European Stocks Stand Ground As Eyes Kept on ECB

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European Stocks Stand Ground As Eyes Kept on ECB

European stocks stood steady on Thursday, with investors pausing as they waited to see if the European Central Bank would weigh on pressures against inflation within the Eurozone.

The pan-European FTSEurofirst 300 index remained at 1,343.90 points in early trading hours. The euro zone’s benchmark Euro STOXX 50 index also steadied at 3,188.24 points.

The FTSEurofirst 300 has advanced for the last seven straight sessions, partly because investors speculated that the ECB might show intent of reducing deposit rates below zero, with the effect of charging commercial banks to hold cash with the central bank. Also, investors had anticipated that European central bank might start to inject stimuli into the economy just as US, UK and Japan have.      

But analysts expect the ECB to keep interest rates stable and not pump any stimuli into the already volatile Eurozone economy, despite the plunge of inflation to the lowest point in more than four years.

“I think the market has got ahead of itself, ahead of the ECB,” Courtney-Cook, Central Markets Investment Management’s chief of trading is quoted by Reuters as saying. He added that the outcome of the ECB meeting might trigger sell offs within equity markets.

Should the ECB keep its benchmark interest rate unaltered, the rate will stand at a record low of 0.25%. According to a projection commissioned by Bloomberg, the ECB might cut the rate to 0.1%. Yet, two separate surveys of economist by the news firm projected an interest rate reduction of 0.15%.  

The ECB is expected to announce its stand on interest rates on Thursday at 1145 GMT. The bank’s president Mario Draghi is expected to expound more on monetary policy decisions at 1230 GMT at a Frankfurt press conference.

In the meantime, Deutsche Bank dropped to 32.75 euros, after losing 1.7%. Stocks of BTG, a UK biotechnology firm, gained 3.2% to 558.5 pence.  

To contact the reporter of the story: Jonathan Millet at john@forexminute.com