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Most stock indices rose after the European Central Bank’s interest rate cut. The German stock index DAX briefly hits 10,000 for the first time.
The European Central Bank cut its interest rate to 0.15% from 0.25%, but later recovered its losses and traded higher. Analysts had expected a cut to 0.1%.
The ECB also cut its marginal lending to 0.40% from 0.75% and reduced its deposit rate to -0.10% from 0.0%. The European Central Bank is the world’s first major central bank to use a negative rate. The deposit rate of -0.10% means that commercial bank will be charged for holding their reserves. This measure should spur commercial banks to ramp up lending.
Retail sales in the Eurozone climbed 0.4% in April, exceeding expectations for a 0.1% gain, after a 0.3% increase in March. On a yearly basis, retail sales in the Eurozone rose 2.4% in April, exceeding expectations for a 1.3% increase, after a 0.9% gain in March.
German factory orders surged 3.1% in April, beating expectations for a 1.3% rise, after a 2.8% decrease in March.
The Bank of England kept its interest rate unchanged at record low 0.50%. The stimulus program of the Bank of England remained unchanged at 375 billion pounds. Investors had expected this decision. Investors expect the BoE will raise interest rate in the first half of next year.
Indexes on the close:
Name Price Change Change %
FTSE 100 6,813.49 -5.14 -0.08%
DAX 9,947.83 +21.16 +0.21%
CAC 40 4,548.73 +47.73 +1.06%
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