European stocks traded mostly lower on Thursday ahead of the European Central Bank's interest rate decision.

The ECB will probably leave interest rates unchanged , but it may give clues about whether it's ready to start lowering borrowing costs at its next meeting in June.


The ECB's message at Thursday's meeting should be in line with recent communications, with the objective to not alter market expectations, Indosuez Wealth Management said.

State Street Global Advisors said the ECB will, understandably, aim to strike a measured tone , balancing clear disinflationary trends and still elevated wage growth by historic eurozone standards.

The meeting will be all about preparation while the June meeting will be about delivery of the first installment, State Street said.

The market pricing of around 85 basis points of interest-rate cuts by the ECB this year seems reasonable and isn't not far away from Pimco's baseline of three rate cuts in 2024.

Vanguard Europe said higher energy prices are the key change compared with the ECB's March meeting.

Vanguard's forecast remains for ECB rate cuts of 125 basis points this year--this is more than the 82 basis points markets currency price in, "but it is clear that rate cuts could come more slowly due to rising energy prices."

Stocks to Watch

London Stock Exchange Group's growth capacity remains poorly reflected in the company's valuation, Berenberg said.

The LSE's benefits from its partnership with Microsoft are difficult to quantify, the analyst says. However, incremental annual growth of 1% to 2% is still possible from 2026 despite consensus lowering LSEG's expectations for growth to accelerate beyond 2024.

U.S. Markets:

Stock futures were lower after indexes dropped broadly Wednesday following the hotter-than-expected CPI data.

PPI data will be watched at 12:30 GMT, where monthly growth is expected to decline to 0.3% growth in March from 0.6% in February, according to The Wall Street Journal's poll of analysts.

Stocks to Watch

Alpine Immune Sciences was rising 36% after agreeing to be acquired by Vertex Pharmaceuticals for $4.9 billion in cash. Vertex shares declined 2.2%.

Boeing gained slightly in premarket trading, after falling every session this month following a series of allegations regarding safety issues. The stock has lost 9.5% in April.


Any signals from the ECB that rates could be cut in June on Thursday have been brought into sharp focus for the euro after Wednesday's stronger-than-expected U.S. inflation data caused U.S. rate expectations to be trimmed back, MUFG said.

"We see good grounds for the ECB today communicating a clearer message on the increasing prospects of a rate cut at the meeting in June," MUFG added.

"We see scope for EUR/USD to extend further lower today toward the 1.0500 level."

The dollar added to the gains it made on Wednesday following the higher-than-expected U.S. inflation data, taking the DXY dollar indexto a five-month high of 105.318.

Wednesday's data--which prompted markets to sharply reduce bets on Federal Reserve interest-rate cut prospects this year--signal that U.S. inflation is potentially reaccelerating, said.


Eurozone government bond yields rose, with the focus on the ECB meeting, particularly after the recent strong U.S. inflation data, which make the possibility of the Fed easing in the coming months less likely, UniCredit Research said.

There is room for the 10-year Treasury-German Bund yield spread to widen more if market expectations of Federal Reserve interest-rate cuts are further delayed, UniCredit Research said.

The 10-year U.S.-German bond yield spread widened to a multi-month high of 210 basis points on Wednesday, prompted by above-forecast U.S. CPI data for March which also led to a significant repricing of market expectations of Fed rate cuts.

Should U.S. PPI data also come in higher than expected, the selling momentum in bonds is likely to keep going.

The two-year Treasury yield has tested 5% in the wake of above-forecast March CPI data, and this could signal that the neutral policy rate is higher, and policy until this point has been looser than generally understood, said.

"The lift in yields reflects the markets moving closer to conditions more consistent with tighter policy."


Oil prices are likely to be supported by geopolitical risks and stronger demand in the near term, Citi said.

It noted that oil demand data has been a slightly better year-to-date in key regions, while longer shipping voyages due to the Red Sea diversions are also supportive. The majority of recent price moves are due to geopolitical risks that are likely to persist through 2Q, Citi said.


Metal prices were mixed, with gold pulling ahead and base metals flat.

