Wednesday. Meanwhile, the Fed will meet next week.
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Global equity indices such as the MSCI and STOXX 600 are posting gains, while Asia-Pacific excluding Japan also saw significant gains. However, Japan’s Nikkei fell due to renewed yen strength.
Wall Street futures indicate a higher opening for the S&P 500 and the Nasdaq,both with a strong technological component. The 10-year US Treasury yield stands at 4.3396%, while the dollar index rose slightly against a basket of currencies, just above a nearly two-month low.
The weakening US dollar boosted the yen, although it fell during the session.
Crude oil prices improved about 0.25%, recovering from four-month lows, as traders evaluated OPEC+ decisions and the increase in crude and fuel stockpiles in the United States.
