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European Central Bank signals a rate cut

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The Maltese market closed in the green on Thursday, with the MSE Equity Total Return Index ending the session 0.175% higher, to 9,819.945 points. Best performer was Malta International Airport plc by adding 1.33% to close at 7.60, followed by Bank of Valletta plc and RS2 Software plc which rose 0.90% and 0.55% to close at 1.12 and 1.83 respectively. Biggest fall was seen from Mapfre Middlesea plc, it shed 2.65% to close at 2.20, followed by Lombard Bank Malta plc and Malita Investment plc which slid 1.74% and 0.58% to close at 2.26 and 0.86 respectively.

European shares slipped below the waterline at the end of a sweltering Thursday, as the market digested an avalanche of earnings reports and a fresh European Central Bank rate decision. The pan-Europe Stoxx 600 was down 0.56% at 389.52, while Frankfurt’s DAX lost 1.28% to 12,362.10 and the CAC 40 in Paris slipped 0.5% to 5,578.05. Italy’s FTSE MIB lost 0.8% at 21,903.29, while back in London, the FTSE 100 was down 0.17% at 7,489.05.

US stocks closed lower on Thursday as investors grew worried that the Federal Reserve may not be as dovish with its monetary policy as initially expected while also continuing to monitor trade developments and earnings. At the close, the Dow Jones Industrial Average was down 0.47% at 27,140.98, while the S&P 500 was 0.53% lower at 3,003.67 and the Nasdaq was 1.00% weaker at 8,238.54.

The European Central Bank’s governing council has left interest rates unchanged but hinted at cutting rates in September in a bid to support the trading bloc’s ailing economy.

The Eurozone’s central bank deposit rate remains at 0.4%, which was last changed in 2016.

It added in a statement that it would keep interest rates at "their present or lower levels at least through the first half of 2020, and in any case for as long as necessary."

The announcement comes amid below-target inflation. As it stands, inflation in the Eurozone was 1.2% in June, significantly lower than the 2% goal.

The Federal Reserve is expected to cut interest rates in its meeting from July 30. This follows months of pressure from President Donald Trump, who has called for the measure to boost the U.S. economy.

The ECB could also resume its program of quantitative easing, a measure which was halted only in December. Under the measures, the bank bought up $2.8 trillion (€2.6 trillion) of government and corporate bonds.

Outgoing ECB President Mario Draghi will comment on the decision in a press conference later.

This article was issued by Nadiia Grech, Junior Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.