Futures a la baja.
Europe Stocks, U.S. Futures Remain Lower as ECB Stands Pat
Stocks in Europe and U.S. futures remained lower Thursday after the European Central Bank kept interest rates unchanged at its first meeting Thursday since the U.K. voted to leave the European Union last month.
U.S. futures pointed to a 0.1% opening loss for the S&P 500 after Wall Street closed at fresh record highs Wednesday. The Stoxx Europe 600 was down 0.3% recently, weighed down by falls in airline shares, after markets in Asia mostly gained.
Global stocks have been on the rise in recent weeks, fueled by a series of data releases underlining the strength of the U.S. economy, company earnings and expectations of further central bank action following the Brexit vote.
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Economists hadn’t expected the European Central Bank to boost its stimulus measures Thursday, but many believe ECB President Mario Draghi will signal further action is in the cards at a press conference later in the day.
While the effects of Britain’s vote to leave the EU will be mainly felt in the U.K., a host of issues still put Mr. Draghi “in a tough position,” said Carl Hammer, chief currency strategist at Swedish bank SEB.
In addition to Brexit, Europe is dealing with a wave of recent terror attacks, rising populism, a still-fragile economy and concerns over the health of the Italian banking system, Mr. Hammer said. He expects the ECB to deliver new measures in the fall.
There was further evidence of the heightened focus on central bankers Thursday with the yen jumping sharply against the dollar after Bank of Japan Governor Haruhiko Kuroda said on a prerecorded radio show from mid-June with the British Broadcasting Corp. that there was “no need and no possibility for helicopter money,” government spending funded directly by the central bank.
Expectations of fresh monetary and fiscal stimulus measures from Tokyo, including increasing chatter around helicopter money, had pushed the yen lower in recent days ahead of the BoJ’s meeting next week.
While investors don’t expect fresh measures from the ECB Thursday, they are watching to see whether the bank loosens some of the rules governing its quantitative easing, or QE, program amid concerns it will soon run out of eligible assets to buy.
An asset shortage could prove a problem if the ECB wants to boost stimulus measures at a later date. Many analysts believe officials are reluctant to cut rates further into negative territory over concerns about denting the profitability of Europe’s struggling banking sector.
“I don’t think the ECB will cut rates much further. If they extend easing, they will have to do it through QE,” said Gareth Colesmith, a senior portfolio manager at Insight Investment.
“The problem is they’re running out of bonds,” he said.
Lufthansa jets parked at the airport in Frankfurt. The airline issued a profit warning Thursday.
Lufthansa jets parked at the airport in Frankfurt. The airline issued a profit warning Thursday.Photo: Agence France-Presse/Getty Images
Investors in Europe were also focused on company earnings releases. Airline stocks were under pressure after easyJet PLC reported a fall in sales and Deutsche Lufthansa AG issued a profit warning, sending shares in the latter down over 7%.
Mining shares, meanwhile, climbed following declines earlier this week.
Attention will return later to the U.S. earnings season. Shares in General Motors Co. rose 4.8% in premarket trade after the company said its profit more than doubled.
Shares in eBay Inc. were up around 6% in premarket trade after the company posted its second straight quarter of sales gains after the closing bell Wednesday. Shares in chip maker Qualcomm Inc. gained over 8% in premarket trading after the company reported better-than-expected sales in the latest quarter.
Investors have taken comfort from the largely solid, though unspectacular, earnings posted so far.
“Expectations were on the low side, but I think any news is good news,” said James Davidson, a fund manager at J.P. Morgan Asset Management.
Earnings are giving investors “some reassurance that, for all the Brexit macro uncertainty, life goes on,” said Mr. Davidson, adding the second quarter should be the low point for year-over-year U.S. earnings growth.
In currencies, the euro was roughly flat against the dollar Thursday at $1.1017. The yen was last 0.9% higher against the buck at ¥106.3070.
The ICE U.S. Dollar Index, which measures the greenback against a basket of currencies, fell 0.2%. The index hit a four-month high Wednesday as investors signaled a stronger expectation that the U.S. Federal Reserve would raise interest rates this year.
The yield on the 10-year U.S. Treasury note, meanwhile, rose slightly to 1.598% as prices fell.
Asian bourses mostly ended higher Thursday. Hong Kong’s Hang Seng Index entered bull market territory with a 0.5% rise, taking gains to just over 20% since its mid-February low. Japan’s Nikkei Stock Average ended 0.8% higher and Australia’s S&P ASX 200 was up 0.4%.
In commodities, Brent crude oil was down 0.5% at $46.97 a barrel. Gold slipped slightly to $1,1318 an ounce.
Write to Christopher Whittall at
christopher.whittall@wsj.com