AFP – The euro gyrated Thursday after the European Central Bank signaled it could soon undertake new stimulus measures and cut rates to boost flagging growth and inflation in Europe.
The single currency plunged to two-year lows following the ECB’s statement emphasizing economic weakness in the region but later rallied as traders judged the announcement less dovish than expected.
European stocks fell, with investors focused on the region’s tepid outlook. Wall Street stocks also retreated, with major indices pulling back from records following disappointing results from Tesla, American Airlines and others.
Quincy Krosby of Prudential Financial said strong US economic data, including Thursday’s report showing an increase in durable goods sales in June, could lead to a less dovish Federal Reserve announcement next week.
"Good news has become bad news with the fear that the Fed will not be as accommodating as anticipated," she said.
But if some US data has been strong, lackluster reports in Germany and other key centers in recent days had set expectations for Thursday’s ECB meeting. Some experts guessed the central bank might immediately pull the trigger and cut rates.
The ECB governing council left the rate on the bank’s main refinancing operations at zero, on its marginal lending facility at 0.25 percent and on its deposit facility at -0.4 percent.
But crucially, it hinted rates could fall still further — saying they would be kept at "their present or lower levels at least through the first half of 2020."
In addition, the ECB said officials had been tasked to look at other options, including "new net asset purchases."
– ‘Out with a bang?’ –
"ECB president Mario Draghi all but confirmed another round of easing by the central bank, but with expectations already being sky-high before the meeting, investors reacted in a mixed fashion," said Gorilla Trades strategist Ken Berman in a note.
An aggressive mix of stimulus measures at the September ECB meeting "looks like a done deal," said Ken Wattret, chief European economist at IHS Markit.
"There are only two policy-setting meetings left for Mario Draghi beyond today and he will want to go out with a bang."
Earlier in Asia, gains in stock markets were tempered by the emergence of doubts over a US-Chinese trade meeting next week and the announcement of massive job cuts at beleaguered Japanese automaker Nissan.
Nissan announced after the market close that it would shed 12,500 jobs, following a 95-percent net profit plunge in the first quarter to $59 million.
A heavy schedule of corporate earnings battered shares of some companies that disappointed, including Tesla, which plunged 13.6 percent, Ford, which sank 7.5 percent and American Airlines, which tumbled 8.4 percent.
– Key figures around 2040 GMT –
New York – Dow: DOWN 0.5 percent at 27,140.98 (close)
New York – S&P 500: DOWN 0.5 percent at 3,003.67 (close)
New York – Nasdaq: DOWN 1.0 percent at 8,238.54 (close)
London – FTSE 100: DOWN 0.2 percent at 7,489.05 (close)
Paris – CAC 40: DOWN 0.5 percent at 5,578.05 (close)
Frankfurt – DAX 30: DOWN 1.3 percent at 12,362.10 (close)
EURO STOXX 50: DOWN 0.6 percent at 3,510.15 (close)
Tokyo – Nikkei 225: UP 0.2 percent at 21,756.55 (close)
Hong Kong – Hang Seng: UP 0.3 percent at 28,594.30 (close)
Shanghai – Composite: UP 0.5 percent at 2,937.36 (close)
Euro/dollar: UP at $1.1145 from $1.1140 at 21H00 GMT Wednesday
Pound/dollar: DOWN at $1.2452 from $1.2484
Dollar/yen: UP at 108.66 yen from 108.19 yen
West Texas Intermediate: UP 14 cents at $56.02 per barrel
Brent North Sea crude: UP 18 cents at $63.39 per barrel