European bonds and stocks rally; ECB meeting in focus as Lagarde confirms early exit
TLT•European stocks and government bonds rallied ahead of the ECB meeting, with the STOXX 600 up 0.5% and euro zone yields edging lower. Christine Lagarde confirmed she will leave the ECB in February, while Alphabet shares fell 10.5% in premarket trading after its results.
1. European markets advance
European government bonds and stocks rallied on Thursday as investors awaited the European Central Bank’s next move. The STOXX 600 rose 0.5%, while euro zone government bond yields edged lower and oil and natural gas prices dipped.
2. Lagarde to leave in February
ECB President Christine Lagarde confirmed she will leave her post in February. RBC expects the ECB to hold rates at 2.50%, followed by a final hike to 2.75% in December, while money markets are pricing in as many as three additional increases. The yield gap between French and German government bonds stood at 153.50 basis points, after reaching nearly 178 basis points last week.
3. Tech results weigh on futures
Nasdaq futures were down 1% after Alphabet fell 10.5% in premarket trading, following disappointing results in its core search business and an acceleration in cash spending on AI. Amazon and Intel were due to report earnings after US markets closed. Brent crude fell 1.2% to just under $114 a barrel.
