Investors digest ECB slowdown and economic data

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LONDON – European markets were cautiously higher on Friday, following their global counterparts as sentiment rebounded after a turbulent week.

The pan-European Stoxx 600 rose 0.25% by mid-afternoon, but is still on course to end the week in the red. Basic resources climbed 1.3% while telecoms fell 0.9%.

Asia-Pacific stocks rose on Friday as Hong Kong-listed stocks affected by China’s regulatory crackdown rebounded, after other potential Beijing measures on gaming companies were found not to be as harsh as those initially reported.

In the United States, stock index futures were higher in pre-market trading on Friday after Wall Street posted a fourth straight day of losses on Thursday.

Weekly jobless claims figures on Thursday indicated that the recovery in the US labor market remains on track, with the number of initial jobless claims falling to 310,000 last week, the lowest in nearly 18 months.

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European investors continue to digest the European Central Bank’s decision on Thursday to slow bond purchases under its Pandemic Emergency Purchase Program (PEPP) in response to higher inflation and sluggishness. stronger GDP growth in the euro area. The ECB also slightly revised upwards its medium-term inflation forecasts.

“We have counted at least four decisions for which we will have to return in December, in addition to the pace of the PEPP for the first quarter of 2022: the future of the PEPP beyond March (decrease the program or extend it, and what to do with APP ‘normal’ quantitative easing program), a possible new round of cheap loans to banks (TLTROs) and possible technical adjustments to asset purchase programs to ensure that they can last longer ” , said HSBC economists Simon Wells and Fabio Balboni.

“For now, the relatively dovish upward revision to inflation forecasts should reassure markets that more support is coming.”

Separately, finance ministers from major Group of Seven (G-7) economies said on Thursday they needed to make more technical progress on plans for global corporate tax reform.

Germany’s finance and justice ministries were raided on Thursday as prosecutors investigate the government’s anti-money laundering agency, casting doubt on the failure of the fight against financial crime in the greater economy of Europe.

Eurozone finance ministers will meet in Ljubljana, Slovenia for informal talks on Friday.

Data-wise, the UK economy grew just 0.1% in July, official statistics showed on Friday, as the spread of the delta variant of Covid-19 slowed economic activity to a trickle after the easing of lockdown measures.

The final German harmonized consumer price index (CPI) rose 0.1% month-on-month in August, marking an annual increase of 3.4%.

In terms of the development of individual stock prices on Friday, the French IT company Atos climbed 4.7% by mid-afternoon to take the lead of the Stoxx 600.

At the bottom of the index, French oil company Rubis fell 6.2% after problems in the Caribbean region weighed on its otherwise improving profits in the first half of the year.

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