European Stocks Mixed; ECB Meeting, Ericsson Woes in Focus

© Reuters

By Peter Nurse 

Investing.com - European stock markets traded in a mixed fashion Thursday, with investors cautiously awaiting a key policy-setting meeting from the European Central Bank.

By 3:30 AM ET (0730 GMT), the DAX in Germany traded 0.3% higher, the CAC 40 in France rose 0.6%, while the U.K.’s FTSE 100 dropped 0.3%.

The European Central Bank will be in the spotlight Thursday, as its policymakers meet to decide the path of monetary policy against a backdrop of record-high inflation as well as concerns about a war-related recession.

As it stands the ECB plans to end its emergency bond buying at some point in the third quarter, with interest rates going up "some time" after that. However, many of the central bank's peers have already started tightening policy, and investors will be looking to see if the central bank provides a clearer schedule for unwinding its extraordinary stimulus.

European markets had received a positive handover from Wall Street Thursday, as falling U.S. Treasury yields helped interest-sensitive growth stocks close substantially higher. 

Still, any gains are likely to be limited as geopolitical risks cap market optimism. Ukraine warned on Wednesday of an expected substantial Russian assault in the east of the country, while U.S. President Joe Biden announced an additional $800 million in military assistance.

In the corporate sector, Ericsson (BS:ERICAs) stock slumped over 8% after the Swedish telecoms gear maker said its earnings fell in the first quarter and warned of further hits due to its withdrawal from Russia and a fresh U.S. fine for sanctions-busting. 

Publicis (PA:PUBP) stock rose 1.2% after the world's third-biggest advertising group beat market expectations in the first quarter, while Hermes (PA:HRMS) stock rose 2.3% after the French luxury group benefited from strong appetite for its accessories, particularly in the United States and Europe, in the first quarter.

Dunelm (LON:DNLM) stock rose 2.5% after the British homeware retailer reported strong sales growth in the third quarter, helped by the reopening of stores after coronavirus curbs were eased.

Oil prices edged lower Thursday, handing back some of the week’s substantial gains after the release of a larger-than-expected build in U.S. crude inventories.

Data released Wednesday from the Energy Information Administration showed that U.S. oil stocks rose more than 9 million barrels last week, substantially more than expected, even as U.S. gasoline stocks fell 3.6 million barrels.

Still, both benchmarks are well over 7% higher over the course of the week as worries over tightening global supply continue to weigh on sentiment.

The International Energy Agency on Wednesday warned that from May onwards roughly 3 million barrels per day of Russian oil could be shut-in due to sanctions or voluntary embargoes.

By 3:30 AM ET, U.S. crude futures traded 1.1% lower at $103.14 a barrel, while the Brent contract fell 0.9% to $107.81. 

Additionally, gold futures fell 0.5% to $1,974.30/oz, while EUR/USD traded 0.2% higher at 1.0907.