European stocks mixed after stark Bank of England forecast

Thursday 06th of August 2020 at 7:30 am

European stocks mixed after stark Bank of England forecast

European stocks were mixed after the Bank of England predicted that the UK economy would suffer its largest contraction in a century.

Mark Carney, Governor of Band of England and Andrew Bailey, Governor-designate of BOE, attend a news conference at Bank Of England in London, Britain March 11, 2020. Peter Summers/Pool via REUTERS
Bank of England governor Andrew Bailey. Photo: Peter Summers/Pool via Reuters

European stocks were mixed on Thursday after the Bank of England predicted that the UK economy would suffer its largest contraction in a century this year.

Though the bank held both its benchmark interest rate and the size of its bond-buying programme steady, it warned that the UK’s economic output would shrink by 9.5% this year and stay below its pre-pandemic levels until at least the end of 2021.

The pan-European STOXX 600 index (^STOXX) rose by around 0.3%, while London’s FTSE 100 (^FTSE) was 0.6% in the red.

Stocks in the UK were dealt a second blow by a series of weak company results, including from Glencore (GLEN.L) and ITV (ITV.L).

READ MORE: UK economy to have biggest annual decline in 100 years

Germany’s DAX (^GDAXI) climbed by around 0.9%, while France’s CAC 40 (^FCHI) rose by more than 0.4%. Stocks rose by around 0.1% on Italy’s FTSE MIB (FTSEMIB.MI), but fell marginally on Spain’s IBEX (^IBEX).

“It was a tough morning for the FTSE 100, dealt blows from the Bank of England and some of Thursday’s reporting companies,” said Connor Campbell, a financial analyst at trading platform Spreadex.

“Keeping interest rates at a record low 0.1%, the Andrew Bailey-led central bank warned that the UK economy shrank by 20% in the second quarter,” he said.

Stocks in Asia had a similarly mixed trading session.

READ MORE: Wetherspoon to axe up to 130 head office jobs amid dent to trade

Shanghai’s SSE Composite Index (^SSEC) rose by 0.26% on Thursday, while the Hang Seng (^HSI) closed more than 0.8% in the red in Hong Kong.

Japan’s Nikkei (^N225) fell by 0.4%, while the KOSPI Composite Index (^KOSPI) in South Korea climbed by around 1.3%. Australia’s ASX 200 (^AXJO) rose by almost 0.7%.

Futures were pointing to a higher open for stocks in the US, even as a dispute about funding for the United States Postal Service raised the prospect of a further delay to lawmakers agreeing on new stimulus measures.

Futures on the S&P 500 (ES=F) rose by around 0.3%. Dow Jones Industrial Average futures (YM=F) climbed by 0.4%. Nasdaq futures (NQ=F), meanwhile, were up by around 0.25%.

Share this article:

Read More

Misty Copeland: Coronavirus will impact ballet for 'years to come’