UK and Europe
European markets were mostly lower on Thursday after a humdrum European Central Bank press conference saw no new policies announced or hinted at for later. Having pushed into new highs for 2016, inaction from the ECB and no lasting movement in the euro left stock markets with nowhere to go.
The official statement aimed to prevent the volatility seen in markets after the last press conference by stating that interest rates would stay at present “or lower” for an extended time.
Most of the Q&A with ECB president Draghi centred on the bank’s relationship with German politicians. Germany’s finance minister Wolfgang Schaeuble and politicians from Bavaria have been particularly critical, calling QE a failed policy and blaming the ECB for the rise of right-wing parties. Mr Draghi’s depiction of relations with the German finance minister as “friendly” helped put to bed the idea that the ECB’s independence was being undermined and affecting its ability to ease policy further.
The Banks provided the biggest boost to the FTSE 100 with RBS (LON:RBS), HSBC (LON:HSBA) and Lloyds (LON:LLOY) all top risers ahead of earnings in the sector next week.
Sky (LON:SKYB) was amongst the biggest fallers on the FTSE 100 after reporting a 5% rise in revenues over the first nine months of its reporting year was offset by concerns over a German ruling on Bundesliga football television viewing rights. The auction of rights to live matches means margins are squeezed with the loss of exclusivity. Sky is already feeling the pressure from BT over viewing rights for The Premiership and the Champions League in the UK and the same is about to happen in Germany from local competition.
US
US stocks were flat in early trading amid generally positive corporate results but an uninspiring ECB meeting. There are a number of bellwether results after the close from Alphabet (Google (NASDAQ:GOOGL)), Microsoft (NASDAQ:MSFT) and Visa (NYSE:V) that could have investors sitting on their hands for the time-being.
FX
The US dollar was evenly split on Thursday; mixed versus the euro, rising against commodity currencies and down against the British pound and the yen.
The euro round-tripped during Mario Draghi’s ECB press conference as confidence that the policies were starting to take hold in the European economy were undermined by a suggestion that interest rates could be cut further if needed.
Sweden’s Riksbank left interest rates negative at -0.5% but raised its bond-buying target to 245bn Swedish krona in an effort to boost inflation and hold down the value of the currency. The policy has already failed on the second count since the SEK rallied in the immediate aftermath of the decision in another sign that extraordinary monetary policies are reach the limit of effectiveness.
Commodities
Commodities were volatile on Thursday, especially around the open of US trading where the price of silver slumped from gains of over 2% to losses of -1% in under an hour after coming just 8c shy of its peak in May 2015.
Crude oil backed off from its highest level this year after talk of a second producer meeting in May and a smaller than expected build in US weekly inventories gave way to profit-taking. Chances of another producer meeting in May seem fleeting at best. This latest effort ended in an embarrassing failure and the next OPEC meeting is in June so it makes no sense that another one would take place in May.
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