EUROPE MARKETS: Europe Markets Pare Gains As ECB Rate Pledge Falls Short Of Hopes
June 06 2019 - 10:10AM
Dow Jones News
By Dave Morris
Euro climbs after ECB meeting, Draghi comments
European stock markets pared gains Thursday, after the European
Central Bank said it would keep key interest rates unchanged
through the first half of 2020, disappointing those who wanted a
more dovish push.
How are markets performing?
The Stoxx 600 turned flat to 374.2. On Wednesday it climbed
0.4%.
The U.K.'s FTSE 100 rose 0.4% to 7,250.4. It had edged up 0.1%
Wednesday.
The pound rose to $1.2706, after nudging 0.4% higher Wednesday.
The climbed 0.4% to $1.1264.
In Germany, the DAX turned lower, down 0.2% to 11,955.97, having
also ticked 0.1% up on Wednesday.
France's CAC 40 was flat at 5,923.5. It rose 0.5% Wednesday.
Italy's FTSE MIB rose 0.3% to 20,218, having fallen 0.4%
Wednesday.
What's moving the markets?
The European Central Bank on Thursday left interest rates
unchanged
(http://www.marketwatch.com/story/european-central-bank-says-now-plans-to-leave-rates-on-hold-at-least-through-first-half-2020-2019-06-06),
and extended the period it expects rates to remain on hold through
at least the first half of 2020. The ECB had previously indicated
rates would remain on hold through the end of 2019. It also
announced the terms of its third round of targeted longer-term
refinancing operations.
At a press conference, ECB President Mario Draghi said the
central bank could cut interest rates, if needed, but markets still
fell and the euro rallied. Data ahead of that showed German factory
orders
(http://www.marketwatch.com/story/german-manufacturing-orders-rise-slightly-2019-06-06)
for April beat economists' expectations, but were down from the
previous month.
"Instead of taking a rate increase off the table, it instead
decided to simply push the first hike further out. Head still in
the sand. Markets are still pricing for a cut before then," said
Neil Wilson, chief market analyst at Markets.com, in a note to
clients.
Read:3 things to watch for when ECB meets Thursday
(http://www.marketwatch.com/story/3-things-to-watch-for-when-ecb-meets-thursday-2019-06-05)
U.S. President Donald Trump tweeted an update on discussions in
Washington, D.C. with representatives of the Mexican government,
saying that "progress is being made, but not nearly enough". The
U.S. will levy tariffs on Mexico starting Monday, barring a
breakthrough.
Ratings agency Fitch downgraded Mexico
(http://www.marketwatch.com/story/mexico-sovereign-debt-rating-cut-one-notch-by-fitch-2019-06-06),
citing state oil company Pemex's credit troubles as well as
possible tariff action by the U.S. The agency changed the outlook
for Mexico from Negative to Stable.
The International Monetary Fund revised down its GDP
expectations for China to 6.2% for 2019 and 6% for 2020, reflecting
the potential impact of trade tensions. Managing Director Christine
Lagarde told Reuters
(https://www.reuters.com/article/us-g20-japan-imf-lagarde/imfs-lagarde-says-tariff-actions-dont-pose-global-recession-threat-idUSKCN1T62Y2?il=0)
that the international body's base case was that tariffs might
dampen growth but would not tip the global economy into
recession.
Which stocks are active?
Fiat Chrysler Automobiles NV
(https://www.wsj.com/articles/fiat-chrysler-withdraws-merger-offer-for-renault-11559773129)(FCA.MI)
withdrew its merger proposal from Renault SA (RNO.FR) citing a lack
of backing from the French government. Wall Street Journal sources
said the sticking point was that Nissan, Renault's partner in a
long-term alliance, had not yet given its backing. Renault stock
sank 6%, while Fiat Chrysler rose 0.5%.
Rolls-Royce Holdings PLC (RR.LN) shares moved 1.5% higher on
news its pensions unit had struck a GBP4.6 billion ($5.8 billion)
annuity deal with Legal & General Group PLC (LGEN.LN), the
insurance company.
Entertainment One Ltd. (ETO.LN) rebounded 16% after issuing a
statement refuting a Variety article saying Mark Gordon, President
and Chief Content Officer of EOne's film and TV unit, was in talks
to exit his role. Shares had fallen 17% Wednesday after the initial
Variety report.
(END) Dow Jones Newswires
June 06, 2019 09:55 ET (13:55 GMT)
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