There are just two drivers setting the pace for today’s risk mood: the OPEC meeting in Vienna which started a few hours ago, and the ECB’s announcement as well as Mario Draghi’s press statement due out just one hour from now. Both are expected to not reveal any major surprises, with OPEC almost certainly unable to implement a production freeze while the ECB is expected to remain on hold and provide some more details on its corporate bond buying program, although there is some modest risk of upside surprise in either case. So while we await the outcome of both key events, European stocks rose, U.S. index futures declined, oil held near $49 a barrel, and the yen gained notably for the third day in a row. 

Crude hovered near a seven-month high as OPEC tries to find a way to push the price even higher even as every member can produce as much as they want, with Saudi Arabia’s energy minister saying he sees supply and demand coming into balance. European equities halted a two-day losing streak and the euro advanced as investors awaited ECB President Mario Draghi’s press briefing for indications of the central bank’s policy trajectory. The ruble rose for the first time in three days. The yen advanced against all of its Group of 10 peers and a sale of 10-year sovereign debt in Japan drew the strongest demand in almost two years. Similar-maturity Spanish bonds led losses in Europe.

As Bloomberg summarizes, global markets have started June tentatively, with the OPEC and ECB meetings Thursday setting the stage for a month that will also see the U.K. vote on whether to remain in the European Union and a possible interest-rate increase by the Federal Reserve. Wednesday data showed the U.S. manufacturing sector grew more than economists forecast last month and American employment figures this week will help shape expectations for the timing of the next rate hike. Fed Funds futures indicate a 22 percent chance of a move at the June 14-15 meeting.

European stocks rose as investors awaited the European Central Bank’s rate decision and President Mario Draghi’s remarks. Euro rises to 1-week high as ECB stimulus seen on hold again. “The ECB meeting and the upcoming Fed decision are correlated – if the Fed does something with the rates this month, the euro will weaken, which is in favor of the ECB plan,” said Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany. “The ECB is in a more of a wait-and-see position with regards to what the Fed will do. The inflation forecast Draghi gives will be the main focus. The forecast has to be adjusted in a way that the market knows this a goal that can be achieved.”

In Asia, Japan was in the spotlight after BOJ member Sato dampened prospects for further easing when he said the central bank’s 2% inflation target will not be reach on time, adding the BOJ should make asset purchase operation more flexible and explore flexible approaches to monetary base target; he also admitted that negative interest rate policy has effect of monetary tightening, rather than an effect of easing. As such the market interpreted the words as an indication that any additional stimulus will not be coming soon: “There’s now less chance of more Japanese monetary policy particularly when Abe said he’s thinking about doing more fiscal initiatives,” said Tony Farnham, a Sydney-based analyst at Patersons Securities Ltd. “That should have the U.S. dollar on the back foot for a period of time. There’s certainly nothing in the Beige Book to say the Fed is cowering away from a rate increase.”

On OPEC, while the downside case is said to be priced in, a negative outcome may impact oil prices: “The economic situation in America may be solid, but there are still fears that the rest of the world won’t be able to withstand higher U.S. interest rates,” said Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co. “If the OPEC meeting results in a negative outcome, we’ll see even more risk being taken off the table.”

The Stoxx Europe 600 Index added 0.3%, reversing a 0.2% loss, after capping its biggest two-day decline in four weeks. Banks and energy producers posted the best performances of the equity gauge’s 19 industry groups on Thursday.  Futures on the S&P 500 Index fell 0.1%. Stocks closed Wednesday little changed for a second session, as investors weighed better-than-expected factory data against sluggish global growth, and mulled the implications of a possible interest rate hike this month or next.  Japan’s Topix index tumbled 2.2 percent after Prime Minister Shinzo Abe held back a widely-expected fiscal stimulus package. He postponed a planned sales-tax hike until October 2019 and vowed to take “bold” economic steps in the autumn. Honda Motor Co. tumbled 4.2 percent and Toyota Motor Corp. dropped 1.5 percent after their U.S. sales fell last month by more than analysts estimated.

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