European shares opened higher on Monday, as investors prepared for a week of central bank meetings in the U.S. and Europe, as well as key economic data that could signal the direction of interest rates.
Europe’s Stoxx 600 rose 0.3 percent, France’s Cac 40 rose 0.5 percent and London’s FTSE 100 rose 0.2 percent.
The moves followed a rebound on Wall Street on Friday, with the blue-chip S&P 500 gaining 0.1%, consolidating its move into bull market territory last week. The tech-heavy Nasdaq Composite rose 0.2%.
Stocks were buoyed by bets the central bank would reject a rate hike at its June 13-14 meeting, marking the first pause in the central bank’s 14-month campaign to curb inflation.
Susannah Streeter, head of currency and markets at Hargreaves Lansdown, said: “There are signs that the economy is edging into a potential recession and it is expected (Fed policy makers) are likely to keep interest rates on hold.”
Traders await the latest U.S. consumer price index report due on Tuesday, which economists polled by Reuters expect will show headline inflation slowed to 4.1 percent in May from a year earlier.
The reading would be a marked improvement from 4.9% in April, following 5% in March, giving the Fed more room to pause.
“Any deviation from the predicted path could lead to market volatility,” Streeter said.
U.S. futures rose, with contracts tracking the benchmark S&P 500 up 0.3% and contracts tracking the Nasdaq 100 up 0.4% ahead of the New York open.
Oil prices fell after Chinese data last week showed producer price deflation accelerated to the fastest pace since 2016 and exports fell short of expectations, pointing to weak demand at home and abroad.
International benchmark Brent crude fell 1.6% to $73.61, while U.S. West Texas Intermediate crude fell 1.7% to $69.02.
The two-year U.S. Treasury yield, which is sensitive to interest rate expectations, rose 0.01 percentage point to 4.62%. The 10-year Treasury yield was flat at 3.75%. Bond yields rise as prices fall.
Economists, meanwhile, still believe the ECB will raise the deposit rate by another 25 percentage points when policymakers meet next Thursday.
Asian shares struggled for change, with Hong Kong’s Hang Seng down 0.2 percent and Japan’s Topix up 0.7 percent.