Downbeat start for stocks on ECB day
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DOWNBEAT START FOR STOCKS ON ECB DAY
European shares were set to fall at the open on Thursday on a busy day for earnings and corporate news, with the European Central Bank meeting setting the overall tone.
Euro Stoxx 50 futures were down 0.45% with U.S. share futures also down, but, the broad STOXX 600 benhcmark did hit a fresh all time high on Wednesday.
In earnings and company news there is plenty happening.
Lufthansa, LHAG.DE alongside reporting in line operating profits, adjusted its outlook for its 2024 operating margin down to 7.6% from a goal of 8% as it struggles with labour disputes, and pharma giant Merck MRCG.DE forecast a return to modest operating earnings growth this year when adjusted for currency headwinds.
In UK finance news, Nationwide Building Society NBS.L has agreed to buy lender Virgin Money UK VMUK.L for around 2.9 billion pounds ($3.69 billion), the companies said on Thursday, in an all-cash deal set to create a new rival to Britain's biggest banks.
Elsewhere in the world of deals, German rail operator Deutsche Bahn expects at least 10 biddersto submit offers for its logistics subsidiary Schenker and aims to sign a contract for the sale in the second half of 2024, two people familiar with the matter told Reuters on Wednesday.
As for the big picture, the European Central Bank is set to keep interest rates at record highs on Thursday and take baby steps towards cutting them in the coming months as inflation continues to fall despite stubbornly high underlying price pressures.
(Alun John)
MORNING BID EUROPE- ECB ALSO WANTS MORE EVIDENCE
Federal Reserve Chair Jerome Powell was unambiguous overnight, but the European Central Bank meets today and is more divided and hesitant about committing to monetary easing.
The ECB is universally expected to keep its policy rate at a record 4.0%, and policymakers are likely to repeat that they need more evidence inflation is under control and that ongoing wage increases will not give it another leg up.
ECB President Christine Lagarde's message will be key, for new economic projections are likely to point to lower economic growth and inflation this year, which may require the central bank to tweak its message slightly.
Investors have pencilled in three or probably four rate cuts by the end of the year 0#ECBWATCH.
Interest rate futures are almost fully priced in for a first rate cut from the ECB in June, with a total easing of 88 basis points expected for all of this year. That's more realistic than the 150 bps markets were expecting in January.
German data on factory orders and production is due later, and should reinforce the weakness in the euro zone's largest economy and the reason the ECB is so divided.
Meanwhile, Asia is extending the broad rally in global stocks and risk assets after Powell kept the door open to interest rate cuts later this year and U.S. bond yields drifted lower
Powell stuck to script by saying the Fed still expects to cut rates later this year, even though continued progress on inflation "is not assured".
Japan's Nikkei .N225, however, is down as the yen jumps to near 149 per dollar, its highest in a month, as momentum builds that a move from the Bank of Japan to end negative interest rates could come as soon as this month.
Key developments that could influence markets on Thursday:
CENTRAL BANKS-ECB rate decision at 1315 GMT, Lagarde press conference at 1345 GMT
DATA - German industrial orders, UK Halifax house prices
DEBT AUCTIONS - France: Reopening of 10-year 2033, 10-year 2034, 14-year and 21-year government debt auctions
EARNINGS - Admiral Group, Continental AG, Deutsche Lufthansa AG, Hugo Boss AG, ITV PLC, Merck KGaA
(Vidya Ranganathan)
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