European stocks higher ahead of ECB policy meeting

Investing.com - European stock markets rose Thursday, ahead of what market participants expect to be the first cut in interest rates by the European Central Bank since 2019.

At 03:05 ET (07:05 GMT), the DAX index in Germany traded 0.6% higher, the CAC 40 in France rose 0.4% and the FTSE 100 in the U.K. gained 0.1%.

ECB set to cut interest rates 

The European Central Bank concludes its latest policy-setting meeting later in the session, and is expected to join the central banks of Canada, Sweden and Switzerland in cutting rates.

The central bank is widely expected to trim its deposit rate to 3.75% from a record 4.0%, in what would be its first cut since 2019.

The ECB policymakers have signaled that sufficient progress in tackling inflation has been made to justify an easing, with consumer prices having fallen from more than 10% in late 2022 to just above the central bank’s 2% target.

That said, recent data has seen prices turn higher, indicating that inflation could prove to be stickier than expected in the eurozone, creating uncertainty over what follows this likely rate cut.

This brings ECB President Christine Lagarde’s press conference after the rate decision firmly into focus, as the market looks for clues about future policy moves.

Money markets are pricing in between one and two more interest rate cuts, possibly in September and December.

Before the ECB announcement, eurozone retail sales data for April are due later in the session, and are expected to show a drop of 0.2% on the month, a small rise of 0.1% on an annual basis.

Nvidia’s market value soars above $3 trillion 

In the corporate sector, the focus is likely to be on chipmakers after market darling Nvidia (NASDAQ:NVDA) rallied more than 4% on Wednesday, pushing its value above $3 trillion for time ever, overtaking Apple (NASDAQ:AAPL) as the second most valuable company.

The surge in Nvidia followed recent strong quarterly results that fueled further bets the surge in AI-related spending on semiconductors is set to continue. In its quarterly results, the chipmaker also announced a 10-to-1 stock split, which will take effect on Friday, making its stock more affordable and accessible to a larger group of investors. 

Crude on course for weekly losses 

Crude prices edged higher Thursday, boosted by the overall positive sentiment, but are still on course for hefty weekly losses. 

By 03:05 ET, the U.S. crude futures (WTI) traded 0.8% higher at $74.67 per barrel, while the Brent contract climbed 0.7% to $78.92 per barrel.

Both contracts are headed for weekly declines of around 4%, weighed down by the decision from the Organization of the Petroleum Exporting Countries and allies to leave room for voluntary output cuts to be unwound gradually, beginning in October.

The crude market was also hit by the news that U.S. crude stocks jumped by 1.2 million barrels in the week to May 31, compared with estimates for a draw of 2.3 million barrels, data from the U.S. Energy Information Administration showed.