European Equity Market Handover: Trade tension and ECB dissection

Market sentiment is a work in progress whilst Europe tries to decide whether the ECB offered more or less of what investors desired

Stock market snapshot as of [6/6/2019 3:40 PM] 

  • Market sentiment is a work in progress; partly whilst Europe tries to decide whether the ECB offered more or less of what investors desired
  • On the one hand, expectations of very generous terms from the central bank’s new loan programme were not entirely met. The ECB’s best TLTRO III deal to banks is set at a negative rate, so it effectively pays lenders to borrow. But the rate will be 10 basis points higher than ‘ordinary’ deposit rates, so the package isn’t seen as very aggressive
  • Here are the key takeaways from the central bank’s policy statement

  • European stocks initially retreated from their best levels by way of reaction, whilst the euro retained a bid after rising to a 7-week high
  • The single currency eventually eased a bit after ECB president Mario Draghi noted in his press conference that there was no bias to hike and that there was “considerable” headroom for QE, if needed. These comments appeared to reassure stocks
  • Trade headwinds remain the key factor for U.S. shares: President Trump’s call for Mexico to “step up” can be taken in a number of ways. Neither side seems to rule out the possibility of a deal—with provisos. But Monday’s deadline for escalating tariffs to kick in on Mexican imports is approaching fast and Market nerves are showing
  • Wall Street is trading near the day’s lows as the S&P 500, Dow, indecisively switch between fractional gains and losses. Mexico’s S&P BMV traded almost 1% lower just now 

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