Euro sags as markets see ECB in no rush for QE exit

08:43 | 27/04/2018
The euro sagged and equities pushed higher on Thursday (Apr 26) as the ECB warned of threats to economic growth and signalled easy money policies could stay if necessary.
euro sags as markets see ecb in no rush for qe exit
Euro currency. (AFP/PHILIPPE HUGUEN)

Wall Street rose on strong earnings by Facebook and data showed first-time claims for unemployment benefits fell to a 48-year low.

As expected, the ECB made no changes to its ultra-low interest rates and its bond-buying stimulus programme, which is slated to end in March.

However, European Central Bank chief Mario Draghi warned on Thursday of storm clouds on the horizon for the eurozone as fears mount of a global trade war.

"The head of the ECB mentioned the slowdown in economic momentum in the eurozone, and this spooked some currency traders," said market analyst David Madden at CMC Markets UK.

"As always, Mr Draghi gave himself some wiggle room, but stating the monetary easing policy would stay in place if it was necessary."

That sent the euro moving lower to a level unseen since mid-January. The lower euro helped eurozone equity markets pick up.

Frankfurt finished the day with a gain of 0.6 per cent and Paris rose 0.6 per cent. Outside the eurozone, London rose 0.5 per cent.

Wall Street's main stock indices were higher approaching midday, with the Dow rising 0.7 per cent, supported by a batch of mostly good earnings from Facebook and others.

But Facebook's results, released after the market closed on Wednesday, won strong reviews after the company reported a 63 per cent rise in first-quarter profits to US$5 billion, undented by a consumer data scandal.

Facebook's shares shot more than nine per cent higher.

European markets also had plenty of earnings news to digest.

Shares in British bank Barclays shed 1.4 per cent after revealing that it had dived into a first-quarter net loss following a huge US fine over its conduct in the run-up to the global financial crisis.

Germany's Deutsche Bank slid 1.3 per cent in Frankfurt after reporting falling profits for the first quarter and announced deep cuts to its flagship investment banking division.

Lufthansa meanwhile slumped 5.5 per cent on news of weaker revenues, even as the airline giant said it pared losses in the first quarter.

But auto behemoth Volkswagen revved 2.6 per cent higher despite a drop in quarterly net profits in saying strong sales had got 2018 off to "a good start".

Key figures around 1530 GMT:

New York - Dow: UP 0.7 per cent at 24,263.18 points

London - FTSE 100: UP 0.5 per cent at 7,418.07 (close)

Frankfurt - DAX 30: UP 0.6 per cent at 12,500.47 (close)

Paris - CAC 40: UP 0.7 per cent at 5,453.58 (close)

EURO STOXX 50: UP 0.6 per cent at 3,506.86

Tokyo - Nikkei 225: UP 0.5 per cent at 22,319.61 (close)

Hong Kong - Hang Seng: DOWN 1.1 per cent at 30,007.68 (close)

Shanghai - Composite: DOWN 1.4 per cent at 3,075.03 (close)

Euro/dollar: DOWN at US$1.2104 from US$1.2161 at 2100 GMT

Dollar/yen: DOWN at 109.36 yen from 109.43

Pound/dollar: DOWN at US$1.3923 from US$1.3932

Oil - Brent North Sea: UP 65 cents at US$74.65 per barrel

Oil - West Texas Intermediate: UP 18 cents at US$68.23 per barrel

AFP

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