European Shares Set To Rise As ECB Rate Cut Looks Certain

(RTTNews) - European stocks are likely to open higher on Monday after a private survey showed China's manufacturing activity grew more than expected in May - contrasting with an official PMI reading that showed China's manufacturing unexpectedly shrank in the month.

It's a busy week ahead on the economic calendar, with the European Central Bank expected to begin cutting interest rates from historic highs on Thursday.

Economists expect a quarter percentage point reduction, taking the key deposit rate to 3.75 percent from its current record level.

Economic activity data due before the ECB's rate decision may shed light on the state of the euro zone economy.

The Bank of Canada is also widely expected to cut interest rates this week, potentially sparking monetary loosening across the globe. The U.S. dollar began the week slightly lower after data showed U.S. inflation stabilized in April.

The U.S. monthly jobs report is likely to be in the spotlight this week, along with reports on manufacturing and service sector activity.

The jobs data holds significance as it will be the last economic report before the Federal Reserve's upcoming monetary policy meet on June 11-12.

Asian markets traded mostly higher, with Indian shares leading regional gains after several exit polls pointed to a third term and sizable mandate for Prime Minister Narendra Modi.

Technology stocks surged in Hong Kong and South Korea after NVIDIA Corporation unveiled a new line of artificial intelligence chips.

Gold edged down slightly in Asian trading while oil prices were little changed as OPEC+ extended its production cuts well into 2025 but announced a plan to restore some production as early as October.

U.S. stocks ended mostly higher on Friday and Treasury yields eased after the Fed's preferred measure of inflation met estimates and posted the smallest increase this year at 2.7 percent in April, raising hopes for an interest rate cut by the end of the year.

Wage growth moderated, growth in spending by consumers weakened by more than economists expected and growth in incomes for Americans also slowed last month, easing investor woes surrounding inflation and interest rates.

The Dow surged 1.5 percent and the S&P 500 added 0.8 percent while the tech-heavy Nasdaq Composite finished marginally lower.

European stocks closed higher on Friday despite signs of accelerating inflation in the euro area.

The pan European STOXX 600 gained 0.3 percent. The German DAX ended marginally higher, France's CAC 40 edged up 0.2 percent and the U.K.'s FTSE 100 rose half a percent.