European Stocks and US Futures Fall Ahead of Key ECB Event

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Principal Points

• European bourses open Thursday’s session lower, Stoxx 600 slides almost 1%
• US futures fell sharply ahead of today’s market action, Dow futures declined over 150 points

European markets traded sharply to the downside in the initial hours of the session on Thursday. Futures contracts tied to the major US indexes were lower in pre-market activity as US investors prepared to enter the day.

Dow Jones Industrial Average futures hovered lower by more than 150 points. S&P500 futures and Nasdaq futures fell 0.3% each ahead of the opening bell today.

The Stoxx Europe 600 fell 5 points, or 1.06%, to 467.87 on Wednesday. Automobile stocks were among the biggest decliners of the day, leading to the drop with a loss of 2.2%. Banking stocks and other economically sensitive shares moved lower by more than 1% as investors braced for uncertainty later in the week.

European stocks slipped early on Thursday, continuing their decline from Wednesday. The Stoxx 600 opened about 1% to the downside with major European indexes the following suit.

Yesterday’s session marked the biggest single-day drop for equities across the old continent in three weeks. The risk-off approach to stocks comes ahead of today’s European Central Bank meeting.

Bitcoin Floats Around the Flat Line

The European Central Bank convenes today to discuss whether to raise the ultra-low interest rates and to decide if it should dial down its pandemic-era stimulus program.

The defensive stance today highlights investors are positioning for any outcome of today’s ECB policy meeting. The central bank of Europe is widely expected to announce a reduction in its emergency bond-buying program, the main tool used to sustain the eurozone economy since the pandemic arrived.

For more than a year, the ECB has been buying bonds worth between €20bn and €80bn a month under the €1.85tn Pandemic Emergency Purchase Program (PEPP). Against the backdrop of a recovering economy and rapidly climbing consumer prices, ECB officials have been pushing for tighter monetary policies.

In recent weeks, the region-wide Stoxx 600 has hovered below its record high reached in mid-August. Worries over the ECB’s next move and a potentially slowing down economy have caused investors to retreat their bets from the all-time high valuations of stocks.

Stateside, US equities have also retrenched from fresh records set earlier in the month. The Nasdaq Composite slipped on Wednesday, ending a streak of four consecutive days of gains. The Dow Jones Industrial Average fell nearly 70 points, while the S&P500 declined about 0.1%.

Meanwhile, in cryptocurrency markets, the price of bitcoin is floating around the flat line today, near $46,000 per coin. The digital asset space suffered a steep selloff on Tuesday when prices of major tokens fell between 10% and 30%. Bitcoin’s price pared back some of the 17% loss on Tuesday but remains lower by about 10% this week.

Gold is also in decline for the week. The precious metal is currently trading near $1,790 per ounce, down roughly 2% on the week.

Oil and natural gas rose slightly on Wednesday and remain well bid early Thursday. Brent crude, the international benchmark in energy markets, climbed almost $1 to levels near $72.60 per barrel.