European stocks rose for a fourth straight session on Thursday, with traders shrugging off concerns over U.S. tariffs and instead looking ahead to the European Central Bank’s closely watched policy decision later in the day.
No action is expected at the ECB meeting, but all eyes are on the central bank’s statement for any tweaks to its easing bias.
What are the markets doing?
The U.K.’s FTSE 100 index UKX, -0.01% was slightly lower at 7,155.41.
The euro EURUSD, -0.1370% fell to $1.2401 from $1.2411 late Wednesday in New York.
What is driving the market?
The upbeat trading mood came as tensions over the planned U.S. tariffs on steel and aluminum imports eased after comments from the White House that major trading partners Canada and Mexico could be exempt. President Donald Trump is expected to sign the tariff order on Thursday, with an announcement planned for 3:30 p.m. Eastern Time, according to media reports.
Closer to home, traders looked ahead to the ECB’s policy decision for any hints on the future of monetary policy. The central bank is widely expected to keep rates and its a key stimulus program on hold, but the big question is if the rate setters are changing their forward guidance.
According to the current forward guidance, the quantitative easing program is currently slated to run “until the end of September 2018, or beyond if necessary,” with the bank standing ready to “increase the asset purchase program (APP) in terms of size and/or duration,” if the economy turns sour. If the ECB removes these sentences from the statement, it’s seen as a hawkish shift and likely to send the euro higher, according to analysts.
“Will they now say for sure that [QE will] end in September? Or will they say they’ll end at some specific time after September? Or will they just announce that there will be a further reduction at some point, but leave the end point vague? That’s going to be the focus,” said Marshall Gittler, chief strategist at ACLS Global, in a note.
“The more certainty there is about the end, the better it will be for EUR. The market assumption is currently that the ECB will end its QE program at the end of this year. Nonetheless, an announcement in line with that vague consensus would probably boost EUR by eliminating the uncertainty,” he added.
The ECB announces its policy decision at 12:45 p.m. London time, or 7:45 a.m. Eastern Time, followed by central bank chief Mario Draghi’s news conference at 1:30 p.m. London time.
Which stocks are on focus?
What’s new in economics?
German manufacturing orders fell more than expected in January, dropping 3.9%, compared with forecasts of a 1.5% decline.
In France, the Bank of France said the country’s economy is likely to expand by 0.4% in the first quarter, down from 0.6% in the fourth quarter of 2017.