European stock markets and the euro climbed yesterday awaiting a key policy update from the ECB, with focus also on the auto sector as the collapse of Fiat Chrysler’s proposed merger with Renault sent shares in the French car giant tumbling.
European Central Bank chief Mario Draghi is expected to outline plans to offer fresh assistance to banks and hint at further options to counteract rising worries about growth and inflation in the eurozone.
“European markets are trading higher on the day the ECB is going into its monthly session with hopes of an economic stimulus from the bank balancing out stock falls caused by the abandoned Fiat Chrysler Renault merger,” noted Fiona Cincotta, senior market analyst at City Index.
“Like the Federal Reserve earlier this week, Europe’s central bank is expected to keep a dovish stance and rates unchanged with most of the activity focusing on some form of economic support for the region.”
Central banks around the world are adopting a more dovish tone on monetary policy amid a slowdown in the global economy.
India's central bank yesterdaydelivered a third consecutive interest rate cut in a boost to newly re-elected Prime Minister Narendra Modi as he grapples with sluggish economic growth and decades-high unemployment. On the corporate front, shares in French carmaker Renault slumped yesterday to trade down 6.6 per cent at €52.51 in Paris midday deals.
Fiat Chrysler gained 0.1 per cent to €11.71 on the Milan stock market, reversing an initial slide after the Italian-American peer scrapped the blockbuster merger proposal.
Fiat Chrysler blamed the move on political objections in Paris, sparking a war of words with French officials, only a week after proposing the deal.
Asian stock markets made modest gains yesterday as trade tensions continued to weigh on investors’ minds, with some cautiously hoping that the United States and Mexico will strike a compromise on tariffs.
US President Donald Trump said some progress – but not enough – had been made in Wednesday’s talks with Mexico on averting the tariffs he intends to impose next week unless the flow of undocumented migrants into the US is stopped.
Trump tweeted that discussions would resume yesterday.
Coming on the heels of the US-China trade war, Trump's threats against Mexico have intensified fears for the global economy, hurting oil prices and lowering overall growth forecasts.
Crude prices made a tepid recovery yesterday, following the previous day’s sharp decline caused also by high US supplies and weak demand growth.