European Shares Edge Lower Ahead of ECB’s Rates Decision

(Bloomberg) — European equities edged lower as traders looked ahead to the European Central Bank’s monetary policy announcement.

The Stoxx Europe 600 Index was 0.2% lower by 12:30 p.m. in London. Autos and travel stocks led the gains, with retail dropped the most as Inditex SA extended losses after a downgrade. Swiss blue-chip SMI index was little changed after the Swiss National Bank made a half-point rate cut to stem gains in the franc. 

The focus turns to the ECB’s interest rate decision, which will be announced at 2:15 p.m. in Frankfurt. President Christine Lagarde will host a press conference 30 minutes later.

Traders expect the central bank to decrease the deposit rate by a quarter-point, loosening constraints on the region’s struggling economy as inflation nears 2%. The ECB will also release fresh quarterly projections, which are likely to signal weaker price gains and gross domestic product in 2025.

“The new forecasts are likely to reflect the macro deterioration and uncertainties that threaten the European economy, so a downward revision is expected in both growth and inflation outlooks,” said Germán García Mellado, fund manager at A&G Banco.

European stocks have rebounded in December on optimism over Chinese stimulus measures and the main regional index is up about 9% in 2024, with German shares among the best performers. Positive sentiment also got a boost Wednesday as data showed US inflation matched expectations, bolstering wagers on a Federal Reserve rate cut next week. 

Elsewhere, China’s top officials signaled further stimulus measures including raising its budget deficit ratio in 2025 and vowed to deliver rate cuts and lower the reserve requirement for banks during a two-day huddle of the Central Economic Work Conference in Beijing, according to China Central Television.

In other individual stock moves Thursday, Brunello Cucinelli SpA rallied as much as 7.1% to an eight-month high after the luxury goods maker increased its revenue growth forecast.

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–With assistance from Michael Msika and Allegra Catelli.

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