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Business News/ Market / Stock-market-news/  US stocks fluctuate, Europe shares decline on ECB plan details
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US stocks fluctuate, Europe shares decline on ECB plan details

The S&P 500 Index fell less than 0.1%, while the Stoxx Europe 600 Index dropped 1.6%, the most since March

The MSCI Emerging Markets Index fell 0.4%. Photo: AFPPremium
The MSCI Emerging Markets Index fell 0.4%. Photo: AFP

New York: US stocks fluctuated amid an unexpected decline in jobless claims, while European equities plunged and the euro rose on concern additional stimulus will fail to boost inflation and revive the economy. Crude sank below $90 for the first time in 17 months.

The Standard & Poor’s 500 Index fell less than 0.1% at 10:04 am in New York, after the gauge plunged 1.3% on Wednesday. The Stoxx Europe 600 Index dropped 1.6%, the most since March. The euro rose for the first time in three days versus the dollar. Treasuries weakened after gaining the most in more than eight months on Wednesday. West Texas Intermediate oil slumped 1.3% to $89.60 a barrel.

The European Central Bank (ECB) left its main refinancing rate at 0.05% at its meeting on Thursday in Naples, Italy. Draghi said the central bank will buy assets for at least two years to boost inflation and economic growth in the euro area. US jobless claims unexpectedly dropped last week. Pro-democracy leaders in Hong Kong said they will escalate protests if their demands aren’t addressed.

“Draghi did not bring out the big bazooka that the market had hoped for," Peter Garnry, head of equity strategy at Saxo Bank A/S in Hellerup, Denmark, said by telephone. “Sentiment was already tilted to the downside on economic data and we are seeing an increasing likelihood of deflationary pressures. It seems that the market is interpreting Draghi’s words negatively and as not providing the salvation that was hoped for."

Stock Slump

The ECB’s asset-buying plan is part of a range of stimulus measures it has announced since June to fight the threat of falling prices in the 18-nation currency bloc. Inflation slowed to 0.3% last month, the least in almost five years, and the central bank’s preferred measure of medium-term inflation expectations has extended its decline.

The euro rose as investors curbed bets the central bank’s purchases would expand the ECB’s balance sheet enough to weaken the currency.

The euro added 0.3% to $1.2662 after touching $1.2571 on 30 September, the lowest level since September 2012. The yen appreciated 0.3% to 108.62 per dollar, having reached 110.09 on Wednesday, the weakest since 25 August, 2008.

The S&P 500 fell on Wednesday to its lowest level since 12 August, while the Russell 2000 Index of smaller shares closed more than 10% below its record in March amid signs of economic weakness in Europe and geopolitical turmoil as the Federal Reserve prepares to end its bond-buying programme.

US Data

The US claims data come before the government’s labour report on 3 October, which may show that payrolls added 218,000 workers in September after a 142,000 increase the month prior that was the smallest this year, according to the median estimate in a Bloomberg survey. The jobless rate probably held at 6.1%.

“Initial jobless claims are down to pre-recession levels, which bodes well for the jobs market," Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $160 billion, said in a telephone interview. “After the ECB meeting, all eyes should be on the jobs numbers tomorrow, which should be a good indicator for growth in the economy."

Developing-nation stocks fell to a five-month low as Hungary and the Czech Republic sank and lower oil prices weighed on Russia.

Emerging Equities

The MSCI Emerging Markets Index fell 0.4%. The developing nation gauge is within 0.2 percentage point of sliding 10% from this year’s peak on 3 September. The measure has fallen 1% in 2014 and trades at 10.6 times projected 12-month earnings, data compiled by Bloomberg show.

The Micex Index tumbled 1.4% for a second day of losses. Russia’s central bank intervened for the first time since May to stem the world’s worst currency slide since June, ending the ruble’s five-day losing streak. The ruble gained 0.1% to 44.3072 against the central bank’s basket of dollars and euros.

The Jakarta Composite Index declined the most since April and the rupiah depreciated 0.2% after Indonesia’s parliament chose a house speaker that may challenge President-elect Joko Widodo’s plans to boost economic growth.

Equities in the Czech Republic, Poland and Hungary lost at least 0.7%. Hungary central bank deputy governor Adam Balog is set to speak at a conference on the nation’s economic outlook and banking sector.

Markets in China and India are shut for holidays. Bloomberg

Claudia Carpenter, Cecile Vannucci, Paul Dobson, Zahra Hankir, Abigail Moses and Lucy Meakin in London and Jonathan Morgan in Frankfurt also contributed to this story.

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Published: 02 Oct 2014, 08:12 PM IST
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