Market Commentary | ECB leaves rates unchanged

Worldwide stocks were mixed on Thursday as most of the attention turned to European Central Bank president Mario Draghi who discussed the Brexit vote and the state of the European banking industry.  In Asia, stocks were mostly higher, while UK stocks pulled back from a record high as travel shares fell on concerns that bookings are lower following the recent terror attacks. US stocks were also mixed on Thursday, as Wall Street kept an eye on corporate earnings and economic data, after record highs for the DOW and S&P this week.

European shares were mainly flat, as the ECB left rates unchanged. The benchmark refinancing rate was left at 0%, and the interest rate on deposit facility was unchanged at -0.4%. This move was widely expected. Mario Draghi also assured investors that the ECB won’t hesitate to add fresh stimulus if needed, once it has a clearer picture of the economic impact from the UK’s vote to leave the European Union.

Pulling the main Index lower in Europe were travel shares. EasyJet was one of the culprits, after its shares dropped 5.5%. The UK airline company said that currency volatility as well as the recent events in Turkey and Nice continued to impact consumer confidence. German airline Lufthansa was also a drag, as its shares shed 5.65% following a cut in full-year profit. Shares of British Airways parent International Consolidated Airlines fell 3.45% and Ryanair also lost 5% on Thursday.

US airline stocks came under similar pressure as a result of this news from European carriers. Delta airlines shed 2.79% and American Airlines group lost 1.64%. Southwest Airlines were among the biggest losers, after falling 8.9% as the company reported weaker than expected earnings.

Shares in mining gear maker Joy Global soared 17%, after the Japanese construction machinery giant Komatsu said it has agreed to buy Joy for $2.89 billion. Shares in Komatsu rose 2.26% on this news.

Oil futures gave up gains made in previous sessions as pressure from ample US stockpiles of gasoline and recent slowdown in domestic crude production took its toll on prices. Brent crude fell 1.73% to trade at around $45 a barrel, while Brent also gave up 1.5%.

Meanwhile, shares in General Motors were up almost 2% after posting a record second quarter profit on Thursday, that beat analyst expectations. The company also raised its full-year outlook. Intel also beat analyst expectations for earnings, but revenues came in lower than expected. Intel shares sank 4.3%. Staying with earnings reports, eBay and Qualcomm reported better than expected results. Shares in online auctioneer eBay sailed 12.2% higher, while chip company Qualcomm rallied 7.5%. After markets close, AT&T, Starbucks and Visa are expected to grab the spotlight.

Disclaimer:

This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, views and opinions provided in this article are 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.