Sumary of Dovish ECB and upbeat earnings support euro-zone stocks:
- European stocks rose for a third session on Thursday after the European Central Bank (ECB) pledged to keep interest rates at record lows for even longer, while strong corporate earnings underpinned optimism about an economic recovery.
- Euro-zone shares rose as much as 1.2 per cent after the central bank said it would not hike rates until it saw inflation reach its 2 per cent target “well ahead of the end of its projection horizon and durably”.
- But the rate-sensitive euro-zone banking index fell 0.2 per cent, with government bond yields on the decline.
- “This news should be a short-term positive for European stocks and the overall recovery trade, providing additional support especially amidst rising nerves over the Delta [coronavirus] variant,” said Xian Chan, chief investment officer of wealth management at HSBC.
- Ryanair was one of the Iseq’s strongest movers, up 1.8 per cent to €15.85, as Europe’s airline sector was boosted by a pick-up in demand for travel on foot of the easing of restrictions in several countries.
- The blue-chip FTSE 100 index dropped 0.4 per cent with Unilever being the main drag, while energy stocks fell 1.6 per cent, despite a jump in oil prices.
- Unilever was down 5.9 per cent after it warned that surging commodity costs would squeeze its full-year operating margin, overshadowing strong second-quarter sales growth.
- However, commentary from Bank of England’s deputy governor Ben Broadbent helped calm some of the inflation fears after he said the current spike in prices is unlikely to create longer-term inflation pressures.