European stock futures are poised for mild gains at the open, continuing a rally in Asia after US inflation data reinforced expectations of Federal Reserve policy easing. The Euro Stoxx 50 futures contract climbed as much as 0.3%, mirroring the positive sentiment. Similarly, US futures edged higher following Wall Street’s fresh highs on Wednesday.
The optimistic start to the European trading day follows a robust session in Asia, where a regional gauge approached a new peak not seen since March 2022. The Bloomberg dollar index dipped to a one-month low as the greenback weakened against all major currencies, including its Group-of-10 peers. Asian currencies, particularly the Korean won, led the rally.
Despite data showing a contraction in the Japanese economy in the first quarter, the yen traded at its highest level in over a week against the dollar, building on Wednesday’s 1% advance. Meanwhile, the Australian dollar initially gained ground but later erased its gains after the country’s April jobless rate missed the median estimate in a Bloomberg survey.
In the bond market, Treasuries extended gains from Wednesday, pushing the policy-sensitive two-year yield down by nine basis points. This move reflects investors’ increased expectations of interest rate cuts by the Federal Reserve. The swaps market is now anticipating two rate reductions in 2024, up from one earlier in the year. Overall, the positive sentiment in global markets reflects investors’ confidence in central bank support and hopes for economic recovery amid ongoing concerns about inflation and the pace of monetary policy tightening.
