MARKET WRAPS
Watch For:
Manufacturing PMI for EU, Germany, France, Italy, UK; no major corporate updates expected
Opening Call:
Shares are poised to start higher in Europe on Monday. In Asia, stock benchmarks were mixed; Treasury yields were barely changed; the dollar consolidated; while oil was flat and gold weakened.
Equities:
European shares are off to a strong open on Monday amid expectations the European Central Bank will begin lowering rates at its meeting on Thursday.
The ECB is widely expected to make a first 25 basis-point cut to interest rates, as inflation is on a declining trend and following strong hints from policymakers, taking the deposit rate down to 3.75% and the refinancing rate to 4.25%.
Investors will also likely be digesting China's latest Caixin manufacturing PMI data for May.
The private gauge of China's factory activity expanded at a faster clip in May, contrasting with the official index's unexpected slide into contraction.
Other data due this week include final eurozone purchasing managers' data for manufacturing on Monday and services on Wednesday, as well as figures from individual countries. U.K. final purchasing managers' data for manufacturing are also due on Monday and for services on Wednesday.
Forex:
The dollar consolidated in Asia, with focus on upcoming central bank meetings and U.S. economic data.
The greenback could have a volatile week, with two major central-bank rate announcements and U.S. non-farm payrolls data scheduled for release, CBA said.
There is a risk that the Bank of Canada and the ECB are perceived to be a little less dovish than markets expect, it says. Under such a scenario, there might be some downward pressure on the dollar, it added.
Bonds:
Treasury yields were little changed, as investors try to figure out when interest rate cuts may come this year, if at all.
Data released on Friday showed the personal-consumption-expenditures (PCE) price index, the Fed's favored inflation gauge, rose 0.3% for April, as economists had expected.
Meanwhile, the narrower measure, which strips out food and energy, increased by a smaller 0.2% - the smallest gain since the final month of last year. This helped soothe some concerns that progress on disinflation might have stalled.
After the report, fed-funds futures traders priced in at least one rate cut from the Federal Reserve this year, as soon as September.
Energy:
Oil was flat, following the OPEC+ decision to start to phase out some voluntary reductions after the third quarter.
Eight top producers agreed to continue voluntary cuts separately into 2025, currently around 2.2 million barrels a day, according to an OPEC+ document.
However, the voluntary cuts, which include a production cut of 1 million barrels a day from Saudi Arabia, will only be maintained at the same level for three months before being gradually eased through September next year, the document says.
Meanwhile, OPEC+ agreed to extend through end-2025 curbs totaling 3.66 million barrels a day.
Metals:
Gold edged lower in possible position adjustment.
The metal may get support from Fed rate-cut hopes spurred by data released Friday showing the U.S. core PCE price index rose at a slower pace in April than in March.
The decline in the core reading suggests U.S. inflation might ease faster than previously thought, boosting the likelihood of the Fed cutting rates, said XS.com.
Lower rates tend to be positive for gold as they reduce the opportunity cost of holding non-yielding assets, it added.
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Copper prices were higher in early trade amid stronger investor sentiment.
A private gauge of China's factory activity grew at the fastest pace in almost two years in May, signaling faster manufacturing growth.
Copper is widely used in the manufacturing and construction sectors.
Meanwhile, Chile, the world's largest copper producer, recorded its lowest month of copper output in more than a year, creating supply-side issues, ANZ said.
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Iron ore prices were lower, as China's property contracted sales remained at historical lows in May despite Beijing's latest stimulus measures to support the sector.
Hopes for higher demand for iron ore have started to cool, ANZ Research said.
The stimulus has done and will do little to spur new property projects, the real drivers of steel and iron ore demand, it added.
TODAY'S TOP HEADLINES
China Caixin PMI Signals Faster Manufacturing Growth in Contrast to Official Gauge
A private gauge of China's factory activity expanded at its fastest pace in almost two years in May, in contrast to the official index's unexpected slide into contraction.
The China Caixin manufacturing purchasing managers index rose to 51.7 in May from 51.4 in April, according to data released Monday by Caixin Media Co. and S&P Global.
OPEC+ Agrees to Extend Production Cuts in Bid to Boost Oil Prices
OPEC+ on Sunday agreed to extend all production curbs into next year, a deal that likely signals oil prices will remain elevated through the U.S. presidential election.
The agreement comes on the same day the group's kingpin, Saudi Arabia, launched a giant sale of shares in its national oil champion that will yield billions to help fund the kingdom's economic transformation.
