By Tom Westbrook and Alun John
SINGAPORE/LONDON (Reuters) -The euro was pinned at an 11-week low on Thursday after the ECB cut rates by 25 basis points as expected, while European shares held onto gains on the back of better earnings both at home and from Taiwanese chipmaking giant TSMC.
Also in the mix, U.S. retail sales beat expectations, providing a further boost to U.S. stocks and the dollar.
The European Central Bank made its first back-to-back rate cut in 13 years, a tacit acknowledgement that inflation, now below 2%, could settle around its 2% target quicker than previously thought.
With markets pricing another cut in December, the tone and guidance in the press conference will be closely watched.
“In our view, this is unlikely to be the last cut from the ECB this year. Another cut is likely in December, and we expect this will be followed by a series of cuts at every meeting through to June next year,” said Dean Turner, chief euro zone economist, UBS Global Wealth Management
The euro was last down 0.2% at $1.0842, flat after the ECB decision, but falling after the U.S retail sales data.
Germany’s 10-year government bond yield, the benchmark for the bloc, was last up 3 basis points at 2.21%, likewise little moved by the ECB and rising after the U.S. numbers. [GVD/EUR]
Also weighing on the euro is the U.S. presidential election, which remains on a knife edge, according to the latest opinion polls. Republican Donald Trump’s tariff, tax and immigration policies are seen as inflationary, and thus negative for bonds and positive for the dollar, which was at an over two-month high on major peers. [FRX/]
The U.S. 10-year Treasury yield was last up 2 bps at 4.04%. [US/]
In share markets, Europe’s broad Stoxx 600 index was last up 0.8%, as a number of well-received earning updates helped the index to bounce back following a poor start to the week on disappointment over results from heavyweights ASML and LVMH. [.EU]
The impact of ASML’s earnings in particular were also tempered by results from Taiwan’s TSMC which beat market expectations, and said it expects revenue to rise sharply in the fourth quarter.
That helped Nasdaq futures outperform. They were up 0.9%, outpacing a 0.5% gain in S&P 500 futures, and extending gains after U.S. retail sales data.
The S&P 500 finished a whisker away from another closing record high on Wednesday. [.N]
CHINA REAL ESTATE
Earlier on Thursday, blue-chip share indexes in Hong Kong and mainland China each fell 1.1%, and are both now around 14% below their most recent peaks, as investors move aside to wait for more Chinese government spending and signs it is helping the economy. [.SS]
Chinese real estate stocks fell 7.8%, reversing two days of gains.
China’s housing minister on Thursday promised to improve builders’ access to funding for finishing thousands of projects.
But there was no new gesture to excite markets about a meaningful revival for a sector where a crackdown on developers’ borrowing has set off a wave of defaults, while declining prices have shaken households’ faith in the asset class.
“The briefing is mainly about implementing previously-announced policies, including some already in operation,” said Shi Jiangwei, analyst at Shanghai Minority Asset Management, disappointing investors expecting fresh stimulus.
Australian shares also eased from a record high as mining stocks slipped and iron ore prices fell in Singapore.
That also weighed on the Australian dollar which struggled to hold its gains from data showing net employment blew past forecasts. [AUD/]
In commodity trading, Brent crude futures steadied at $74.35 a barrel after four sessions of losses. Industry data showed an unexpected drop in U.S. crude stockpiles last week. [O/R]
Gold last traded at $2,680 an ounce. [GOL/]
(Reporting by Tom Westbrook in Singapore and Alun John in London; Editing by Edmund Klamann, Toby Chopra and Emelia Sithole-Matarise)
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