European stock markets dipped Thursday while the euro struck two-week highs against the dollar after the European Central Bank left its key interest rates unchanged and decided against extending the duration of its bond-buying stimulus program. The central bank faces stubbornly low annual inflation of only 0.2 percent despite pumping 1 trillion euros ($1.1 trillion) in newly printed money into the banking system through bond purchases since March, 2015.
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RIDING OIL: Several oil drilling and production companies were up following a report that said USA crude stockpile shrank last week.
Having already risen on Thursday, yields on Germany’s 30-year Bunds rose over 8 basis points to 0.59 percent, the highest level since the day after the Brexit vote in June. “So they could say something like they will consider a hike in coming months”, she said.
Focus will now turn to ECB President Mario Draghi who will host a post-decision press conference shortly.
Germany’s DAX fell 0.4 per cent, and France’s CAC 40 and Britain’s FTSE 100 were both down 0.3 per cent, while United States futures pointed to a fall of around 0.2 per cent at the open on Wall Street.
It has managed to prop up growth, but not enough, and even shaved some of its forecasts on Thursday, reinforcing market expectations that more monetary stimulus is just a matter of time. The Nasdaq Composite shed 24.44 points, or 0.5%, to 5,259.48.
Expectations were that the European Central Bank would extend its asset purchase programme beyond the current cut-off date of March 2017 and tweak the criteria to expand the pool of eligible assets. ‘It takes a while for the European Central Bank to buy enough bonds to build up the critical mass to have the desired effect of pushing investors out of government bonds and into riskier assets, ‘ he said.
Stocks of USA crude have been at record highs in the past two years, thanks partly to an output-boosting shale oil boom.
ENERGY: Crude oil prices were moving higher following a report indicating a big drop in fuel stockpiles last week.
Brent LCOc1 rose to as high as $50.14 per barrel on Thursday and last stood at $49.63, down 0.7 percent from Thursday’s close but still up nearly 6 percent so far this week. The Hang Seng index in Hong Kong gained 0.8 percent. Benchmark U.S. crude shed 60 cents to $47.02 a barrel in NY while Brent crude, used to price worldwide oils, lost 82 cents to $49.17 in London.
METALS: Among metals, gold slid $7.60 to $1,341.60 an ounce, while silver fell 17 cents to $19.68 an ounce.
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The rise in US bond yields widened the yield gap between the USA and Japan and lifted the dollar against the yen to 102.31 yen JPY= from around 101.60. The euro climbed to $1.1251 from $1.1245.
