Wednesday 21 February 2018

European stocks slump on ECB decision

European Central Bank (ECB) president Mario Draghi. Photo: Reuters
European Central Bank (ECB) president Mario Draghi. Photo: Reuters
Colm Kelpie

Colm Kelpie

European equities tumbled the most since the August sell-off as the additional stimulus measures unveiled by the region's central bank underwhelmed investors.

The Stoxx Europe 600 Index lost 3.1pc at the close of trading in London, reversing a gain of 0.9pc. The European Central Bank lowered its deposit rate, and President Mario Draghi said it will extend its quantitative-easing programme until at least March 2017, including debt issued by regional and local governments. It didn't, however, expand its monthly asset purchases.

By the close in Dublin, the ISEQ Overall Index was down 1.96pc, or 134.82 points, to end the trading session at 6,751.74.

The laggards on the Dublin market included building material groups CRH, down 3.6pc to €26.89, while recruitment group Cpl Resources slipped 2.7pc to €6.15.

On the other side of the board, the leaders included Ovoca Gold, which increased 15.3pc to 7 cents, and Independent News & Media, the publisher of this newspaper, which closed up 2.2pc to 18 cents.

"There was under-delivery all the way from the ECB today and the interest rate announcement was just the beginning of it," Jasper Lawler, a London-based market analyst at CMC Markets, said yesterday.

He recommends selling German stocks because the euro's weakness that has boosted exporters so far may be over.

"They did something, but not enough. The market believed Draghi too much and wasn't paying too much attention that the European recovery had been improving."

Heading into yesterday's meeting, investors had high expectations.

The Stoxx 600 climbed 13pc from its low in September through yesterday, including its best two-day rally since July after Mr Draghi signalled in October that the central bank would consider additional measures.

Irish Independent

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