Euro retreats on dovish ECB; Stocks are mixed
AFP – The euro tumbled against the dollar Thursday following a dovish European Central Bank announcement, while US stocks were mixed as a government shutdown churned on with no resolution in sight.
The ECB as expected kept interest rates unchanged. ECB Chief Mario Draghi warned that risks to the economy were "moving to the downside," a gloomier outlook than in recent meetings, signaling that the central bank could still take measures to prod growth.
"The fact that Mr. Draghi expressed greater concern over the bloc’s economic health suggested a later rather than sooner rate hike," said Joe Manimbo, senior market analyst at Western Union Business Solutions, predicting further pressure on the euro.
Earlier, a survey by data firm IHS Markit estimated Eurozone business growth in January at its lowest level in five and a half years.
"The Eurozone economy slipped closer to stall speed in January, with companies reporting the first drop in demand for over four years," IHS Markit economist Chris Williamson said.
Williamson cited the "yellow vest" protests in France as a drag on the euro area, but noted: "German businesses are also reporting their toughest spell for four years."
– Mixed day on Wall Street –
European equities finished mixed, with London falling and Paris and Frankfurt posting gains.
Meanwhile, Wall Street had a mixed session, with the Nasdaq boosted by strong earnings from semiconductor companies, while the Dow edged lower.
The S&P 500 scraped out a modest gain at the close after drifting in and out of positive territory throughout the session as investors sought direction.
"The market is waiting for the next catalyst, bullish or bearish," said Adam Sarhan of 50 Park Investment.
"We’re just waiting for something to happen in the near future as we move forward, just waiting for the next shoe to drop."
Analysts said investors were unnerved by comments from US Commerce Secretary Wilbur Ross that the United States and China are "miles and miles" from resolving their trade war.
Meanwhile, the Senate blocked dueling plans to reopen shuttered federal agencies, with competing proposals favored by President Donald Trump and Senate Democrats each falling short of the needed 60 votes.
US airlines were upward-bound, with American Airlines, Southwest Airlines and JetBlue Airways jumping five percent or more following earnings reports.
All three companies expressed concerns about the impact of the government shutdown on air transport but said they still expected strong profits in 2019.
But pharma stocks were under pressure, with Merck, Pfizer and Eli Lilly all losing about three percent.
In Brazil, the Sao Paulo Stock Exchange again hit a new record, surpassing 97,000 points — invigorated by Economy Minister Paulo Guedes’ positive message of reform at the World Economic Forum in Davos.
– Key figures around 2140 GMT –
New York – DOW: DOWN 0.1 percent at 24,553.24 (close)
New York – S&P 500: UP 0.1 percent at 2,642.33 (close)
New York – Nasdaq: UP 0.7 percent at 7,073.46 (close)
London – FTSE 100: DOWN 0.4 percent at 6,818.95 (close)
Frankfurt – DAX 30: UP 0.5 percent at 11,130.18 (close)
Paris – CAC 40: UP 0.7 percent at 4,871.96 (close)
EURO STOXX 50: UP 0.5 percent at 3,126.31 (close)
Tokyo – Nikkei 225: DOWN 0.1 percent at 20,574.63 (close)
Hong Kong – Hang Seng: UP 0.4 percent at 27,120.98 (close)
Shanghai – Composite: UP 0.4 percent at 2,591.69 (close)
Euro/dollar: DOWN at $1.1313 from $1.1381 at 2200 GMT Wednesday
Pound/dollar: DOWN at $1.3058 from $1.3069
Dollar/yen: DOWN at 109.57 yen from 109.60
Oil – Brent Crude: DOWN 5 cents at $61.09 per barrel
Oil – West Texas Intermediate: UP 51 cents at $53.13 per barrel