Crypto News: 5 things to start your day: Europe

Good morning. European equity futures rise after Asia started June with a bang, while oil fluctuates after an OPEC+ meeting. Nvidia unveils next-generation Rubin AI platform. Here's what people are talking about.

European stocks are set to take heart from a perky mood across Asia at the start of June. The region's equities rallied, helped by a surge in technology shares and data showing regional manufacturing activity picking up the pace. Adding to the impetus was Indian stocks jumping to record highs as exit polls indicated a resounding victory for Prime Minister Narendra Modi's party. A weaker US dollar in recent weeks on optimism the Federal Reserve will finally begin to ease policy is also adding to tailwinds for risky assets.

In contrast, the oil market is having a rough start to the new month after a loss in May. Crude prices fluctuated early Monday after OPEC+ extended its production cuts on Sunday while also setting a date to begin bringing some oil back online later this year. Most market watchers had expected OPEC and its allies to extend the curbs through the end of the year. On the geopolitical front, Israel has pushed back on a cease-fire plan laid out by US President Joe Biden as the war in Gaza approaches its eighth month.

Nvidia Chief Executive Officer Jensen Huang said the company plans to upgrade its AI accelerators every year, announcing a Blackwell Ultra chip for 2025 and a next-generation platform in development called Rubin for 2026. The world's most valuable chipmaker looks to broaden its customer base beyond the handful of cloud-computing giants that generate much of its sales. In the meantime, Advanced Micro Devices is speeding up introductions of new AI processors as it seeks to dent Nvidia's domination of that lucrative market.

We may be headed toward a volatile week or two going into key interest-rate decisions on both sides of the Atlantic. The European Central Bank could open the door to a weaker euro on Thursday as its first rate cut of the cycle puts the region on a divergent policy path from the US. This week's ECB decision will include quarterly forecasts that will be scrutinized for hints of future policy intentions, as will President Christine Lagarde's press conference. Money markets for now are betting on two rate reductions in total this year, with a small chance of a third. Separately, France's assets may be in focus today after S&P Global Ratings downgraded the country.

If Donald Trump is elected president again, the Federal Reserve will face a significant risk of losing its independence to ramped-up political interference. That's according to the latest Bloomberg Markets Live Pulse survey. About 24% of 484 survey participants said a Trump win would immediately cause the 10-year Treasury yields to rise more than 25 basis points. In the meantime, Trump joined TikTok, the Chinese-owned platform he tried to ban in the US, as the presumptive 2024 Republican nominee steps up efforts to reach young voters.

We have a slew of activity data due out of Europe. Along with euro-zone PMI reading, prints from countries including Germany, France, Italy and Spain are also on the calendar. Turkey releases price data.

This is what's caught our eye over the past 24 hours.

Mnuchin chases Wall Street glory with war chest of foreign money
South Africa's ANC courts rivals after election humiliation
Labour considers business veterans for roles in UK government
Europe election will show what voters really think of green deal
Saudi Aramco's $12 billion stock offer sells out in hours
GameStop set to jump as Keith Gill post shows $116 million bet
Sheinbaum set to become Mexico's first female president

The end of the week brought some relief to US bond markets, with yields down across the curve as PCE inflation came inline with expectations. The S&P and Dow rallied on the news, with the Nasdaq only slightly in the red. But this was more of a relief rally. In fact, September swaps are still pricing in about-even odds as in-line inflation data were just not good enough. A 0.3% headline month-on-month print and 0.2% core are basically a push relative to what the Federal Reserve needs to see to a cut by September. So where do we go now?

I think the summer market action is going to be forgettable. The biggest problem going forward for bulls — whether in equities or bonds — is that commodity traders are bracing for a summer heatwave that will lead to commodity volatility, and potentially higher headline inflation prints as well. That's what has people in the US talking about "stagflation," because that slowing growth but still-high inflation is a combination which will keep the Fed on hold, even though it would desperately want to cut. It doesn't help that European inflation numbers were also weak as well, with harmonized CPI for the EU coming in at a whopping 3.8%.

Essentially, for the bond bulls, we need to see economic weakness to justify real moves down in yield. By contrast, the equity bulls are going to need to see inflation come down enough to warrant cuts but without the economy falling apart. I rate the bond bull faction as more likely to see any of that in the next couple months.

Ed Harrison writes the Everything Risk newsletter. Follow him on X at @edwardnh.