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World stocks near all-time high ahead of ECB rate cut

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With the long-awaited moment about to arrive, traders pushed the pan-European STOXX 600 up 0.3% in early deals and watched the MSCI main world index rise to within a point of a seemingly inevitable new high

World stocks were on the verge of an all-time high and the euro gained on Thursday ahead of what was widely expected to be the ECB’s first interest rate cut in almost five years.

With the long-awaited moment about to arrive, traders pushed the pan-European STOXX 600 up 0.3% in early deals and watched the MSCI main world index rise to within a point of a seemingly inevitable new high.

Sentiment was almost at frenzy stage again. Wall Street’s S&P 500 and Nasdaq had both set fresh records on Wednesday after a now $3 trillion Nvidia swept past Apple to become the world’s second-most valuable company, behind Microsoft.

The euro was on the rise again too. It added another 0.1% to its 2% gain over the last month to reach just short of $1.0880, although most traders were waiting to see what the European Central Bank signals later.

EU elections will take place in the coming days but stronger-than-expected data over the past few weeks has raised doubts about how many more cuts will be justified this year.

Euro zone inflation rose more than predicted in May, fuelled by price growth in the services sector, which some policymakers single out as particularly relevant because it reflects domestic demand.

This was likely to mirror larger-than-expected hikes in wages in the first quarter of the year, which boosted consumers’ battered disposable income after years of below-inflation pay hikes.

Michael Metcalfe, head of global macro strategy at State Street Global Markets, said for this meeting though, it was hard to remember a central bank move more well flagged in advance.

Maybe today is going to mark something of a watershed as they (ECB) are not going to be able to be as clear with their forward guidance, he added.

Considering the recent robust data, “what follows is now a much harder question for markets – and the ECB – to assess,” he said. It could be a classic buy-the-rumour-sell-the-fact and the euro get some support from here.

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