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 (PA:RENA) merger.
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. This is likely to centre on the terms for cheap funding to banks that will allow them to support businesses and consumers with cheap loans.
The downside risks for the zone include low core inflation, continued geopolitical risks and fragile overall growth, and of course Italy with its loose budget and high spending, which will continue to give the ECB’s Mario Draghi headaches.
In London retail facing sectors including home improvement and supermarket chains were on the declining end of the FTSE with home builder Taylor Wimpey (LON:TW) dropping a hefty 6% after several days of strong trading. The reluctance of France’s government to OK the mega merger between Fiat-Chrysler Renault and Nissan caused significant drops in Fiat, Renault and Nissan shares alike.
Euro stable ahead of the ECB
The common currency is marginally higher against the pound and the dollar having dropped in afternoon trade Wednesday. In the bigger picture the euro has already weakened more than 2% against the dollar this year and the ECB monthly session could put the currency under further pressure, particularly if it stresses the downside risks to the Eurozone.
Brent crude higher
After a weak close on Wednesday that has pushed WTI crude prices into bearish territory, both Brent crude and WTI are trading higher this morning. For Brent $60 has managed to hold as the current resistance level despite several attempts by the market to move lower. From here it is possible that the market has been sold far as it will be in the near term and that failing fresh geopolitical news, prices might remain in a channel for a short period. Brent is trading 0.79% higher and WTI up 0.81%.
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