Gold futures rose 0.3%, rebounding from an initial dip after Wednesday's publication of U.S. CPI data.

Inflation figures, significantly above the 2% target, have damped the recent optimism among investors, raising concerns that the Fed might postpone interest rate cuts longer than initially anticipated and sending Treasury yields up, causing the initial dip, Sucden Financial said.

However, strong purchasing by central banks and sustained demand from individual investors--particularly in China and India--continue to provide solid support for gold, attracting speculative investors and maintaining high prices, Sucden Financial added.


Publicis Flags Tech Rebound as Revenue Growth Beats Expectations

Publicis Groupe said first-quarter revenue continued to grow and beat expectations, helped by new business wins and what it called a clear rebound in the technology sector.

The Paris-based advertising group said Thursday that organic net revenue grew 5.3% in the first three months of the year compared with the same period of 2023. Analysts expected Publicis to report organic net revenue growth of 4.55% for the quarter, according to consensus estimates provided by Visible Alpha.

Givaudan Posts Higher Sales Amid Strong Momentum

Givaudan said that first-quarter sales rose, exceeding analyst expectations, as the company grew across all regions and customer groups.

The Swiss flavor-and-fragrance company on Thursday reported 1.82 billion Swiss francs ($1.99 billion) in sales for the first three months of the year, compared with CHF1.77 billion a year prior.

Singapore's Temasek Plans to Boost Investments in Europe; Opens Office in Paris

Singapore's state-investment company Temasek plans to invest more in European companies focused on sustainability, pharmaceuticals and biotechnology to build up resilience in its portfolio.

The company has also opened a new office in Paris, Temasek said in a statement Thursday, adding to its existing locations in London and Brussels.


China Struggles to Kick Deflationary Concerns

SINGAPORE-Inflation in China retreated sharply, reigniting concerns over deflation even as its economy starts to feel the benefit of a manufacturing-led revival that is fueling trade tensions overseas.

Consumer prices rose just 0.1% in March compared with a year earlier, according to official data released Thursday, a weaker-than-expected reading that highlights ongoing strains in China's economy from a drawn-out property crunch and restrained consumer spending.

Fed Rate Cuts Are Now a Matter of If, Not Just When

Another firmer-than-anticipated inflation report delivered a meaningful setback Wednesday to the Federal Reserve's hope that it could buoy prospects of a so-called soft landing by dialing back some of the past year's interest-rate increases.

Solid hiring and the prospect that inflation might settle out closer to 3% than the Fed's 2% goal could call into question whether the central bank will be able to cut rates until much later in the year without evidence of a sharper slowdown in the economy.

Asia Economies to Keep Growing Despite China Slowdown, Other Headwinds, ADB Says

Asia's economic expansion is expected to remain healthy this year despite a slowdown in China and uncertainty abroad, the Asian Development Bank said as it revised up forecasts for the region.

Growth in developing economies will be supported by resilient domestic demand, the Manila, Philippines-based multilateral bank said. The ADB now expects developing Asia to expand 4.9% in 2024, up from the 4.8% growth it had projected in December.

Hamas May Not Have Enough Living Hostages for Cease-Fire Deal

Fears are rising over the fate of the remaining hostages held in Gaza after Hamas said it was unsure whether it could bring forth 40 Israeli civilian captives as part of a U.S.-backed cease-fire proposal, according to officials familiar with the negotiations.

The 40 hostages, including women, children, elderly men, and those in fragile health, would be released under a U.S.-supported plan for a six-week cease-fire in the war in Gaza. In exchange, Israel would release hundreds of Palestinian prisoners.

U.S. Warns of Imminent Attack on Israeli Assets by Iran or Proxies

WASHINGTON-U.S. intelligence reports show that an attack on Israeli assets by Iran or its proxies could be imminent, U.S. officials said Wednesday, as the top American military commander for the Middle East headed to Israel to coordinate a response.

Iran has publicly threatened to retaliate for a strike in Syria on an Iranian diplomatic building in Damascus last week, presumed to be the work of Israel, that killed top Iranian military officials, including a senior member of the Islamic Revolutionary Guard Corps' elite Quds Force.

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04-11-24 0601ET