Market Commentary and Intraday News

European Stocks Seen Largely Unchanged After ECB Inaction

295 days ago

(RTTNews) - European stocks may open narrowly mixed on Friday amid a lack of policy moves from the Fed and ECB. After inaction from the Federal Reserve, the ECB yesterday decline to intervene in bond markets, inspiring a negative shift in investor sentiment.

Investors now await the U.S. employment report for July due out later in the day for trading cues. Economists expect the Labor Department report to show that U.S. employment rose by about 100,000 jobs in July following a weaker than expected increase of 80,000 jobs in June. The unemployment rate is expected to remain unchanged at 8.2 percent.

In news out of China, the nation's non-manufacturing sector growth eased in July as inflow of new orders weakened, the latest survey by the China Federation of Logistics and Purchasing showed. The seasonally adjusted purchasing managers' index for the services sector fell to 55.6 in July from 56.7 in the previous month.

The report comes after China's central bank yesterday pledged to ensure steady credit growth to protect its economy from deteriorating too quickly amid global economic woes.

Asian markets are broadly lower, with Chinese shares bucking the downtrend to post modest gains after regulators slashed transaction fees on equities trading.

Commodities such as crude and copper are rising about half a percent each, while the euro is little changed.

In economic releases, eurozone retail sales and purchasing managers' survey data from the U.K. are the major statistical reports due in the European session.

In corporate news, Enel SpA reported a decline in profit for the first half of 2012 to 1.82 billion euros compared to 2.31 billion euros last year.

CF Industries Holdings, Inc. announced that it has entered into a definitive deal with Glencore International Plc to buy interests in Canadian Fertilizers for C$915 million cash.

Mining giant BHP Billiton announced that it would take $3.29 billion writedown, comprising of $2.84 billion writedown on its U.S. shale gas business and a further $450 million writedown on Australian nickel operations, citing low U.S. gas prices and margin deterioration.

Allianz SE confirmed its outlook for an operating profit of 8.2 billion euros, plus or minus 0.5 billion euros, in 2012 after posting higher second-quarter net income.

Axa SA reported a fall in first-half 2012 net income to 2.59 billion euros from last year's 4.01 billion euros, mainly due to the non-repeat of 2011 first half exceptional realized gains of 1.44 billion euros regarding the sales of the stake in Taikang Life and of the Australia & New Zealand operations.

European stocks reversed their early gains on Thursday after ECB President Mario Draghi said the central bank cannot act alone to drive down borrowing costs. The Euro STOXX 50 Index tumbled 3 percent, while the broader Stoxx Europe 50, which also includes U.K. stocks, ended 0.8 percent lower.

Around Europe, the FTSE 100 of the U.K., the German DAX and France's CAC 40 fell between 0.9 percent and 2.7 percent, but Switzerland's SMI ended marginally higher, driven by gains in defensive heavyweights.

U.S. stocks fell for a fourth day overnight following the ECB disappointment. The ECB decided to leave interest rates unchanged and hinted that it "may undertake outright open market operations," but traders seemed disappointed that there was not more conviction behind Central Bank President Mario Draghi's remarks.

As a result of the focus on Europe, traders largely shrugged off a report from the Labor Department showing a smaller than expected increase in weekly jobless claims. The Dow and the S&P 500 dropped about 0.7 percent each, while the tech-heavy Nasdaq slid 0.4 percent.

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