Europe in focus as ECB keeps rates on hold and Britain votes
European stock markets were mainly higher Thursday after the European Central Bank kept its stimulus program unchanged, though the main London index dropped slightly as Britain went to the polls in a general election.
KEEPING SCORE In Europe, France's CAC 40 edged up 0.1 percent to 5,271 while Germany's DAX advanced 0.3 percent to 12,705. Britain's FTSE 100 slipped 0.1 percent. Wall Street was poised for modest gains at the open with Dow futures and the broader S&P 500 futures up 0.1 percent.
ECB WATCH: Traders in Europe will be monitoring the regular press conference from ECB President Mario Draghi and any indication from him that the bank is ready to ease up on its stimulus efforts could have a big impact. Already, he has said risks to Europe's strengthening economic recovery have diminished and that risks to growth are now "broadly balanced." At the bank's last meeting in April, Draghi said risks were "tilted to the downside." It was a small verbal step toward an announcement that the bank will taper and end its extraordinary monetary stimulus as growth and inflation improve. Analysts think the bank might announce that in September. Earlier, the bank left its bond purchase stimulus unchanged at 60 billion euros per month through at least the end of the year and longer if necessary.
ANALYST TAKE: 2We know Draghi wishes to remain accommodative, yet given that he sees the risks as being more external than internal, it is clear that soon enough he will have to set out the timeline for withdrawing stimulus. Any decision to reference and set out a stimulus withdrawal plan will likely be greeted with disdain by the markets," said Joshua Mahony, Market Analyst at IG.
BRITAIN VOTES: Political risk is rising to the top of investors' minds as voters prepare to go to the polls for Britain's general election. The race looks to be tighter than expected as the Conservatives' lead over Labour narrowed sharply in recent weeks. Full results won't be known until Friday. The pound was steady Thursday as traders awaited the outcome — it was down 0.3 percent at $1.2929.
DATA DUMP: Japan released revised first-quarter data that showed Asia's second-largest economy expanded an annualized 1 percent, a significant drop from last month's initial 2.2 percent estimate, according to Kyodo News. The downgrade was based mainly on a drop in crude oil inventories. Meanwhile, China trade growth accelerated last month, with exports expanding 8.7 percent and imports up 11.9 percent, pointing to a pickup in global demand.
ASIAN SCORECARD: Japan's benchmark Nikkei 225 index lost 0.3 percent to close at 19,909.26 and South Korea's Kospi edged up 0.2 percent to 2,363.57. Hong Kong's Hang Seng rose 0.3 percent to 26,059.75 and the Shanghai Composite index in mainland China added 0.3 percent to 3,150.33. Australia's S&P/ASX 200 crept up 0.2 percent to 5,676.60.
ENERGY: Oil futures stabilized after slumping overnight on unexpected news that U.S. crude stockpiles grew 3.3 million barrels last week. Benchmark U.S. crude was down 45 cents at $45.33 a barrel. The contract slid $2.47, or 5.1 percent, to close at $45.72 per barrel on Wednesday. Brent crude, used to price international oils, fell 33 cents to $47.33 per barrel in London.
CURRENCIES: The euro was down 0.4 percent at $1.1207 while the dollar rose 0.3 percent to 110.13 yen.