Europe close: ECB surprises fail to impress investors?
ECB surprises, but perhaps not completely
ECB forward guidance possibly constrained by central bank leadership change in October
Banks pace retreat as EGBs rally, Italian lenders' shares also drop
Updated : 18:40
The European Central Bank surprised markets on Thursday, unveiling a new round of loans for the currency bloc's lenders and pushing back its 'forward guidance' - and markets apparently hated it, which some market watchers said in itself belied the extent of concern in the market.
Few if any observers reacted positively, with some arguing that financial markets were in fact even more 'dovish' and others saying that the announcements betrayed concern.
Among those, Kerim Derhalli, CEO and Founder of Invstr, told clients: "In the face of a seemingly protracted European slowdown, it’s encouraging to see the ECB stick to its guns and maintain tack on monetary policy.
"Bank lending under the negative rates has expanded, however all this good work could come undone should the current slowdown cause a drop in borrowing demand."
Related to all of the above, in remarks to Bloomberg TV, Blackrock boss, Larry Fink, pointed out how "we don't have an organised European response and so the only game in town again is still the central bank. I believe we need a crisis in Europe to really fix Europe."
By the end of trading, the benchmark Stoxx 600 was down by 0.43% at 373.88, alongside a drop of 0.60% for the German Dax to 11,517.80.
In parallel, yields on longer-term European government notes were lower across the board.
The Cac-40 also lost ground, erasing earlier gains to finish the day down by 0.39% to 5,267.92.
Even shares of Italian lenders, who some believe will be the main beneficiary of the easier policy settings, were unwanted.
The Stoxx 600 bank sector gauge meanwhile lost 1.88% to 141.10.
But the main casualty of the session was euro/dollar, which cratered by 0.78% to 1.12213, a 20-month low, although front month Brent crude oil was up by 0.41% to $66.26 a barrel on the ICE.
Elsewhere on the economic front, there was a fair bit of 'market chatter' around the spat between Rome and Washington surrounding the former's stated intent on signing a memorandum of understanding with Beijing supporting its Belt and Road initiative during a visit to the country by Chinese President Xi Jinping.
In other news, Eurostat confirmed that euro area GDP grew at a 0.2% quarter-on-quarter pace over the last three months of 2018, as expected, and up from the just 0.1% clip observed over the prior three months with employment in the single currency bloc up by 0.3% over that same time frame.
Some economists greeted the GDP data, calling attention to the strength in exports and still strong investment.
Shares of Hugo Boss meanwhile were trading down by 6% after the iconic fashion retailer delivered a smaller than expected dividend payout.
German auto parts maker Continental also moved lower, despite posting better-than-expected full-year earnings before interest and taxes of €4.03bn, after the company said business year-to-date had been slow.
Grifols purchased a minority 26% stake in Shanghai RAAS Blood Products in a non-cash deal, in exchange for the latter becoming its exclusive distributor in the country and with the Spanish firm agreeing to provide technology and know-how in exchange for fees.
The Barcelona-based business will also give RAAS a 45% stake in its US subsidiary, which was valued at $1.9bn.