U.S. Presses Two-Lane Diplomacy on Gaza, Facing Road Bumps in Both
The U.S. is pushing on twin diplomatic tracks in Gaza, seeking to stop the war through a cease-fire proposal backed by President Biden, while also joining talks this weekend to reopen a route for aid into the enclave that was closed when Israel advanced along Gaza's southern border with Egypt. Both efforts come with road bumps.
In three-way talks in Cairo on Sunday, a team of U.S. officials discussed with Egyptian and Israeli counterparts how to reopen the Rafah crossing, which has been used for evacuating seriously ill or injured civilians, as well as for fuel deliveries.
Zelensky Says China Is Helping Russia Undermine a Peace Summit on Ukraine
SINGAPORE-Ukrainian President Volodymyr Zelensky accused China of pressuring countries to boycott a peace conference he is promoting in Switzerland later this month and warned that Beijing's support for Russian President Vladimir Putin will only prolong the war.
"Using Chinese influence, using Chinese diplomats, Russia is doing everything to disrupt the summit. Regrettably, such a big, independent country as China has become an instrument in Putin's hands," Zelensky said Sunday in Singapore.
How Israel Avoided Biden's Red Line
Israel overhauled its military operations in Rafah following intensive discussion with American officials to avoid crossing the Biden administration's red line and provoking a crisis in relations with its closest ally, U.S. and Israeli officials said.
Israel shelved its original plan for a two-division sweep through Rafah, an operation that the White House worried would lead to an escalation of casualties in a conflict that has already led to a soaring civilian toll.
Russia Aims to Make Life Unlivable in Ukraine's Second City
KHARKIV, Ukraine-When Russian forces overran a stretch of Ukraine's northeastern border last month, Vitalina Honcharova packed her bags and prepared to flee this city with her family once more.
Three weeks on, Ukrainian forces have halted Russia's advance north of Kharkiv, and Honcharova is staying put. But as Russia pounds the city with bombs and missiles, her bags remain ready by the door.
South Africa's Ruling Party, Chastened by Vote, Faces Difficult Coalition Talks
JOHANNESBURG-Disillusioned South African voters delivered a devastating upset to the African National Congress, with the party sinking to just 40% of the vote in national elections-a result that puts into question the future of President Cyril Ramaphosa and, after 30 years in power, that of the former liberation movement itself.
A final ballot count from Wednesday's national elections showed the worst result on record for the ANC and the first time since 1994 that the party won't have an absolute majority in the country's parliament. In the last national election in 2019, the ANC still won 57.5% of the vote and, at the height of its power in 2004, it commanded nearly 70% of the electorate.
Nvidia speeds up its AI-chip roadmap, next-generation Rubin platform coming in 2026
Nvidia Corp. plans to roll out a new family of AI chips every year, Chief Executive Jensen Huang said Sunday.
Speaking Sunday at a keynote address ahead of the Computex trade show in Taiwan, Huang said Nvidia NVDA expects to launch the Blackwell Ultra chip in 2025, and the next-generation Rubin chip platform in 2026, featuring new GPUs and a new, Arm-based CPU called Vera.
Write to singaporeeditors@dowjones.com
Expected Major Events for Monday
04:30/NED: Apr Retail turnover
05:00/NED: May Netherlands Manufacturing PMI
07:00/TUR: May Turkey Manufacturing PMI
07:00/POL: May Poland Manufacturing PMI
07:00/AUT: 1Q GDP
07:00/TUR: May PPI
07:00/TUR: May CPI
07:15/SPN: May Spain Manufacturing PMI
07:30/EU: May EuroCOIN indicator of euro area economic activity
07:30/CZE: May Czech Republic Manufacturing PMI
07:30/SWI: May procure.ch Purchasing Managers' Index
07:45/ITA: May Italy Manufacturing PMI
07:50/FRA: May France Manufacturing PMI
07:55/GER: May Germany Manufacturing PMI
08:00/POL: 1Q GDP
08:00/GRE: May Greece Manufacturing PMI
08:00/EU: May Eurozone Manufacturing PMI
08:30/UK: May S&P Global UK Manufacturing PMI
08:30/UK: 1Q Household Finance Review
09:00/CYP: 1Q GDP
09:00/CYP: Apr Retail trade
16:59/AUT: May Unemployment figures
23:01/UK: May BRC-KPMG Retail Sales Monitor
23:01/UK: May Scottish Retail Sales Monitor
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06-03-24 0015ET
