European Central Bank dovish bets on stocks returning to record highs Reuters


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© Reuters. File photo: On June 21, 2021, a man looks at an electronic board displaying the Nikkei index outside a brokerage company in the business district of Tokyo, Japan. REUTERS/Kim Kyung-Hoon

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Author: Hugh Jones

LONDON (Reuters)-European stock markets returned to near historical highs on Thursday as investors bet that the European Central Bank will keep its stimulus measures fully open as long as the new crown pneumonia epidemic still poses a threat to economic growth.

As concerns that the Delta variant of COVID-19 will severely inhibit economic recovery eased, interest in risky assets has resumed.

The STOXX index of 600 major European stocks rose 0.6% to 456.53 points, a far cry from the all-time high of 461.38 points touched last week.

Among them, consumer goods giant Unilever (NYSE:)’s share price fell 4.4% after the company warned that soaring commodity costs would squeeze its full-year operating margins and overwhelming solid sales growth in the second quarter.

Investors’ focus is firmly on the European Central Bank in Frankfurt.

CMC Markets chief market analyst Michael Hewson said: “The European Central Bank will act exactly in accordance with market expectations.”

“Given the recent floods in Western Europe, the last thing Europe needs at the moment is to tighten monetary policy,” Hewson said of the devastating floods that killed more than 180 people in Germany and Belgium last week.

Before the ECB meeting, Italy’s borrowing costs fell to the lowest point in more than three months. The results of the meeting will be announced at 1145 GMT, and then will be held with President Christine Lagarde at 1230 GMT. Hold a press conference.

As the debate between European and U.S. central bankers about when to contain the massive stimulus measures during the pandemic continues, investors will scrutinize her guidance on inflation.

CMC’s Hewson said: “The market is caught in a rift between concerns about rising inflation and slowing economic growth, and this situation will continue.”

Chart: ECB target inflation-https://fingfx.thomsonreuters.com/gfx/mkt/oakvebqagpr/CPI0101.PNG

Asian stocks shine

Asian stock markets have their best day in two months on Thursday, although growth-sensitive currencies are difficult to rebound, indicating that doubts about the recovery are lingering.

The MSCI Asia Pacific’s broadest index outside Japan rose 1.2%, the largest one-day gain since late May. The Seoul-Sydney market is showing a green trend.

The Japanese market is closed for the holiday.

Positive sentiment in Asia followed Wall Street’s rebound.

It is only slightly stronger, indicating that the rebound momentum in the United States is fading.

There is no obvious catalyst for the recent stock market rebound or Friday and Monday’s decline, although a study on Wednesday showed Pfizer (NYSE:) and AstraZeneca (NASDAQ:) vaccines are effective against the Delta coronavirus variant.

Jun Bei Liu, portfolio manager of Tribeca Investment Partnership in Sydney, said: “Investors are looking for reasons to cut some profits from time to time. This is what we are seeing,” adding that compared to 12 months ago, now There are many viable vaccines.

Chart: The dollar is strong-https://fingfx.thomsonreuters.com/gfx/mkt/akpezgzjlvr/Pasted%20image%201626897217870.png

Hong Kong led gains in Asia, with HSBC and Standard Chartered Bank (OTC:) rebounding from multi-month lows, rising 1.7%. The debt-laden Chinese real estate developer Evergrande’s stock price rose about 8% after saying it had settled a legal dispute with its lenders.

The Australian and New Zealand dollars are under pressure due to the blockade. [AUD/][FRX/]

The exchange rate was at 92.758, deviating from Wednesday’s three-month high of 93.194, and the euro held steady above the recent low of 1.1793 US dollars. The safe-haven yen fell slightly across the board.

The Asian interest rate market was idle, and trading decreased due to the Tokyo holiday. The benchmark 10-year U.S. Treasury bond yield was 1.2716%. [US/]

{{8849|After the unexpected increase in U.S. crude oil inventories, oil prices fell. Although prices rose sharply on Wednesday, this was the largest one-day increase in three months. Futures finally fell 0.2% to US$72.08 per barrel, but rose more than 4% on Wednesday. [O/R]

As interest in safer assets weakened, gold fell 0.2% to US$1,799 per ounce.

The cryptocurrency is strong after rebounding from lows. At the time, Tesla (NASDAQ:) boss Elon Musk said that the automaker may resume accepting Bitcoin after due diligence on its energy use. Paid.

There is almost no change at $32,135.





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