By Dave Morris
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 /zigman2/quotes/210599654/delayed XX:SXXP +1.11% turned flat to 374.2. On Wednesday it climbed 0.4%.
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +2.04% rose 0.4% to 7,250.4. It had edged up 0.1% Wednesday.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0613% rose to $1.2706, after nudging 0.4% higher Wednesday. The /zigman2/quotes/210561242/realtime/sampled EURUSD +0.3918% climbed 0.4% to $1.1264.
In Germany, the DAX /zigman2/quotes/210597999/delayed DX:DAX +0.86% turned lower, down 0.2% to 11,955.97, having also ticked 0.1% up on Wednesday.
France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.90% was flat at 5,923.5. It rose 0.5% Wednesday.
Italy’s FTSE MIB /zigman2/quotes/210598024/delayed IT:I945 +1.13% 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, 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 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.
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, 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 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 /zigman2/quotes/209202731/delayed IT:FCA -0.37% withdrew its merger proposal from Renault SA /zigman2/quotes/200919924/delayed FR:RNO +0.86% 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 /zigman2/quotes/203646520/delayed UK:RR -0.84% shares moved 1.5% higher on news its pensions unit had struck a £4.6 billion ($5.8 billion) annuity deal with Legal & General Group PLC /zigman2/quotes/201125471/delayed UK:LGEN -0.63% , the insurance company.
Entertainment One Ltd. 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.