Published: Sun, March 10, 2019
Money | By Ralph Mccoy

European Central Bank cuts growth, inflation forecasts

European Central Bank cuts growth, inflation forecasts

European Central Bank also lowered its inflation projection to 1.2 percent, well below its target rate of just below 2 percent.

Investors who had been waiting for the jobs report to provide more clues on the state of the world's biggest economy were disappointed to learn USA nonfarm payrolls increased by 20,000 last month, trailing estimates for a 180,000 increase. Exports tumbled 16.6 percent year-on-year in yuan terms, while imports fell by 0.3 percent. This week, China cut its goal for economic expansion, the Bank of Canada dialed back its expectations for policy tightening and the OECD lowered its global outlook. Its weekly decline of 2.6% was the worst since December.

While the market widely expected a downward revision in growth from the ECB, the central bank had perhaps taken the extent a notch further than expected. European and North American Indices all ended up in the red, on currencies the United States dollar Index hit its highest level since June 2017 while bond yields in Europe and the United States all fell again.

In a comment published on Bloomberg, the chief economic adviser to the global insurance and financial giant Allianz, Mohamed El-Erian, said the European Central Bank move was as dramatic as the Fed's "flip-flopping" in January.

Friday's Asia Pacific Trading Session S & P 500 futures are pointing cautiously higher, perhaps indicating that there is room for a breather when Asia Pacific stock markets trade. "So you put those two together and it is not surprising that the trade data was weaker than expected".

Elsewhere, the yen climbed with gold as investors sought havens.

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"The risks surrounding the euro area outlook are still tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets", he said.

The Stoxx Europe 600 Index sank 0.9 percent. Platinum for April delivery was up 0.5 dollar, or 0.06 percent, to settle at 817.60 dollars per ounce.

The euro increased 0.4 percent to $1.1233, the first advance in more than a week. Imports were down 5.2% in the month, after a 1.5% decline in January.

The Japanese yen advanced 0.4 percent to 111.12 per dollar. Italy's 10-year government bond yield touched its lowest level in just over a month at 2.661% and was last down 4 basis points on the day.

West Texas Intermediate crude dropped 1 percent to $56.11 a barrel.

-With assistance from Scarlet Fu, Adam Haigh, Christopher Anstey, Robert Brand and Todd White.

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