European stocks mixed, euro flat ahead of rate announcement
Euro Stoxx 600 Index
European stocks opened mixed on Thursday, with benchmark indexes Stoke 600 At 8:12 am in London, the index was up 0.13%. Banks were the best performing sector, rising 0.75%.
German German DAX Index and french CAC 40 Both rose by about 0.5%, leading the UK FTSE 100still close to the flat line.
The euro traded moderately, falling 0.09% against the U.S. dollar and slightly higher against the British pound.
—Jenny Reed
The market expects two more interest rate cuts before the end of the year
Financial markets have fully priced in the European Central Bank to cut interest rates two more times this year by 25 basis points, which are expected to take place on Thursday and at the central bank’s next monetary policy meeting in December.
That would raise the deposit rate, the ECB’s key interest rate, to 3% by the end of 2024 from 4% in June.
The ECB was one of the first major central banks to cut interest rates down a quarter of a percentage point in June. The Fed did not join the monetary easing bandwagon until September. Reduce your own key interest rate by half a percentage point.
—Jenny Reed
Goldman Sachs economist says lack of ECB guidance is supporting euro against dollar
Euro remains protected despite sharp fall against dollar Economic growth is stronger Jari Stehn, chief European economist at Goldman Sachs, said Thursday on CNBC’s “Squawk Box Europe” that part of the reason is that the European Central Bank has not provided strong guidance on its future path.
“The European Central Bank is cutting interest rates, but in a way that is very data-dependent and doesn’t give you a lot of guidance on where to go next,” Stern said. “We think that’s going to be the message today as well.”
“So we’re going to cut rates by 25 basis points, and we think they’re going to say we’re doing that in response to the soft data.”
EUR/USD has been volatile all year, starting at $1.1044 and falling to $1.0853 as of Thursday.
Stern also told CNBC that it is necessary to remain cautious about the economic outlook of the euro zone.
“The data coming in is weak and we’re clearly facing challenges ranging from trade to fiscal to manufacturing. We’ve revised our forecasts down several times over the summer, and growth next year is basically at 1%, which is lower than the ECB’s level,” he said.
“Right now, we still think we’re growing. So we’re not saying we’re going into a recession, we’re not saying we’re completely stagnant.”
—Jenny Reed
