European shares fall as Draghi says QE extension not discussed

Bloomberg

Stocks in Europe fell the most in two weeks after President Mario Draghi said the European Central Bank didn’t discuss an extension to its bond-buying program at its latest meeting.
The Stoxx Europe 600 Index dropped 0.8 percent to 347.62 at 2:32 p.m. in London, extending losses as Draghi explained the ECB’s decision to leave interest rates and its stimulus program unchanged. Equities are down 5 percent this year, but have rebounded 13 percent from their post-Brexit June low amid speculation that central banks will keep monetary policy accommodative. Most economists surveyed by Bloomberg forecast Draghi will extend the bond-purchasing plan before the end of the year.
“A lot of people wanted to see a bit more stimulus from Draghi today, or at least an extension to the program,” said Yogi Dewan, the chief executive officer of Hassium Asset Management in Gerrards Cross, U.K. His firm manages about $1 billion. “At the end of the day, Europe’s economy isn’t in great shape, inflation doesn’t look exciting and there are a bunch of political risks to reckon with. It’s very unusual for Draghi to be this hawkish. It looks like he’s taking the lead from the Fed. Everyone is just on hold.”
Automakers posted the biggest drop of the 19 industry groups on the Stoxx 600, as the rise in the euro hurt prospects for profits of European exporters. Daimler AG and BMW AG lost at least 1.6 percent, dragging Germany’s DAX Index to the second-worst performance among western-European markets. The DAX on Wednesday had become the first major euro-area equity gauge to recoup its losses for the year.
The VStoxx Index, which tracks volatility expectations for the Euro Stoxx 50 Index, was little changed near a 13-month low. Earlier this week, volatility hadn’t been this low in the days preceding an ECB meeting since the start of quantitative easing in 2015.
Thomas Cook Group Plc gained 5 percent after setting up a joint venture to expand its business in China. Banca Monte dei Paschi di Siena SpA rose 2.2 percent after Il Messaggero reported that its planned capital increase could be postponed until next year. Zoopla Property Group Plc climbed 1.3 percent after the U.K. real estate website said annual earnings will be near the top end of analysts’ estimates. Micro Focus International Plc soared 17 percent after Hewlett Packard Enterprise Co. said it’s spinning off and merging some non-core software assets in a deal with the U.K. company valued at about $8.8 billion.
Rocket Internet SE declined 3.3 percent after the German startup
incubator slashed the value of one of its key portfolio companies by more than 50 percent in a new financing round. ASML Holding NV lost 4.2 percent as terms of a transaction obtained by Bloomberg News showed that Samsung Electronics Co. is selling about half of its stake in the chip-equipment supplier.