European Shares Fall as Draghi Plays Down Need for More Stimulus

European Stocks Fall After ECB Decision
  • ECB leaves rates, stimulus program unchanged after meeting
  • Oil rebounds after report shows tumble in U.S. stockpiles

Stocks in Europe fell after European Central Bank President Mario Draghi downplayed the need for extra stimulus measures.

The Stoxx Europe 600 Index dropped 0.3 percent to 349.32 at the close of trading. It pared declines after oil jumped on better-than-expected stockpile data. The equity gauge fell as much as 1.2 percent after Draghi said the ECB didn’t discuss an extension to its bond-buying program at its latest meeting, where interest rates were left unchanged. 

“A lot of people wanted to see a bit more stimulus from Draghi today, or at least an extension to the program,” said Yogi Dewan, the chief executive officer of Hassium Asset Management in Gerrards Cross, U.K. His firm manages about $1 billion. “At the end of the day, Europe’s economy isn’t in great shape, inflation doesn’t look exciting and there are a bunch of political risks to reckon with. It’s very unusual for Draghi to be this hawkish. It looks like he’s taking the lead from the Fed. Everyone is just on hold.”

While shares are down 4.5 percent this year, they have rebounded 13 percent from their post-Brexit June low on speculation that central banks will keep monetary policy accommodative. Most economists surveyed by Bloomberg forecast Draghi will extend the bond-purchasing plan before the end of the year. 

BP Plc and Eni SpA led a rebound in energy producers as crude surged following a U.S. government report that showed a surprise plunge in stockpiles. Automakers slid as gains in the euro hurt prospects for profits of European exporters. Daimler AG and BMW AG helped drag Germany’s DAX Index to among the worst performers of western-European markets. The DAX on Wednesday had become the first major euro-area equity gauge to recoup its losses for the year.

The VStoxx Index, which tracks volatility expectations for the Euro Stoxx 50 Index, fell to a 13-month low. Earlier this week, volatility hadn’t been this low in the days preceding an ECB meeting since the start of quantitative easing in 2015.

Among stocks moving on corporate news:

  • Thomas Cook Group Plc gained 6.1 percent after setting up a joint venture to expand its business in China.
  • Banca Monte dei Paschi di Siena SpA rose 3.7 percent as people with knowledge of the talks said it is mulling a probable voluntary debt-for-equity offer to cut back on a 5 billion-euro ($5.6 billion) stock sale envisaged in its current turnaround plan.
  • Zoopla Property Group Plc climbed 1 percent after the U.K. real estate website said annual earnings will be near the top end of analysts’ estimates.
  • Micro Focus International Plc soared 15 percent after Hewlett Packard Enterprise Co. said it’s spinning off and merging some non-core software assets in a deal with the U.K. company valued at about $8.8 billion.
  • Rocket Internet SE declined 4.4 percent after the German startup incubator slashed the value of one of its key portfolio companies by more than 50 percent in a new financing round.
  • ASML Holding NV lost 3.7 percent as terms of a transaction obtained by Bloomberg News showed that Samsung Electronics Co. is selling about half of its stake in the chip-equipment supplier.
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