MW: European stocks seesaw ahead of ECB chief Draghi’s speech
European stocks seesawed Thursday, trying to find their footing before European Central Bank President Mario Draghi talks about monetary policy and the eurozone economy later in the day.
The Stoxx Europe 600 SXXP, +0.50% rose 0.7% to 324.49. It had earlier swung down by 0.2% after popping up by as much as 1.1%. Health care, basic materials and telecom shares moved higher while utility and financial shares gave up ground.
Weighing on the financial sector was Deutsche Bank AG DBK, -8.15% DBK, -7.31% Shares slid 8%, heading toward their worst session since October 2011, after the German banking heavyweight warned of a fourth-quarter loss of 2.1 billion euros ($2.3 billion) because of litigation and restructuring charges. Revenue is also expected to decline.
European stocks on Wednesday closed at the lowest level since 2014. They were swept along in a battering of equities worldwide, spurred in large part as oil prices were shoved down another leg lower. On Thursday, West Texas Intermediate oil CLH6, -1.02% was keeping a fragile hold on $28 a barrel. Brent crude LCOH6, -0.61% held below $28 a barrel. See: Why crude oil and stocks keep plunging together.
Why global demand for oil Is slowing down(2:34)
Recent surging global supply has led oil prices to drop to a 12-year low, and oil companies are cutting spending and production. The WSJ's Jenny Hsu explains how China plays a role in all of this. Photo: CCTV
The plunge in oil prices and what it means for the eurozone economy may be addressed by ECB boss Draghi when he holds a press conference in Frankfurt at 1:30 p.m. London time, or 8:30 a.m. Eastern Time. His conference will take place after the ECB releases its interest-rate decision at 12:45 p.m. London time, or 7:45 a.m. Eastern Time.
The euro EURUSD, +0.1469% was buying $1.0896 ahead of the ECB decision compared with $1.0886 late Wednesday
“Both macro and market developments since December serve to realize some of the downside risks the ECB had expressed concern about, namely with regard to the external growth environment and the domestic inflation backdrop,” said Sue Trinh, senior currency strategist, at RBC Capital Markets, in a note.
“While in theory this opens up the door to more dovish talk this time around, we think the Governing Council will instead prefer to emphasize the importance of waiting to judge how its looser stance unwinds to support the real economy,” she wrote.
Draghi said in December said a program under which the government purchases 60 billion euros of mostly government debt each month would be extended through March 2017. But markets were largely disappointed the ECB wasn’t more aggressive in ramping up its stimulus efforts.
Indexes: Germany’s DAX 30 DAX, +0.63% pared its gain to 2 points at 9,394.88, with moves limited by the slide in Deutsche Bank shares, which also posted the sharpest loss on the Stoxx 600. The DAX on Wednesday tumbled 2.8%, marking a 24% slide from its April peak.
On Thursday, France’s CAC 40 PX1, +0.58% moved up 0.5% to 4,144.89, and the U.K.’s FTSE 100 UKX, +0.43% picked up 0.4% to 5,695.34, but had dipped into negative territory during the session.
