Stock market investors take profits as ECB boosts firepower

( Cashing in. ©GETTY IMAGES NORTH AMERICA/AFP SPENCER PLATT )

A rally in global stock markets petered out Thursday but resolute action from the European Central Bank to fight the coronavirus fallout put a floor under losses from investors cashing in on recent gains.
The euro rose and southern European bond yields slipped after the ECB added another 600 billion euros ($675 billion) to its already gigantic stimulus war chest, and said it would continue its pandemic bond-buying for another year at least.
But if boosted ECB support seems huge, so does the expected eurozone downturn it is designed to alleviate, with ECB chief Christine Lagarde forecasting a 2020 contraction of 8.7 percent in the area’s gross domestic product (GDP).
“Whatever it takes,” said Holger Schmieding at Berenberg. “Like finance ministers, central banks across the advanced world continue to do their utmost to contain the mega recession.”

– ‘More attractive’ –

The ECB’s move came a day after Germany said it would pump 130 billion euros into a stimulus package to kick-start the region’s biggest economy.
At first, European stock markets were unimpressed, with investors locking into profits “after enjoying a very bullish session yesterday”, as David Madden, analyst at CMC Markets UK, put it.
But then, some cautious buying brought markets off their worst levels.
“European equities and US futures rose from session lows after the ECB boosted its Pandemic bond buying program and extended it through June 2021,” said Edward Moya at OANDA.
“The DAX and Euro Stoxx 600 are starting to look much more attractive following Germany’s new stimulus package and the ECB’s increased pandemic purchase plan, both which have exceeded market expectations,” he said.
On Wall Street the Dow, which had been lower at the opening bell after another 1.9 million people filed jobless claims last week, clawed back its losses to hold steady in the late New York morning.
The Nasdaq, which had come within spitting distance of a new all-time high on Wednesday, slipped back.
China-US tensions remained on the table meanwhile, after Washington ordered on Wednesday the suspension of all flights by Chinese airlines in and out of the United States. 
China said it would allow foreign airlines currently blocked from operating in the country to resume limited flights from June 8, lifting a de facto ban on US carriers.
Oil was back under pressure amid “rising doubts” that OPEC and its allies will really manage to agree on a meaningful extension to a current crude output agreement, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

– Key figures around 1540 GMT –

London – FTSE 100: DOWN 0.6 percent at 6,341.44 points (close)
Frankfurt – DAX 30: DOWN 0.5 percent at 12,430.56 (close)
Paris – CAC 40: DOWN 0.2 percent at 5,011.98 (close)
EURO STOXX 50: DOWN 0.2 percent at 3,268.67
New York – Dow: FLAT at 26,263.54
Tokyo – Nikkei 225: UP 0.4 percent at 22,695.74 (close)
Hong Kong – Hang Seng: UP 0.2 percent at 24,366.30 (close)
Shanghai – Composite: DOWN 0.1 percent at 2,919.25 (close)
West Texas Intermediate: DOWN 1.6 percent at $36.68 per barrel
Brent North Sea crude: DOWN 1.0 percent at $39.38
Euro/dollar: UP at $1.1338 from $1.1232 at 2100 GMT
Dollar/yen: UP at 108.97 yen from 108.92 yen
Pound/dollar: UP at $1.2597 from $1.2573 
Euro/pound: UP at 89.97 pence from 89.33
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– London (AFP)