EUROPE MARKETS: European Stocks Slip In Choppy Session Featuring ECB Decision, U.K. Election
ECB drops reference to potential for further rate cut
European stocks tilted lower at the end of trade Thursday, as investors assessed the European Central Bank's policy stance while they waited for results from the U.K.'s general election.
After a choppy session, the Stoxx Europe 600 index ) closed down less than 1 point at 389.15, but that was enough to mark a fourth straight loss and the lowest close since May 1, according to FactSet data.
Most major regional indexes darted in and out of positive territory during the day. Overall, utility, financial and basic material shares fared the best, while consumer-related, telecom and health care stocks fell.
Thursday's session was surrounded by potentially market-moving events. The U.K. is holding a snap general election (http://www.marketwatch.com/story/whats-a-snap-election-and-why-does-uk-prime-minister-theresa-may-want-one-2017-04-18), which was called by U.K. Prime Minister Theresa May in a bid to gain more seats for her Conservative Party and strengthen her hand in Brexit negotiations (http://www.marketwatch.com/story/uk-adds-another-layer-of-complexity-analysts-react-to-surprise-snap-election-call-2017-04-18).
Also in focus was testimony before U.S. lawmakers by former Federal Bureau of Investigation director James Comey. Follow MarketWatch's live blog of Comey's testimony. (http://blogs.marketwatch.com/capitolreport/2017/06/08/james-comey-testifies-at-blockbuster-hearing-in-senate-live-blog-and-video/)
Meanwhile, European stocks vacillated between gains and losses after the European Central Bank, led by President Mario Draghi, left interest rates unchanged, as expected, but removed language from its policy statement indicating rates could go lower in the future. (http://www.marketwatch.com/story/ecb-leaves-policy-unchanged-drops-reference-to-lower-rates-2017-06-08)
ECB: Risks to the region's economic outlook are now "broadly balanced," Draghi said during a press conference, but underlying inflation remains subdued. Substantial "monetary accommodation" is still needed, he said, stressing that the ECB is ready to increase its asset-buying program if needed in the future.
"It is obvious that the ECB is trying to be as cautious as possible to very gradually get out of the unconventional monetary policy measures. Therefore, this process of preparing markets extremely carefully with words and changes in the communication will continue and can take a long while before the ECB delivers new action," said Carsten Brzeski, chief economist at ING, in a note.
The bank's low inflation forecasts argue in favor of just a mild tapering of monetary support and probably a tapering without an end date on it, Brzeski added. "There is clearly room for another 'longer but lower' announcement for 2018 later this year."
Here's the recap of MarketWatch's live blog of Draghi's press conference (http://blogs.marketwatch.com/thetell/2017/06/08/mario-draghi-live-blog-ecb-drops-reference-to-potential-for-further-rate-cut/)
The euro on Thursday fell to a low of $1.1195 after the ECB indicated monetary accommodation is still needed (http://www.marketwatch.com/story/euro-churns-near-6-mo-high-on-view-ecb-to-take-small-steps-toward-loose-policy-reversal-2017-06-08). Sterling later recovered to $1.1220, compared with $1.1257 late Wednesday.
U.K. election: The FTSE 100 finished lower by 0.4% at 7,449.98 (http://www.marketwatch.com/story/uk-stocks-wobble-as-british-voters-head-to-the-polls-2017-06-08) after a topsy-turvy session. Keeping some pressure on the index was the pound , which traded at a two-week high during the day.
But the more U.K. domestically focused and midcap FTSE 250 index rose 0.2% to 19,743.41.
"The most undesirable outcome is surely a hung parliament that produces both domestic political uncertainty and, more importantly, uncertainty and delays in Brexit negotiations," which could "therefore be devastating for sterling," said Craig Erlam, senior market analyst at Oanda, in an early Thursday note.
"While the knee-jerk reaction to this may also be bad for the FTSE, as we saw after the EU referendum, we could see this bounce back quite quickly with the weaker currency benefiting its mostly outward facing companies."
Polls for the general election will close at 10 p.m. local time, or 5 p.m. Eastern Time.
Read:U.K. election--these are the stocks and sectors to watch once the result is in (http://www.marketwatch.com/story/watch-for-a-shake-up-among-uk-stocks-after-thursdays-election-2017-06-06)
Also: This is the worst that could happen to the pound in the U.K. election--and it's not Jeremy Corbyn (http://www.marketwatch.com/story/this-is-the-worst-that-could-happen-to-the-pound-in-the-uk-election-and-its-not-jeremy-corbyn-2017-06-07)
Stock movers: Auto Trader Group PLC shares (AUTO.LN) fell 4.8% as the online car sales website operator offered a cautious comment in its report of higher yearly pretax profit and sales (http://www.marketwatch.com/story/auto-trader-full-year-profit-rises-2017-06-08).
Petrofac Ltd. (PFC.LN) leapt 4.1% after the company won a 10-year contract from Petroleum Development Oman (http://www.marketwatch.com/story/petrofac-wins-petroleum-development-deal-in-oman-2017-06-08) to provide support services for oil and gas projects.
Indexes: Germany's DAX 30 closed up 0.3% at 12,713.58, while France's CAC 40 reversed course and closed down less than 1 point at 5,264.24. Spain's IBEX 35 picked up 0.8% at end at 10,953.10.
Economic news: The eurozone economy grew faster than initially estimated (https://www.wsj.com/articles/eurozone-economy-grows-at-fastest-rate-since-2015-1496912402) in the first quarter of 2017. Gross domestic product expanded by 0.6% in the period, up from a previous reading of 0.5%.
(END) Dow Jones Newswires
June 08, 2017 12:40 ET (16:40 GMT)