Markets Remain Flat due to ECB Policy Meeting
The recent hikes of Asian shares and Euro paused on Thursday as investors awaited for European Central Bank’s policy meeting which is due today. After the meeting ECB President Mario Draghi will present his views about the condition of euro zone crisis and growth prospects, and his statements will determine the direction of market. Testimony of a new head for Bank of England and Bond auctions of France and Spain also helped in pausing the markets.
Along with above given reasons, analysts believe that earning reports of some major European companies and a two-day European Union summit are also two strong reasons to be cautious at the moment.
European markets remained in tight ranges. London’s FTSE 100, Paris’s CAC -40 and DAX of Frankfurt opened approximately flat and were up by only 0.1 percent. A 0.1 percent decline was also noticed in U.S. Stock Futures, indicating towards a soft opening of Wall Street. Nikkei of Japan ended down by 0.9 percent compared to 51 month record highs it reported on Wednesday.
But 5-year Japanese government yields slipped to record low point of 0.135 percent. This indicates that short-term government debt increased by major margins on Thursday.
Euro remained nearly flat at $1.3530 mark and holded the $1.3458 plumb of Tuesday, but it is still well below from the 15-month high of $1.3711 noticed on last Friday. Euro has now soared nearly 20% against yen in the shortest time span of 3 months and has risen 7 percent on dollar while 8 percent on sterling. However, this euro-jump is causing concerns for recession hit countries.
Due to a Spanish auction of up to 4.5 billion euros and political tensions in Madrid, German Bund Futures also reported cautious mood and edged up by 5 points, touching the 142.61 mark.
In oil market Brent Crude also remained steady at $117 per barrel. In metals gold inched up a bit to the $1,680 per ounce mark. Investors in all commodity markets are eagerly waiting for ECB President Draghi’s comments.
ECB President Draghi has a news conference at 13:30 GMT, which follows the ECB policy meeting. All major markets have their eyes on the conference, as interest rates will be declared in the conference. Till now there are no signs of changing the interest rates, so markets are also expecting similar moves from ECB. In conference President Draghi will also talk about his views on economic growth of Europe and euro zone crisis. Big market changes may come ahead after the conference.