European stocks edge higher before ECB

Traders are awaiting the release of US growth data Friday, looking for a better idea about the state of the economy and the Federal Reserve's plans for monetary policy
AFP

London (AFP) – Europe’s main stock markets rose Thursday on earnings news before the latest interest rate call from the European Central Bank.

Frankfurt and London each nudged 0.2 percent higher and Paris rose 0.4 percent.

With clouds gathering over the outlook for economic growth and inflation limping, ECB President Mario Draghi will likely temper expectations on Thursday for a quick exit from its massive stimulus programme for the eurozone, analysts say.

Governors are expected to keep interest rates at their historic lows and keep to a September expiry date for their 30-billion-euro ($37 billion) per month quantitative easing (QE) bond-buying scheme.

“The ECB are expected to announce this lunchtime that they will keep all rates and asset purchases unchanged following their latest policy meeting,” said XTB brokers analyst David Cheetham. 

“Traders will be focusing closely on the accompanying statement and subsequent Draghi press conference for any hints as to the future policy path.” 

Ahead of the ECB’s latest monetary policy decision — due at 1145 GMT — investors digested a barrage of big-name company results.

– Principal driver –

“Earnings remain the principal driver,” said Mike van Dulken, head of research at trader Accendo Markets.

British bank Barclays fell 0.1 percent to 212.80 pence after revealing that it dived into a first-quarter net loss following a huge US fine over its conduct in the run-up to the global financial crisis.

Germany’s Deutsche Bank slid almost 0.6 percent to 11.92 euros in Frankfurt, after it reported falling profits for the first quarter and announced deep cuts to its flagship investment banking division.

Lufthansa slumped 6.13 percent to 24.03 euros on news of weaker revenues, even as the airline giant said it pared losses in the first quarter.

On the upside, Volkswagen revved almost 2.0 percent higher to 168.90 euros as the German carmaker reported a drop in quarterly net profits but said strong sales got 2018 off to “a good start”.

In Paris, French oil and gas group Total saw its share price gain 0.9 percent to 51.62 euros on news of rising adjusted net profit.

Back in London, energy major Royal Dutch Shell saw its ‘B’ share price lose 2.1 percent to 2,532.50 pence.

Investors sent the stock lower despite news that first-quarter profit soared on resurgent crude oil and gas prices.

 – Technology sector drag – 

In Asia, further weakness in the technology sector dragged on equities, while the dollar extended recent gains as US Treasury yields sat at four-year highs.

Technology firms again struggled on worries about the smartphone sector, which has seen Apple shares battered over the past week.

Expectations the Federal Reserve will hike interest rates four times this year — instead of the three times previously thought — have increased as the improving economy, rising oil prices and Donald Trump’s huge tax cuts fan inflationary pressure.

This has led the yield on 10-year Treasuries — which are used as a benchmark for mortgage rates — to break the three-percent mark Tuesday.

 – Key figures around 1130 GMT – 

London – FTSE 100: UP 0.2 percent at 7,391.64 points

Frankfurt – DAX 30: UP 0.2 percent at 12,441.64

Paris – CAC 40: UP 0.4 percent at 5,436.43

EURO STOXX 50: UP 0.2 percent at 3,493.06

Tokyo – Nikkei 225: UP 0.5 percent at 22,319.61 (close)

Hong Kong – Hang Seng: DOWN 1.1 percent at 30,007.68 (close)

Shanghai – Composite: DOWN 1.4 percent at 3,075.03 (close)

New York – Dow: UP 0.3 percent at 24.083.83 (close)

Euro/dollar: UP at $1.2172 from $1.2161 at 2100 GMT

Dollar/yen: DOWN at 109.36 yen from 109.43

Pound/dollar: DOWN at $1.3915 from $1.3932

Oil – Brent North Sea: UP 52 cents at $74.52 per barrel

Oil – West Texas Intermediate: UP 34 cents at $68.39

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