European Central Bank will likely cut rates this summer

ECB to cut rates in June? The European Central Bank (ECB) will start cutting interest rates in June, Governing Council member Francois Villeroy de Galhau told French newspaper Le Journal du Dimanche over the weekend. “Bar a surprise, we should decide on the first cut at our next meeting on 6 June … Our cut early June will have to be followed by other cuts by year-end,” he said.

Where rates currently stand: The ECB kept rates unchanged when it met last Thursday, keeping the deposit rate at a record 4% in place since September.

Meanwhile in the US, June cuts are looking less likely: Traders have ruled out the Federal Reserve slashing rate over the summer — some have penciled in mid-September for when the Fed will start cutting rates, while some don’t see the Fed cutting rates at all this year, Reuters reports. This came in response to March’s inflation data coming in hotter than expected — consumer price inflation rose 3.5% y-o-y up from 3.2% the month before.

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THE MARKETS THIS MORNING-

Major Asian benchmarks are all substantially in the red this morning, following Wall Street’s lead: Korea’s Kospi is off 2.1%, the Nikkei is down 1.6%, and the Hang Seng has lost 1.2%. The Shanghai composite is fairing a bit better — it’s off just 0.8% after China reported its economy grew 5.3% in 1Q 2024, beating expectations.

European and US stock futures are largely unchanged but point to a lower opening later today.

THE CLOSING BELL-

The ADX rose 0.2% yesterday on turnover of AED 1.3 bn. The index is down 3.4% YTD.

In the green: Multiply Group (+14.8%), Q Holding (+4.6%) and Emirates Stallions Group (+4.0%).

In the red: Palm Sports (-9.9%), Gulf Medical Projects Company (-9.6%) and Response Plus Holding (-3.2%).

Over on the DFM, the exchange stayed flat on turnover of AED 628.3 mn. Nasdaq Dubai also remained flat.