LONDON – European stock markets and the euro remained firm Thursday as the European Central Bank kept policy unchanged and said in a statement that it stands read to provide the eurozone economy a further stimulus if needed.
KEEPING SCORE: In Europe, Germany’s was up 0.9 percent at 12,324 while the CAC 40 in France was 0.7 percent higher at 5,135. The FTSE 100 index of leading British shares rose 0.4 percent at 7,384. U.S. stocks were poised for a flat opening with Dow futures and the broader S&P 500 futures unchanged.
ECB DECISION: The central bank left its key interest rates and bond-purchase stimulus program unchanged. The decision was announced after a meeting Thursday of the bank’s 25-member governing council in Frankfurt. The bond purchases are set to run at 60 billion euros ($72 billion) per month through the end of the year, and longer if needed to raise inflation from the current 1.5 percent toward the bank’s goal of just under 2 percent. In a statement, the ECB said it could extend its stimulus in terms of its size or duration if the outlook less favorable.
ALL EYES ON DRAGHI: Markets are waiting to see whether European Central Bank President Mario Draghi will try to talk the euro down as he discusses the future of stimulus for the 19-country eurozone economy. The rise in the currency’s exchange rate is complicating life for the central bank. The exchange rate has risen 14 percent this year to $1.20. That could hurt exports and lower inflation, which the ECB is trying to raise. So far, Draghi has not expressed public concern and analysts are speculating he may now use the post-decision news conference to address the issue. Ahead of his briefing, the euro was up 0.5 percent at $1.1970.
ANALYST TAKE: “The ECB is probably not concerned about the past appreciation of the euro but rather about the future appreciation,” said Carsten Brzeski, an economist at ING. “In this regards, to get out of the euro trap, don’t be surprised if Draghi presents a more detailed game plan than market participants expect.”
DEBT DEAL: Trump came to a deal with congressional Democrats to raise America’s debt limit for three months, overruling Republicans in the process. The immediate goal was ensuring money for storm relief as Trump sought to help speed the $7.9 billion aid bill for Hurricane Harvey victims, but the move also helps keep the government operating, removing some short-term uncertainty for investors.
FED IN FLUX: In a surprise announcement, the Federal Reserve said Vice Chairman Stanley Fischer will resign next month for personal reasons, leaving a fourth vacancy on the U.S. central bank’s seven-member governing board. The unexpected departure of Fischer, a widely respected economist, adds to a leadership vacuum at the top of the Fed as it navigates a difficult path. It plans to slowly raise interest rates as the U.S. economy grows and unemployment falls, even as inflation remains below target, complicating its future course.
NUCLEAR TENSIONS: North Korea’s nuclear program remains in the headlines though the focus now shifts to diplomacy, with the U.S., South Korea and Japan all calling for tougher sanctions including cutting off oil supplies. Meanwhile, the U.S. military finished placing more launchers for a high-tech U.S. missile defense system installed in South Korea to better cope with North Korean threats.
ASIA’S DAY: Japan’s benchmark Nikkei 225 rose 0.2 percent to close at 19,396.52 and South Korea’s Kospi jumped 1.1 percent to 2,346.19. The Shanghai Composite slid 0.6 percent to 3,365.50 and Hong Kong’s Hang Seng index gave up early gains to fall 0.3 percent to 27,522.92.
ENERGY: Oil futures renewed their climb. Benchmark U.S. crude was down 36 cents at $48.81 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, fell 7 cents to $54.10 a barrel in London.