Global stock markets traded unevenly on Wednesday as market players were doubtful over whether the European Central Bank policy makers would keep promises to help revive flagging growth at a policy meeting this week.
European stocks inched up slightly during early trading, with France’s CAC 40 gaining 0.4 percent to 4,423.46 and Germany’s DAX surging 0.4 percent to 9,727.59. Britain’s Financial Times Stock Exchange 100 soared 0.1 percent to 6,130.56.
A market analyst said, “Markets are really looking for more stimuli from Europe. If they don’t do whatever it takes, markets will be a little disappointed.”
Meanwhile, market players are keeping a close eye on the European Central Bank’s policy meeting on Thursday.
Many market analysts anticipate the central bank to open the stimulus taps further based on indications from European Central Bank President Mario Draghi and economic data that reported inflation across the 19 countries euro zone has tumbled below zero.
“The euro area is still recovering from a once-in-a-generation economic and financial crisis that has left deep scars. Both policy makers and financial institutions need to play their part. They need to ensure that the financial system is fit for purpose and able to finance the recovery – and they need to do so today, not tomorrow,” an analyst stated.
The European Central Bank could send deposit rates further into negative territory or step up a bond buying strategy. The most likely scenario is a trim to deposit rates, which could provide bank an incentive to lend more.
As stated by a market analyst, “The market has already priced in this expectation (of further ECB stimulus). However if this doesnt happen tomorrow then we will see more volatility following the disappointment and the euro will also feel under pressure.”
“Some traders, they may be more cautious and stay away from the markets right now and wait for after the ECBs decision to get into the markets.”
A steep selloff in Chinese stocks weighed on world stock markets, as it boosted the safe haven yen on Wednesday amid revived concerns about the sentiment for China’s economy.
“The Shanghai index has rebounded near 8% from its recent low, thus the correction is largely expected given the economic outlook is pretty pessimistic,” an analyst noted.
Chinese stocks ended more than 1 percent lower, while Morgan Stanley Capital International’s broadest index of Asian pacific shares outside Japan tumbled 0.3 percent, declining 1.4 percent from a two month peak hit on Monday.
Meanwhile, Japan’s Nikkei 225 Stock Average closed with 0.8 percent lower, which is its lowest level in a week. South Korea’s Kospi grew 0.3 percent to close at 1,952.95 after regaining early losses, while Hong Kong’s Hang Seng slipped 0.1 percent to 19,996.26 and the Shanghai Composite Index in mainland China jumped 1.3 percent to 2,862.56. Australia’s Standard & Poor ASX 200 edged 1 percent higher to 5,157.20.
According to an economist, “Investors are once again focused towards the scanty economic data over in China and the anxiety is if the Peoples Bank of China has the right tools to help the recovery.”
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