ECB, Economic data and Earnings, lifting EU stock Market

ECB Holding its Dovisg policy

By: Ahura Chalki

Market analyst – IFC Markets

Yesterday, ECB had an interest rate decision and monetary policy meeting. According to its announcement, the European central bank will hold its negative interest rate. Also, ECB adjusted its interest rate guidance yesterday, which led the central bank to expect this year’s inflation overshoot to be temporary. The bank kept its dovish policy and 1.85 trillion euro asset-purchase scheme.

This policy and decisions from ECB council members, sending a supportive signal to the stock markets. This support of ECB with positive earnings helps the market sentiment. 

Thales (PA: TCFP), Lonza (SIX: LONN), Vodafone (NASDAQ: VOD) were the companies that had better-than-expectations earnings and supported the stock markets all around Europe. 

On the economic data front, UK retail sales rose by 0.5% in July, but Core Retail Sales, despite a 0.3% increase and better than the month before, was a bit less than market expectation (0.6%). German Manufacturing and service PMI both rose 65.6 and 62.2, respectively. In Eurozone also both Manufacturing and composite PMI rose to 62.6 and 60.6. And finally, UK PMI for Manufacturing and Service PMI decreased to push the Composite PMI number also lower to 57.7. 

Following these data, FTSE100 rose by 0.68%, German DAX gained 0.55%, and Stocks 600 gained 0.6%. 

Euro after yesterday’s dovish policies of ECB was weaker against the US dollar, as it was expected. Also, despite the decrease in the first half of the day, USD was much stronger in the second half to gain all its earlier losses. Today also US dollar was increasing by 0.12%. This increase of US dollar increased US currency, capped off the Euro gains following positive data, and held it in a side movement in the smaller charts. In the more extensive charts, like in the H4 chart, we can see that pairing moves under 50 MA, Parabolic SAR that supports the market bears, and RSI at 44 support the relative strength of the trend. 

Euro Stocks


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