European Stocks Edge Higher; ECB Expected to Deliver Stimulus

European Stocks Edge Higher; ECB Expected to Deliver Stimulus

© Reuters.  © Reuters.

By Peter Nurse – European stock markets edged higher Thursday, with investors looking for more stimulus from a key ECB meeting while Brexit trade talks continue.

At 3:35 AM ET (0835 GMT), the DAX in Germany traded 0.6% lower, the CAC 40 in France fell 0.6%, while the U.K.'s FTSE index outperformed, climbing 0.6%.

Talks between U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen late Wednesday ended without a breakthrough, confirming very large gaps remain over issues from fisheries to dispute resolution.

The two sides gave themselves until the end of the weekend to seal a new trade pact, with around $1 trillion in annual trade at risk of facing tariffs and quotas if a deal cannot be reached before transition arrangements end on December 31.

While the lack of agreement may have disappointed some investors, eyes have quickly turned towards the latest European Central Bank policy-setting meeting later Thursday. The central bank is widely expected to increase and extend its pandemic bond-buying program.

“The reasons for new ECB action are clear: with the second lockdowns the September projections have become outdated and too optimistic,” said ING analyst Carsten Brzeski, in a research note. “Back then, the ECB had penciled in 3.1% QoQ growth in the fourth quarter. This number will have to be revised downwards significantly.”

Data from the (non-Eurozone) U.K. earlier Thursday illustrated this slowdown, with monthly GDP growth of 0.4% for October, a drop from the 1.1% growth seen the previous month.

In corporate news, Tui stock dropped 3.7% after the world's biggest holiday company posted a loss of 3 billion euros ($3.6 billion) for the financial year.

In the U.K., Ocado (LON:OCDO) stock dropped 3% despite the online supermarket raising its full-year guidance again after a strong quarter through the end of November. The stock is up over 76% year-to-date.

On the flip side, Frasers stock soared 8.9% after the retailer, formerly known as Sports Direct (LON:FRAS), posted a strong jump in quarterly profit, helped by growth in its online sales.

Oil prices rose Thursday, despite a larger-than-expected build in U.S. crude stocks, on increased confidence a fairly prompt rollout of Covid-19 vaccines will spur a rebound in demand next year.

U.S. crude futures traded 0.3% higher at $45.67 a barrel, while the international benchmark Brent contract rose 0.3% to $48.98. Both benchmarks have fallen this week, after previously posting five consecutive weeks of gains, but remain near nine-month highs.

Elsewhere, gold futures rose 0.1% to $1,839.60/oz, while EUR/USD traded 0.1% higher at 1.2088.

Original Article

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