European stock markets fall, the European Central Bank is expected to cancel stimulus measures
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European stock markets fell, while German government bonds hovered at their lowest level since mid-July, as expectations rose for the central bank to scale back its monetary stimulus plan in response to the crisis.
The regional Stoxx Europe 600 stock index fell 1.1% in early trading and fell 0.5% in the previous trading day. The London FTSE 100 Index fell 0.8%.
The European Central Bank met on Thursday. Investors expect that after the economic outlook improves, the central bank will announce a slowdown in debt purchases.
The European Central Bank’s 185 million euro pandemic emergency purchase plan is its main crisis response policy. For most of this year, it purchased 80 billion euros of bonds every month, with the goal of reducing loan costs throughout the euro zone. Analysts generally expect these to slow to about 60 billion euros.
In the United States, the Federal Reserve is also expected to announce a reduction of its $120 billion monthly bond purchase plan, which reduces borrowing costs since March 2020 and lowers the yield of debt securities, increasing the relative attractiveness of stocks.
With the widespread improvement in business activities and the demand for workers, St. Louis Fed President James Brad, Said In an interview with the British “Financial Times”, “In general, the production cut will begin this year and will end sometime in the first half of next year.”
Marija Veitmane, a senior strategist at State Street Global Markets, said that a slight decline in the stock market at this time makes sense, but she does not expect a sharp correction because it is widely expected that the central bank will maintain interest rates at historically low levels.
She said: “This is a time when you can slightly lower your risk appetite, but now is not the time to reverse your risk aversion.” “There is a big difference between a reduction and a rate hike.”
The yield on German 10-year government bonds fell by 0.01 percentage point to minus 0.325%. The yield on the government bonds is inversely proportional to its price and serves as a benchmark for borrowing costs in the Eurozone. However, it is still close to its highest level in two months. The 10-year US Treasury bond yield fell 0.02 percentage points to 1.358% after hitting its highest point since mid-July on Tuesday.
The futures market hinted that Wall Street’s blue-chip S&P 500 index would fall 0.4% in early trading in New York, and closed 0.3% on Tuesday. The contract betting on the Nasdaq 100 technical direction also fell 0.4%.
In Asia, Japan’s Nikkei 225 Index rose for the eighth consecutive trading day, up 0.9%, as investors placed their hopes on the successor of the outgoing prime minister Suga Yoshihide Introduce a wave of economic stimulus measures to combat the spread of the coronavirus.
In other parts of the region, stock markets have weakened, reflecting the decline in Wall Street the previous trading day.
Mainland China’s CSI 300 Index fell 0.4%, and Hong Kong’s Hang Seng Index fell 0.4%. South Korea’s Kospi 200 index fell 0.8%.
The U.S. dollar index, which measures the U.S. dollar against the other six currencies, was flat. The exchange rate of the euro against the US dollar was stable, and 1.1842 US dollars were bought. Brent crude oil rose 0.6% to US$72.13 per barrel.