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European stocks advance on mixed US macro message

·3-min read
New applications for US unemployment benefits climbed unexpectedly to 419,000

Most European stock markets extended gains Thursday while the euro edged lower on a jump in US unemployment gains that was offset by strong home sales.

In Frankfurt, the European Central Bank (ECB) updated information on its pandemic-fuelled stimulus package, but analysts found little new in the presentation.

Oil prices continued to rebound from hefty losses at the start of the week meanwhile.

In New York the Dow Jones index was slightly weaker in midday trading as investors pored over a trove of mostly solid corporate earnings.

They also digested the latest release of US weekly jobs data, which showed that new applications for unemployment benefits climbed unexpectedly to 419,000.

On the upside, sales of existing homes rose in the United States last month, snapping a four-month streak of declines as prices set a new record high, industry data showed.

Back in Europe, the ECB made it clear that monetary stimulus will keep flowing as concerns grow over economic risks from the fast-spreading Delta variant of the coronavirus, first seen in India.

In addition, the ECB unveiled a new-look "forward guidance" statement that will give investors information about its likely future moves on interest rates and bond purchases.

Most of its decisions had been indicated in advance, however, and observers were not caught by surprise.

Carsten Brzeski, an economist at ING bank, felt the ECB made "a shift towards more dovishness, putting more emphasis on the possibility of inflation overshooting" its updated target of two percent.

Traders believe that higher inflation as economies reopen will push central banks to raise interest rates, in turn hindering the recovery, a move the ECB appears to have discounted for now.

In Asia, stock markets closed higher as worries about the coronavirus' Delta variant were eclipsed by earnings reports that indicated companies were faring well.

"Part of the narrative behind the... (stocks) rebound in the last couple of days has been the idea that support for economies might be sustained for longer as the world stares down the barrel of rising Covid infections linked to the Delta variant," AJ Bell investment director Russ Mould said.

The ECB's announcements supported that view.

- Key figures around 1600 GMT -

New York - Dow: DOWN 0.1 percent at 34,749.28 points

EURO STOXX 50: UP 0.8 percent at 4,059.05

London - FTSE 100: DOWN 0.4 percent at 6,968.30 (close)

Frankfurt - DAX 30: UP 0.6 percent at 15,514.54 (close)

Paris - CAC 40: UP 0.3 percent at 6,481.59 (close)

Hong Kong - Hang Seng Index: UP 1.8 percent at 27,723.84 (close)

Shanghai - Composite: UP 0.3 percent at 3,574.73 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: DOWN at $1.1768 from $1.1801 at 2130 GMT

Euro/pound: DOWN at 85.60 pence from 86.00 pence

Pound/dollar: UP at $1.3749 from $1.3708

Dollar/yen: DOWN at 110.11 yen from 110.28 yen

Brent North Sea crude: UP 1.0 percent at $72.92 per barrel

West Texas Intermediate: UP 1.0 percent at $70.99 per barrel

dan-bcp/wai/pbr

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