ECB fails to break new ground on monetary policy

European markets experienced a choppy session on Thursday as a disappointing set of earnings reports put investors on edge and a closely watched monetary policy decision from the European Central Bank resulted in very little further expansion. US stocks also struggled to build on gains, as crude oil prices took a pause from a multiday rally.

During Thursday’s news conference, ECB President Mario Draghi did not break much new ground on monetary policy – and he was not expected to, given that he had just fired the proverbial bazooka in March. Markets in Europe had a muted reaction to this, as the ECB is leaving the deposit rate at negative 0.4%, and the main refinancing rate at 0%.

Draghi called for critics of ECB policy to give its unprecedented stimulus measures time to work, and urged governments to help. The ECB has come under attack from various politicians as it battles to revive inflation and sustain economic growth in the 19-nation euro area.

In company news, Under Armour Inc. shot up after its earnings and revenue exceeded analyst forecasts. The Baltimore-based company announced double-digit revenue and profit gains during its last quarter, as the company continues to reap the benefits of its relationship with NBA player Stephen Curry, whose basketball shoe line continues to power its footwear business. Revenue totalled $1.05 billion in the quarter, as its footwear sales surged a whopping 64%. Shares in Under Armour jumped 4.6% in Thursday’s premarket trading, and ended the day 7.31% higher at $47.15.

Mitsubishi shares slid for a second straight day, hitting a record low amid concerns about the potential cost of compensation and fines from the biggest scandal to hit the company. The stock has lost a third of its market value, or $2.5 billion, in the last two days.

Staying in the automobile industry, shares in Volkswagen rose 6.2%, after sources told Reuters that VW and US officials have reached a framework deal for the carmaker to buy back almost half a million diesel cars with software that enabled them to evade US emission rules.

In other news, SunEdision, once the fastest growing US renewable energy company, filed for Chapter 11 bankruptcy protection on Thursday, as years of debt-fuelled acquisitions proved unsustainable. Shares of SunEdision were halted, and last traded at around 34c on the New York Stock Exchange.

As earnings reports continue to roll out, mixed results were reported. General Motors were on the right side of the balance sheet, as the carmaker beat profit and revenue forecasts, sending its shares trading in the green. However, the same cannot be said for Verizon Communications. Shares in the number one US wireless carrier fell 3.2% as an ongoing strike by its workers hurt earnings in the current quarter. Similarly, shares in toy maker Mattel dropped 6% after the company posted a wider loss, due to a sales slump in Barbie and other toys.

Eyes will then turn to companies including Alphabet, GM, Microsoft and Starbucks, that are expected to release their earnings reports after the US market closes.

This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd. has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.