Europe open: Stocks in the red as investors look to ECB meeting
European stocks were a little weaker in early trade as investors looked ahead to Thursday’s rate announcement from the European Central Bank.
At 0840 GMT, the benchmark Stoxx 600 index was down 0.4%, France’s CAC 40 was off 0.6% and Germany’s DAX was down 0.4%.
European equity markets got a boost last week after ECB chief Mario Draghi indicated that the bank was ready to act to boost inflation.
“This week promises to be a crucial one, not only will the ECB hold its monthly meeting but also Fed chief Yellen will appear on Capitol Hill to testify and on Friday US non-rarm payroll data will be released. Historically the first week of December often turns out to be a mixed bag with a couple of down days usually offering the last opportunity to jump into the market before the year-end rally starts going in earnest,” said Markus Huber, senior analyst at Peregrine & Black.
“While almost everybody expects the ECB to take additional extraordinary measures on Thursday to combat low inflation and stimulate Eurozone growth not everybody is convinced that Draghi after preparing the markets for weeks and months can not only deliver but still surprise the markets. “If this would be the case that the market has completely priced in the entire ECB action we would most likely see a classic ‘buy the rumour sell the fact’ play taking hold.”
On the corporate front, BHP Billiton was under pressure after it emerged that Brazilian authorities will demand £3.5bn from the miner, Vale and their Samarco joint venture for the tailings dam burst on 5 November.
Aberdeen Asset Management was in the red after the investment house revealed that its full year profits were hit by a slump in Asia and emerging markets equities.
Dutch insurer Delta Lloyd was also on the back foot after it announced a €1bn rights issue and said it will not pay a final dividend this year.
On the upside, Deutsche Lufthansa rallied after reaching an agreement with trade union Verdi on the wages and pensions of its ground staff and personnel.
Data released earlier showed German retail sales unexpectedly fell in October, missing analysts’ expectations.
Retail sales slipped 0.4% compared with forecasts for a 0.4% increase. On the year, they rose 2.1%, falling short of expectations for a 2.9% gain.
Still to come on the macroeconomic front, Chicago PMI is at 1445 GMT while US pending home sales are at 1500 GMT.