European Indices Continue Rally Unperturbed by Surprise in ECB Monetary Policy Statement

Equity markets around Europe continued their rally across the board on Thursday, seemingly unfazed by an unexpected element to the ECB’s announcement on its fiscal stimulus policy into 2017. Markets were fairly confident that today’s meeting would result in the announcement that the present stimulus policy of 80 billion euro per month of bond purchases would be extended through to September.

While the asset-buying programme will be extended beyond the March 2017 term which had been in place until today it will be at a lesser 60 billion euro per month. However, it will also remain in place beyond September, up until at least the end of the year and quite possibly beyond.

Draghi denied that the reduction in the programme beyond March amounted to ‘tapering’.

He insisted that the fact the threat of deflation in the Eurozone had largely dissipated meant that 80 billion euros per month was no longer necessary and that 60 billion euros from April would essentially do the same job. He also made a pointed statement that the ECB would maintain an active position in markets “for a long time”.

In Italy, the Eurozone country with the most vulnerable banking sector, the FTSE MIB has finished the day up 1.61%, with the larger banking constituency on the index all showing strong gains. The biggest risers were Banca Mediolanum, up 7.21%, Banca Pop Milano, up 8.33% and Banca Popolare, up 8.25%.

French-Italian electronics and semiconductor manufacturer STMicroelectronics was another notable riser with a gain of 4.24%.

An announcement today by Cinemo, which produces high-performance automotive-grade multimedia playback, streaming, media management and connectivity middleware, that it would use the new Accordo 5 family of automotive processors from STMicroelectronics comes on the back of recent analyst upgrades for the company.

Natural gas infrastructure company Snam dropped by 1.47% and energy companies group Terna was down 2.1% as utilities took a hit across Europe today.

In Amsterdam the AEX Index has concluded Thursday up 1.02%. Another semiconductor company having a good day, ASML Holding had one of the day’s biggest gains to return 2.37. However, the honour of top spot on the index’s leaderboard went to Telecom Altice with the telecom up 3.66%.

ArcelorMittal was the other company up more than 3% and finished the day 3.49% to the good. In line with banks around Europe, ABN Amro was boosted by continued ECB fiscal stimulus and gained 1.93%.

HR company Randstad Holding following on from its positive Wednesday with a 1.83% gain and information and analytics company Relx Group finished up 1.64%.

Oil and gas-related products handler Royal Vopak was the only company to slip by more than 1% today, to fall to a 1.39% loss.

The ATX Index recorded a 1.14% gain in Vienna, led by lighting company Zumtobel which is up 5.01%. On Tuesday the company announced that its adjusted EBIT for the first half of its financial year had seen an increase of 23% on the previous year, up to 52 million euro.

Specialist steel and steel-based equipment maker Voestalpine also followed yesterday’s good performance with a 3.59% gain today. Vienna Insurance Group rose by 3.15% and caterer Do & Co by 2.79%.

There were only incremental fallers today. Electricity provider Verbund was down by 0.34%, a reasonable result within the context of a rough day for utilities.

And, finally, to Sweden where Stockholm’s OMX 30 finished Thursday with a gain of 1.08%. The day’s best performer was pharma goliath AstraZenica, which recorded a 2.72% return. Boliden, the miner and smelter was up 2.57% and Lundin Petroleum 2.55%.

Digital security company Fingerprint Cards took a heavy 9.97% hit as the company announced a significant cut to its revenue forecast for the year.

Chief Executive Christian Fredrikson admitted that the company had overestimated the demand for touch sensors and fingerprint security systems in smartphones. Increased competition has also had an impact but there are hopes that the company can again increase its revenues in 2017.