Europe Markets

European markets close lower as ECB expands crisis bond-buying program

Key Points
  • The ECB expanded its pandemic bond-buying program to 1.35 trillion euros.
  • The pan-European Stoxx 600 fell by 0.8% following the decision.
  • U.S. equities fell as Wall Street grappled with disappointing jobs data.

European stocks closed lower Thursday after the European Central Bank announced a larger-than-expected expansion of its coronavirus stimulus program.

The pan-European Stoxx 600 closed down by almost 0.8% provisionally following the ECB decision, with all sectors turning negative. Auto shares were the worst performers, falling 1.7%.

The euro zone's central bank announced a 600 billion euro ($672 billion) expansion of its Pandemic Emergency Purchase Programme (PEPP), a larger increase than analysts had been expecting. The PEPP expansion comes on top of an existing 750 billion euros of government bond purchases set out in March, bringing the total value of asset purchases to 1.35 trillion euros in a bid to weather the euro zone's worst economic downturn since World War II.

Investor sentiment was shaken after ECB President Christine Lagarde said the euro zone faced an "unprecedented contraction." The central bank updated its forecasts, saying it now expects the economy to contract by 8.7% this year, before rebounding to 5.2% growth in 2021 and 3.3% in 2022. Those projections were significantly worse than the ECB's own forecasts in March.

Global markets are continuing to weigh up an economic recovery following the coronavirus pandemic. U.S. equities were mostly lower as Wall Street grappled with disappointing jobs data and increased central bank stimulus. Filings for unemployment insurance claims totaled 1.877 million last week, according to the Labor Department, more than the 1.775 million new claims expected by economists surveyed by Dow Jones.

Biggest movers

Remy Cointreau shares climbed over 10% to lead the Stoxx 600 after its earnings report, in which the French spirits company forecast a strong rebound in the second half of the year.

At the other end of the European benchmark, British property developer Hammerson tumbled more than 14% as investors cashed in on a substantial rally in the first half of the week following the announcement that its flagship sites would reopen from June 15.

Meanwhile, U.K. budget airline easyJet and cruise operator Carnival are among notable stock names that will be removed from the FTSE 100 index on June 22, global index provider FTSE Russell has revealed. Shares of easyJet and Carnival climbed 6% and 2% respectively on Thursday.