ECB cuts rates from historic high

Good morning. Here's what happened overnight and what you need to know today.

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1.

ECB eases: The European Central Bank (ECB) has joined Canada, Switzerland and Sweden in cutting interest rates — the first time in five years for the eurozone lender — lowering its key deposit rate by 25 basis points from its historic high to 3.75%. The move, which was widely expected, follows a significant improvement in the region's inflation outlook, although the ECB did not commit to future rate cuts. It cited ongoing price and wage pressures that led to an increase in its 2025 inflation forecast to 2.2% from 2% — its inflation target. “Despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year,” the bank said. This suggests a pause in July, with potential cuts in September and December, according to economists surveyed by Reuters. The bank expects inflation will stay at around 2.5% this year. (European Central Bank) (Reuters) (Bloomberg)

2.

D-Day remembrance: Veterans and world leaders gathered in Normandy for the 80th anniversary of D-Day, possibly the last major ceremony with surviving veterans. US President Joe Biden, France's Emmanuel Macron, Ukrainian President Volodymyr Zelenskiy, King Charles and other dignitaries highlighted the importance of international cooperation to oppose tyranny. Biden urged Western powers to stay the course with Ukraine. "We will not walk away,” he said, “because if we do, Ukraine will be subjugated and it will not end there. All of Europe will be threatened." Australia was represented by Governor-General David Hurley. The anniversary comes amid ongoing conflicts in Ukraine and Gaza. Approximately 200 veterans attended, many aged 100 or more, to honour the 150,000 Allied soldiers who landed in France on 6 June, 1944, a turning point in World War II. (Reuters)

3.

Gaza school hit: An Israeli airstrike hit a Gaza school on Thursday, reportedly killing 40 people including women and children according to a Hamas official, in what Israel said was a targeted strike on up to 30 Hamas fighters inside, Reuters reported. Hamas denied Israel’s assertion that the UN school in central Gaza had hidden a Hamas command post, calling the attack unjustified, while the Israeli military defended the strike as precise. The school was sheltering 6,000 displaced people, according to the UN Palestinian refugee agency (UNRWA). "Claims that armed groups may have been inside the shelter are shocking. We are however unable to verify these claims. Attacking, targeting or using UN buildings for military purposes are a blatant disregard of International Humanitarian law," UNRWA chief Philippe Lazzarini posted on X. The strike comes amid sensitive ceasefire talks, but Israel said there would be no halt to fighting during the negotiations. Meanwhile, the United States and other countries issued a statement urging Israel and Hamas to finalise the US-proposed ceasefire deal after eight months of conflict. (Reuters)

4.

Robinhood snags Bitstamp: Robinhood is acquiring the European cryptocurrency exchange Bitstamp for USD200 million ($301 million) in a move to expand its global presence and enter the institutional business. Robinhood’s largest purchase in its 11-year history comes shortly after the SEC warned it of potential enforcement action over alleged securities law violations by its crypto unit. The deal, expected to close in the first half of 2025, will expand Robinhood’s operations beyond its US retail market, leveraging Bitstamp’s established European base and over 50 global licenses, according to a statement by the company. Founded in 2011, Bitstamp is smaller than competitors like Binance and Coinbase. Robinhood’s shares rose over 7% following the announcement before paring some gains before the market close. (Robinhood release) (Reuters) (Bloomberg)

5.

FTC probes AI deal: The US Federal Trade Commission (FTC) is investigating whether Microsoft structured its USD650 million ($976 million) deal with startup Inflection AI to avoid an antitrust review, the Wall Street Journal reported. In March, Microsoft hired Inflection AI’s co-founder Mustafa Suleyman and most employees, agreeing to pay the startup a licensing fee. The deal wasn’t reported to the FTC despite exceeding the USD119 million reporting threshold. The FTC is seeking information about how and why the partnership was negotiated, the publication said, citing documents it reviewed and an unnamed source. The regulator has concerns about the potential for major tech firms to dominate AI applications. Microsoft maintains that it complied with antitrust laws, stating Inflection AI remains an independent entity. (Wall Street Journal)

6.

SpaceX milestone: Elon Musk’s SpaceX accomplished a set of ambitious goals with its giant Starship rocket, successfully guiding both the spacecraft and booster to controlled splashdowns in a hopeful sign of its reusability. The spacecraft made a successful re-entry and landed in the Indian Ocean, while the booster landed in the Gulf of Mexico. The fourth test flight marks progress towards making Starship fully reusable, crucial for Musk’s vision of interplanetary exploration and NASA’s lunar missions. The nearly 400-foot-tall (121 metres) Starship, touted as the most powerful rocket ever built, aims to carry larger satellite loads, transport astronauts to the moon and potentially send humans to Mars. (CNN)

7.

Crypto fund race: The USD1.6 trillion asset manager Franklin Templeton is considering the launch of a new crypto-focused investment fund targeting institutional investors, The Information reported. The fund would invest in various cryptocurrencies beyond bitcoin and ether, and potentially provide “staking rewards” — earned from holding cryptocurrencies in a blockchain network to support operations such as validating transactions — to fund investors. Franklin Templeton already has a spot bitcoin ETF and has applied for a similar ether offering. The move comes as Franklin Templeton competes with other industry giants like BlackRock, which runs the largest spot bitcoin fund, and Fidelity, which offers cryptocurrency trading and custody services. (The Information)

8.

EV disappointment: Shares in Chinese electric vehicle start-up NIO plunged as much as 10% after it reported a larger-than-expected loss in the first quarter. The premium EV maker's net loss widened to 4.9 billion yuan ($1 billion), missing forecasts, while revenue fell 7.2% year on year to 9.9 billion yuan. NIO has faced intense price competition, impacting sales momentum. The company said it expected recovery in the second quarter with revenues forecast to double. It is also planning a September launch of its budget sub-brand Onvo, which is seen as a cheaper rival to Tesla’s model Y. NIO forecast Q2 deliveries of 54,000-56,000 vehicles, representing 130% growth year on year, and said it expected sales of about USD2.3billion. (Investor’s Business Daily) (Barron’s)