By Steve Goldstein
European stocks rose Thursday as traders renewed bets on an economic recovery, as the European Central Bank communicated its intention to keep monetary policy loose for the foreseeable future.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.50% rose 1%, with travel and leisure stocks including cruise operator Carnival /zigman2/quotes/210414141/delayed UK:CCL -4.69% and British Airways owner International Airlines Group /zigman2/quotes/208070069/delayed UK:IAG -3.94% leading the advance.
Futures on the S&P 500 /zigman2/quotes/209948968/delayed ES00 -0.03% edged 0.2% higher, after the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.34% rose Wednesday for the second day in a row, adding 2.4% over the period.
The European Central Bank met for the first time since switching to a symmetric 2% inflation target.
The ECB said it would keep rates “at their present or lower levels until it sees inflation reaching two per cent well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term. This may also imply a transitory period in which inflation is moderately above target.”
Xian Chan, chief investment officer for wealth management at HSBC, said the language by the ECB is now more “forceful.”
“This news should be a short-term positive for European stocks and the overall recovery trade, providing additional support especially amidst rising nerves over the Delta variant. The strong signal that the ECB will be keeping rates lower for longer is also an indication that the euro could trade lower,” said Chan. The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.2239% , after an initial rise, did move lower.
Earnings continued to pour in on both sides of the Atlantic. Unilever /zigman2/quotes/205449809/delayed UK:ULVR -0.39% shares slumped 5% in London, as the maker of Dove soap and Ben & Jerry’s ice cream warned its operating margin for the year will be flat due to cost inflation.
Private-equity firm EQT /zigman2/quotes/214213438/delayed SE:EQT +0.45% rallied nearly 12%, as its profit swelled to €361 million from €47 million, with assets under management rising 95%. 3i Group /zigman2/quotes/202254899/delayed UK:III -0.72% shares rose 3%, as the U.K.-listed private-equity firm reported a 12.2% return for the fiscal first quarter.