A gauge of global equity markets fell modestly and the euro strengthened on Thursday after the European Central Bank fell short of market hopes for a dovish tone regarding its bond-buying programme.
ECB President Mario Draghi said the bank was looking at options to enable it to pursue the money-printing programme, but maintained the March end-date for the plan, disappointing investors who were looking for more immediate action, including an extension or expansion of the current plan.
Mixed data over the past month in Europe, including German industrial orders this week that showed the steepest drop in almost two years, led many market participants to speculate the ECB might take additional actions in order to stimulate Euro Zone growth.
“He sort of shut the door on further easing. That was not expected,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
“The central banks, whether it is the US or the ECB, it is clear they can change their mind on a whim, so this can certainly be changed again.”
The euro gained ground after Draghi’s comments, hitting a two-week high of $1.1326 before paring gains to trade up 0.15 percent at $1.1254. The dollar touched a low of 94.465 against a basket of major currencies before rebounding to trade up 0.1 per cent at 95.054.
European shares closed lower, with the FTSEurofirst 300 off 0.38 per cent at 1,374.26.
A 2.6 per cent decline in shares of Apple weighed on each of the three major US stock indexes in the wake of its annual event on Wednesday. The company also said it would not release details on first-weekend sales of the newly announced iPhone 7.
The Dow Jones industrial average fell 46.23 points, or 0.25 per cent, to 18,479.91, the S&P 500 lost 4.86 points, or 0.22 per cent, to 2,181.3 and the Nasdaq Composite dropped 24.44 points, or 0.46 per cent, to 5,259.48.
MSCI’s all-country world index declined 0.31 per cent after touching a 13-month high in the prior session.
German government bond yields extended earlier gains, up 6.2 basis points on the day at minus 0.61 per cent after hitting a high of minus 0.054 per cent. US Treasury yields also rose, with benchmark 10-year Treasury notes down 20/32 in price to yield 1.6076 per cent, from 1.539 per cent late on Wednesday.
The focus will now begin to shift to the US Federal Reserve two-day policy meeting on September 21-22 as investors look for clues on the timing of a rate hike. Expectations are for the Fed to hold rates unchanged despite another round of strong labour market data on Thursday.
Oil shares surged after US inventory data showed a surprisingly large drawdown in crude stocks as imports into the US Gulf Coast slid last week due to Tropical Storm Hermine.
Brent crude settled up 4.2 per cent at $49.99 and US crude settled last up 4.7 per cent at $47.62, marking the highest level since August 26 for both.