European stock indices remain positive after ECB interest rate decision and German Factory Orders report .
The Major European stock indices climbed further into positive territory on Thursday after the European Central Bank kept its benchmark lending rate at 0.75 percent. The ECB interest rate decision and Germany’s huge jump in factory orders during October helped European stocks build on Wednesday’s modest gains. ECB President Mario Draghi reported that the Eurozone economy is expected to contract by 0.05 percent during 2012, compared with the anticipated contraction of 0.04 percent. Worse yet, the Eurozone’s economy is expected to contract by another 0.03 percent during 2013, despite an earlier outlook for expansion by 0.05 percent (NYSEARCA:VGK).
Destatis reported that Germany’s factory orders surged in October by 3.9 percent on a month-over-month basis, compared with expectations for a 1 percent advance. The move represented a recovery from September’s 3.3 percent decline (NYSEARCA:EWG).
Eurostat reported that during the third quarter of 2012, GDP contracted by 0.1 percent in the Eurozone, although GDP expanded by 0.1 percent in the broader, 27-nation European Union (EU27). On a year-over-year basis, Eurozone GDP declined by 0.6 percent and EU27 GDP contracted by 0.4 percent.
At its monthly meeting, the Bank of England determined to leave its interest rate unchanged and to maintain its asset-purchase program at £375 billion (NYSEARCA:EWU).
Former Italian Prime Minister Silvio Berlusconi was back causing trouble again, instead of going off to prison where he belongs. Berlusconi threatened to undermine the support Prime Minister Mario Monti had been receiving from Berlusconi’s People of Liberty party. Berlusconi’s antics caused Italy’s ten-year bond yield to spike and it sank the nation’s FTSE MIB Stock Index (NYSEARCA:EWI)
As of 11:15 EST, the Euro STOXX 50 Index advanced 0.50 percent to 2,605 – staying above its 50-day moving average of 2,512 (NYSEARCA:VGK). The FTSE 100 Index rose 0.27 percent to 5,907 (NYSEARCA:EWU). The German DAX Index jumped 1.10 percent to 7,536 (NYSEARCA:EWG). France’s CAC 40 Index climbed 0.42 percent to 3,605 (NYSEARCA:EWQ). Spain’s IBEX 35 Index advanced 0.28 percent to 7,905 (NYSEARCA:EWP). Italy’s FTSE MIB Index fell 0.76 percent to 15,833 (NYSEARCA:EWI). Israel ETF Continuing Run Despite Risks
As of 11:20 EST, the euro sank 0.77 percent against the dollar, trading at $1.2967 (NYSEARCA:FXE). Forget Europe, Traders Must Watch the U.S. Dollar
Spain’s ten-year bond yield rose to 5.47 percent on Thursday from Wednesday’s closing level of 5.40 percent. Spain’s two-year bond yield remained flat at Wednesday’s closing level of 2.97 percent on Thursday (NYSEARCA:EWP).
Italy’s ten-year bond yield jumped to 4.62 percent on Thursday from Wednesday’s closing level of 4.48 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, January futures for Brent crude oil declined by $1.57 (1.45 percent) to $106.38/bbl. (NYSEARCA:BNO, NYSEARCA:USO).
In China, stocks declined slightly, as a result of a slump in the consumer staples sector caused by a scandal involving plasticizers in alcoholic beverages. The Shanghai Composite Index dipped 0.13 percent to 2,029 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index slipped 0.09 percent to 22,249 (NYSEARCA:EWH).
In Japan, stocks advanced as the yen weakened (NYSEARCA:FXY) on continuing expectations that the December 16 elections will bring further monetary easing after a win by the Liberal Democratic Party. The Nikkei 225 Stock Average advanced 0.81 percent to 9,545 (NYSEARCA:EWJ).
American stock index futures were in negative territory before Thursday’s opening bell, as a result of ECB President Mario Draghi’s gloomy forecast for the European economy. The December 12 Dow Jones Industrials future dipped 0.07 percent to 13,015 as of 9:14 EST. The December 12 S&P 500 future declined 0.18 percent to 1,405 (NYSEARCA:SPY). The December 12 Nasdaq 100 future fell 0.26 percent 2,630.
Bottom line: The major European stock indices responded well to the ECB interest rate decision, although the meddling by convicted Former Italian Prime Minister Silvio Berlusconi sank Italy’s stock prices.