Markets Hold Steady Before ECB Decision
On Thursday, European equities moved within a narrow band after posting their biggest single-session loss in two months, with traders holding back ahead of the European Central Bank's policy statement and a briefing from President Christine Lagarde. By 0838 GMT the pan-European STOXX 600 stood at 639.79 points, essentially flat, and most regional benchmarks also drifted in a small range. The previous day the index had shed 1.4% once Brent crude topped $100 a barrel for the first time since July, feeding inflation fears and cementing the view that central banks could stay restrictive for longer.[S1]
When the ECB publishes its decision at 1215 GMT, it is broadly anticipated to raise its benchmark rate by a quarter point to 2.5%, while hinting that more tightening could follow if the inflation picture does not brighten. Markets have already priced in one further increase this year plus one or two more in the next. Susannah Streeter, chief investment strategist at Wealth Club in London, said observers would scrutinise the guidance for signs of a wait-and-see stance or another hike. Lagarde is scheduled to speak at 1245 GMT.[S1]
Oil, Inflation and Corporate Moves
Crude prices retreated slightly on Thursday, yet Brent stayed above $100 a barrel as traders positioned for wider supply interruptions following the largest round of shipping attacks by Iran and the United States since their conflict started six months ago. European energy shares added 0.3% as oil held firm. German inflation picked up to 2.9% in August, in line with a Reuters poll forecast. U.S. producer prices for August were due later, with consumer prices on Friday; CME Group's Fedwatch tool showed traders assigning a 62% probability to a quarter-point Federal Reserve hike at the September 15-16 meeting.[S1]
Looking at single stocks, Associated British Foods slid 10%, on course for its worst daily percentage decline since January, after its budget fashion chain Primark posted soft sales. D'Ieteren led the STOXX 600 higher, climbing almost 5%, after the Belgian holding company announced improved half-year profit and appointed a new chief executive.[S1]
