Interest rates held but mixed messages from ECB

The ECB kept interest rates at their record low of 1% earlier today, nothing to surprise the market. In the accompanying press conference, there were however mixed messages. ECB President Mario Draghi suggested that the recent disappointing eurozone economic data highlighted the prevailing uncertainty, and as such the ECB’s stance remained accommodative and the bond buying program was still in place. The view that there would be a gradual economic recovery during the latter part of the year however meant that the any near term stimulus (a rate cut or further cash injection) was not on the cards. The Euro gained during the speech as it became evident the ECB had not discussed lowering interest rates.

US jobless claims for last week showed that 365,000 Americans had files for unemployment benefits during the period, below the previous weeks figure and forecasts. It was welcome news ahead of tomorrow’s non-farm payroll data that is expected to show employers added 160,000 jobs in April. Data from the Institute of Supply Management however showed that the non-manufacturing PMI came in at 53.5 for March, below the 56.0 in the previous month.

Draghi’s comments and the poorer aspect of US data took the shine off stock markets that had got off to a decent start, in part helped by positive earnings from some of Europe’s blue-chip companies. European indices finished the day marginally in the red, with the UK’s FTSE 100 up 0.15% at 5767. Brent crude was down 1.7% to $116.5/bbl at the time of writing on news of higher OPEC production and rising stockpiles in the US.

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