Europe stocks drop as investors await update on rate outlook
written by Bella Palmer
The ECB is anticipated to stand pat on Thursday after a regular interest-rate meeting and call for patience in the drawn-out battle against high inflation, pushing back against market hopes of rapid cuts to borrowing costs
European stock markets dropped in morning trades on Thursday as investors awaited an update on the outlook for eurozone interest rates.
Shanghai and Hong Kong closed with significant gains awaiting fresh pledges of stimulus from Chinese officials, a day after they announced a measure to boost bank lending.
Oil prices jumped nearly 1.5% after a bigger-than-expected drop in US crude stockpiles. The dollar struggled against main rivals.
European markets are moderately down, with traders remaining cautious ahead of this afternoon's European Central Bank meeting, noted Joshua Mahony, chief market analyst at trading group Scope Markets.
Thus far we have seen the ECB holding steadfast in the face of a contracting economy and declining inflation, he added.
The ECB is anticipated to stand pat on Thursday after a regular interest-rate meeting and call for patience in the drawn-out battle against high inflation, pushing back against market hopes of rapid cuts to borrowing costs.
Ahead of the outcome, data showed business morale in Germany dipped further in January, as the slump in Europe's biggest economy showed few signs of passing quickly.
Another record close for the S&P 500 on Wednesday had provided a positive lead for Asian investors.
US data this week will be closely scrutinised, with dealers hoping for a fresh handle on the Fed's own rate plans.
A recent run of strong economic readings in the world's largest economy - and central bank warnings that officials were keen to keep borrowing costs higher - have dented expectations for a March cut.
Frankly, everything depends on the incoming data now and there are a lot of potentially significant releases over the next few weeks that could swing the odds of a March rate cut in either direction, said Paul Ashworth at Capital Economics research group.
He added: We still think the Federal Reserve will lower rates by 25 bps at that upcoming meeting.
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