Although European equity benchmarks traded higher during early Monday’s trading session, comments from the speech given by European Central Bank President Mario Draghi erased the gains as political uncertainty caused by election jitters loomed over the markets.
Draghi on Quantitative Easing
Later during Monday’s trading session, ECB President Mario Draghi repeated that the central bank currently does not have any plans to remove the ECB’s stimulus measures despite the Eurozone’s €10 trillion economy’s signs of strength.
In his speech at the European Parliament, the ECB President also added that the Eurozone’s economy is currently recovering as acute deflation risks vanished, while the low unemployment numbers and inflation rates to catch up in the following years. Draghi also added that the decline in oil prices has supported the region’s recovery but reiterated that there is no current need to bring down the quantitative easing.
The ECB president’s comments regarding the quantitative easing then sparked calls from some German officials to start easing down its policies and stimulus measures.
EUR Stocks
The Euro Stoxx 50 fell 1.1% dropping for the first time below its 50-day moving average since December, while the Stoxx Europe 600 slid by 0.7% with 98% of its sectors moving lower during Monday’s session.
Some of the stocks affected the most include German automaker Volkswagen (DE:VOWG_p) which declined as much as 1.9%, mostly brought about by a new lawsuit faced by the company still in connection with the emissions test scandal. Automobile stocks are the among the worst performers as the sector’s index fell 1.4% during Monday’s session in the middle of investor unease on political uncertainty between the United States and France. Bank of America Merrill Lynch also downgraded the auto sector to an underweight rating as the sector faced more challenges.
Shares of Ryanair Holdings PLC (NASDAQ:RYAAY) also lost around 2.8% on the company’s announcement that their net profit for the third quarter dropped by almost 8% to €94.6 million caused by an oversupply in the sale of their seats caused ticket prices to go lower. Hexagon (ST:HEXNOK) from Sweden also posted a decline of 1.2% on their disappointing fourth-quarter earnings report.
Unicredit (MI:CRDIn), from Italy, declined by 3.7% to €12.63 on the sale of their shares worth €13 billion at a discount of 38% off, with the aim of strengthening the company’s capital to reduce their debt levels. Italy’s banking sector is also seen to be one of riskier sectors in the region as FTSE MIB index declined by 2.2% recording its biggest fall during the week.