Europe close: Stocks buoyed by hopes of more ECB QE
European stocks finished the session with moderate gains after European Central Bank chief Mario Draghi hinted at a possible extension of quantitative easing. The benchmark Stoxx Europe 600 index edged higher by 0.19%, Germany’s DAX was up 0.52% and France’s CAC 40 was 0.44% stronger. Speaking after the ECB’s policy meeting, Draghi said that an “abrupt ending” to QE was “unlikely”
Commenting on Draghi’s remarks, Philippe Gudin and Antonio Garcia Pascual at Barclays Research said: “we believe that members have a preference to wait until December, when they will have updated macroeconomic projections and the conclusions of relevant committees working on QE implementation. “Based on today’s remarks by President Draghi, we continue to believe the ECB will eventually extend the asset purchase programme by 6-9 months, and announce the relaxation of some technical parameters of QE at its December meeting. The pace of future asset purchases may, however, not be decided at the same time, and could be announced only at the March meeting, depending on economic information available at that time.”
Meanwhile, oil prices retreated following a strong rally in the previous session after data from the US Energy Information Administration showed a surprise 5.2m drawdown in crude inventories to 468.7m barrels last week and amid growing expectations of an OPEC-led production cut. West Texas Intermediate was down 1.85% to £50.89 a barrel and Brent crude was off 2.1% at £51.60. By the closing bell, euro/dollar was down 0.36% to £1.0934.
In corporate news, Deutsche Lufthansa flew higher after upping its profit target for the year on the back of better-than-expected business bookings. Switzerland’s Roche nudged up a touch as it reported a 3% rise in third-quarter sales and confirmed its outlook for 2016. London Stock Exchange ticked up after it reported a rise in income and revenue for the three months to the end of September.
Rio Tinto drifted lower after lowering its iron ore shipment guidance slightly after it fell 5% the third quarter, reduced by port and rail maintenance. Swiss food and drinks group Nestle fell after cutting its outlook for the year amid declining food prices. French advertising agency Publicis lost ground as its third-quarter sales growth missed analysts’ expectations.
Anglo-Swiss miner Glencore slipped after announcing plans to sell its rail coal haulage business in the New South Wales Hunter Valley for £1.14bn to Genesee & Wyoming Australia.