- Euro STOXX 600 extends gains
- The euro turns negative, bond yields fall
- The ECB is sticking to its monetary policy course
- Press conference due at 1230 GMT
- Elon Musk is offering to buy Twitter for $41 billion
LONDON, April 14 – Stocks rose while bond yields and the euro fell on Thursday as the European Central Bank signaled a steady reduction in its stimulus, while Tesla CEO Elon Musk offered to buy Twitter for $41 billion in cash to buy.
The ECB confirmed its earlier guidance and said it plans to trim asset purchases – known as quantitative easing – this quarter and then end them sometime in the third quarter. Continue reading
Following the ECB’s statement, the broader Euro STOXX 600 (.STOXX) gained, rising 0.5%. Indices in Paris and Frankfurt (.FCHI) both gained 0.4%.
Travel and leisure stocks (.SXTP) were among the top gainers in morning trade, with low-cost airline Wizz Air (WIZZ.L) gaining over 9% on signs of encouraging summer bookings.
“We have received confirmation that the asset purchase program will end in the third quarter,” said Stuart Cole, chief macro strategist at Equiti Capital in London.
“This leaves open the possibility of a rate hike before the end of the year and accordingly market expectations of a first rate hike in December should firm up.”
The euro fell 0.25% to $1.0869 and euro-zone bond yields fell sharply, with two-year German bond yields falling nearly 4 basis points on the day to 0.046% versus 0.09% just before the ECB statement. .
Although the ECB has shied away from a more hawkish stance, a number of central banks around the world have tightened monetary policy as they struggle to stem rising inflation.
On Thursday, the Bank of Korea surprised markets by raising interest rates and the Monetary Authority of Singapore also tightened monetary policy.
New Zealand’s central bank hiked interest rates by a whopping 50 basis points on Wednesday, the largest hike in over two decades. The Bank of Canada also hiked rates by the same level, making its biggest single move in more than two decades and announcing more rate hikes.
Market participants said growth in major economies is key to whether central banks can tighten policy further.
“The big question for investors now is not whether we need to price further increases, but how much of the price increases that are priced can go ahead?” said Hugh Gimber, global market strategist at JP Morgan Asset Management.
“The key there will be the growth outlook.”
The MSCI World Equity Index (.MIWD00000PUS), which tracks stocks in 50 countries, gained 0.2%. MSCI’s broadest index of Asia Pacific equities outside of Japan (.MIAPJ0000PUS) was previously up 0.4%.
The rate hike cycle is off
MUSK TWITTER BID
Wall Street futures readings fell slightly as a number of lenders announced first-quarter earnings. Continue reading
Twitter Inc (TWTR.N) rose 12% after Tesla CEO Elon Musk offered to buy the social media company for about $41 billion in cash and said the social media company needed to be privatized to see effective changes. Continue reading
Hopes that US inflation may have peaked caused US Treasury yields to continue their decline, with the dollar falling as well.
The 10-year Treasury yield was 2.6806%, down from a three-year high of 2.836% before data on Tuesday showed inflation was lower than investors had feared.
As US yields broke their uptrend, the dollar fell from a two-year high set a day earlier.
The dollar index, which measures the unit with six rivals, rose 0.1% to 99.861 after falling 0.5% overnight from its peak of 100.52.
Oil prices eased on weak trading volumes ahead of the Easter holiday as traders weighed a stronger-than-expected rise in US oil inventories against tightening global supply.
Brent futures fell 1.5% to $107.23 a barrel. Continue reading
Reporting by Tom Wilson in London; Edited by Bernadette Baum