Protecting Global Trade and corporate earnings | Calamatta Cuschieri

The European Central Bank kept the interest rates unchanged with Protectionism remaining an issue for International Trade

The European Central Bank (ECB) decided to keep key interest rates unchanged as the interest rate on the main refinancing operations remained at zero
The European Central Bank (ECB) decided to keep key interest rates unchanged as the interest rate on the main refinancing operations remained at zero

European markets were higher on Thursday, following the European Central Bank's (ECB) decision earlier in the day to keep key interest rates unchanged. ECB's chief Mario Draghi told reporters that protectionism in global trade is a rising risk for the euro area economy.

He added that new tariffs on aluminium and other products imported into the US negatively influence exporter confidence in the Eurozone. Yesterday, Deutsche Bank, Shell, Nokia, Total, Barclays, Lufthansa and Volkswagen all posted their financial reports.

The FTSE 100 ended yesterday's session 0.53% higher, with mining giant Evraz soaring 6.38%. The DAX was up 0.63% at the end of the day, with Linde leading the gains, climbing 3.04%. The CAC 40 was 0.81% higher at the closing bell. French aircraft and defence company Safran jumped 4.66%, following better-than-expected first quarter earnings results.

Facebook and Amazon

Shares of Facebook surged over 8% after reporting better-than-expected earnings, including a 49% increase in revenue year over year. The social network giant was up 8.84% to $173.85 at 5:09 pm CET. Meanwhile, Amazon soared as well ahead of the company's earnings report which was due after markets close. The e-commerce giant was around 2.60% in the green and at one point hitting a high of $1,505 per share.

ECB meeting

The European Central Bank (ECB) decided to keep key interest rates unchanged as the interest rate on the main refinancing operations remained at zero, while the interest rates on the marginal lending facility and the deposit facility remained at 0.25% and -0.4%, respectively.

Furthermore the bank stated, seeing protectionism in global trade as a rising risk for the euro area economy and sees it as a troubling factor as it aims to reach inflation close to but below 2%.

The much awaiting moment for investors were the comments about the Stimulus program, looking for clues that will hint whether the bank plans on extending the easy monetary stimulus beyond the scheme's expiration date set for September this year. The ECB noted that the program might be prolonged past September if needed.

Draghi also pointed out that growth remains steady in the euro area, but that it eased compared to late 2017. However, the bank sees higher employment and business investment growth as signs of positive impact of its stimulus. Another risk for the inflation target are high oil prices, with the ECB expecting inflation to hover around 1.5% and rising gradually in the medium term. Moreover, it was added that “ample” monetary accommodation and structural reforms are still needed in order to increase resilience and boost productivity.

Disclaimer: This article was issued by Rodrick Duca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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