The European Central Bank is anticipated to reduce interest rates as inflation eases and the eurozone’s economy recovers, with the euro and stock markets rising on Thursday.
The ECB announcement will come in response to the Federal Reserve’s decision on Wednesday to hold US borrowing costs because the country’s inflation rate is still high despite declining.
Investors digested broadly positive earnings from tech giants that came days after their valuations fell as Chinese firm DeepSeek stormed the world AI scene, which mixed in more holiday-thinning trading as Asian stock markets closed mixed.
Wall Street’s decline in Asia followed a tepid performance, but the volatility that greeted the week’s opening was gone.
Wednesday saw a broadly upbeat readout, with Facebook-parent Meta, IBM and Tesla posting healthy earnings, though Microsoft disappointed. Apple is due to report Thursday.
With the ECB seen certain to cut eurozone interest rates, focus will be on president Christine Lagarde’s press conference.
Official data from the eurozone economy showed that the eurozone economy had fallen behind expectations in the final three months of 2024 as a result of Germany and France’s contraction.
The single-currency area’s economy had forecast forecasts for a 0.1 percent increase in the previous quarter according to analysts at Bloomberg and FactSet.
Germany’s economy retreated by 0.2 percent while French output shrank 0.1 percent, both worse than forecast, with both countries mired by political turmoil.
According to Kathleen Brooks, research director at XTB trading group, US President Donald Trump’s tariffs are also “the biggest threat to the eurozone economy right now.”
Trump has not specifically mentioned tariffs for the currency bloc, in contrast to Mexico and Canada, despite speaking out about universal tariffs and signaling that he is unhappy with the eurozone’s trade surplus with the US.
– Fed holds –
Jerome Powell, the head of the Fed, stated that the US central bank was not “hurry” to adjust its borrowing costs once more while the ECB is scheduled to cut rates.
Trump criticized the Fed and Powell last week, calling for rates to “drop immediately” and claiming that they had failed to “stop the inflation problem they created.”
Powell said it was “not appropriate” for him to respond to the comments, adding that decision-makers would “wait and see” how Trump’s plans to impose tariffs, and cut taxes, regulations and immigration would affect the economy.
– Key figures around 0930 GMT –
London – FTSE 100: UP 0.2 percent at 8, 576.74 points
Paris – CAC 40: UP 0.5 percent at 7, 908.61
Frankfurt – DAX: UP 0.3 percent at 21, 696.53
Tokyo – Nikkei 225: UP 0.3 percent at 39, 513.97 (close)
Hong Kong – Hang Seng Index: Closed for a holiday
Shanghai – Composite: Closed for a holiday
New York – Dow: DOWN 0.3 percent at 44, 713.52 (close)
Euro/dollar: DOWN at $1.0410 from $1.0425 on Wednesday
Pound/dollar: UP at $1.2449 from $1.2444
Dollar/yen: DOWN at 154.40 yen from 155.15 yen
Euro/pound: DOWN at 83.62 pence from 83.68 pence
West Texas Intermediate: DOWN 0.5 percent at $72.29 per barrel
Brent North Sea Crude: DOWN 0.5 percent at $75.25 per barrel
Source: Channels TV
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