The ECB meeting appeared to cause the European rally to fizzle out on Thursday, while the Dow Jones struggled to keep its own gains going.
Christine Lagarde and co. declined to move interest rates this month, keeping them at -0.5%, meaning the main takeaway from Thursday’s conference was a revision to the bank’s 2020 forecasts. The ECB is now expecting the Eurozone to contract by 8.0% this year – ugly, but nevertheless an improvement on the previous -8.7% estimates.
This put some swagger in the step of the euro, despite Lagarde acknowledging the strength of the single currency. She stated the ECB had to ‘monitor carefully’ the ‘negative pressure on prices’ the euro was exerting, and that that it was ‘indeed extensively discussed’ during Thursday’s governing council.
Against the dollar the euro rose 0.7%, the greenback dealing with a worse than forecast – but still sub-1 million – jobless claims reading. Against the pound, meanwhile, the single currency surged 1.4%, sending sterling to a 6-month nadir as it continued to fret about the ever-increasing likelihood of a no deal Brexit.
The pound found no solace against the dollar, either, with cable hitting a 6 and half week low the wrong side of $1.29.
Yet this didn’t help out the FTSE. Instead the UK index tumbled 0.6%, sinking back below 6000 due to losses in its mining and supermarket sectors.
With the euro on the rise the Eurozone indices were also down, with the DAX and CAC slipping 0.5% and 0.8% respectively.
Initially the Dow Jones had opened far stronger than Europe, rising half a percent as it neared 28200. Then it lost its bottle – fair enough given there has been nothing to provoke the recent rebound – its gains reduced to just a handful of points.
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